This week's feature interview is with Doug McCormick. Doug is an army veteran and is
currently a managing partner at HCI Equity Partners. He's also involved with Team Red,
White and Blue and Bunker Labs. Doug is going to give us his thoughts on Bunker Labs and
financial strategy for veterans and others. Note, we are not providing any financial advice and
VA does not officially endorse Doug's guidance on money, but we did invite him onto the podcast
because it is an important topic and we respect him as a subject matter expert.
If you have any questions or want to explore the ideas that Doug brings,
consult your families or your personal financial advisor.
With that said, here's Doug McCormick. Enjoy.
Yeah, before we get into your service, sort of lay a foundation of sort of where you are now.
Sure. So I co-founded an investment firm called HCI Equity Partners.
And so I've basically been a professional investor for the last 20 years. And I'm
managing money on behalf of institutions. So insurance companies, pension funds, foundations.
And so that's my day job. And I'm very passionate about the lessons I've learned in investing.
And I recently wrote a book called Family Inc. Using Business Principles to Maximize Your Wealth.
And that's a really a book geared to personal finance for individuals.
And so I'm trying to make sure we're bringing that message to the veteran community.
Okay. So one thing that all of my podcast guests have in common, no matter what branch we served,
what era, whatever, we all made the decision to serve. Bring us back to that decision for you.
So to a certain extent, it probably wasn't a conscious decision. So I was a high schooler
and I got recruited to wrestle at West Point. I was very intrigued by the opportunity to serve
and the academy experience. And so as a 17 year old, I'm not sure I fully appreciated what service
meant, but I went to school and then ultimately served following graduation. And I would tell you,
I'm super fond of the experience. And I think for me, it's been a real formative part of my
life journey, both the academy experience, as well as my active duty service.
I'd also tell you, I was commissioned in the early nineties. And so a very different time
than our soldiers are enduring today. And so while I'm proud to have served, I think what our
soldiers are experiencing of late is a very different level of service and commitment than
what I experienced. So you had a very different type of service, but you still served, right?
There was still a sense of purpose there. You still had the discipline of a soldier.
When you got out, did you experience any sort of emotional crisis as it came to sort of finding
your new identity? Yeah, so I would say I don't think I experienced an emotional crisis and
probably because I was very busy, very challenged and was engaged in achieving the goals that I
had set out. But I would tell you, I felt emptiness and a longing for community and
belonging. And in many ways, that's why I'm here today. So over time, I've felt the desire to
continue to get more engaged with the veteran community and have a positive impact, not around
a narrative of veterans as victims, but around a narrative of how do veterans empower each other
to accomplish amazing things. And so I just am so excited to be kind of backing the community and
hopefully having a positive impact on veterans as they think about transition and the world
of opportunity in front of them. And so Bunker Labs is essentially an organization that brings
people together to explore how to pursue entrepreneurship and promote that dialogue so
people can become informed about their choice. And in that regard, success can be a wide range of
outcomes. It doesn't have to be that someone started a business. It could be that they
educated themselves and concluded it wasn't for them. And that's still success to create
informed veterans that have evaluated their options and chosen the best fit for them
and also created a sense of community in the process. Yeah, I need to check it out. As someone
who has had a side business for a few years now, I'm still not even quite sure what I'm doing. Like
I don't like, you know, tax season rolls around or I'm like, am I even doing any of this right?
You know, and I wonder if Bunker Labs would be a good place to get educated. It absolutely would
be. There's a DC chapter here. You got to go check it out. And the thing I would say is, A,
you probably learned something. B, you wouldn't feel so alone in your own endeavors because you
have people that you can commiserate with. And C, I think you'd have fun with it. Yeah,
very cool. Alexandria. Perfect. Easy. There you go. Finances. You wrote the book Family Inc.
centered mostly on personal finances for the average American in general, but you obviously
have an affinity for veterans and veteran success. I think that in a lot of the conversations that
I've had with veterans about any crisis that they've had in their life at any stage post
military, it's amazing to me how many things they're willing to admit to, but finances just
isn't one. Can you speak on that a little bit as to before we get into some of your insights on
financial health, why is it that veterans are, even now, we're willing to be so vulnerable to
the world on our problems where finances are still the ones we have a hard time opening up about?
Yeah. So I think it has to do with, first of all, acknowledging that this is a life skill and it
takes many years to get good at. And I think it's something that oftentimes families grow up and
they don't talk about it in the family, right? So it's often challenging between father, son,
mother, daughter, or father, daughter to have these conversations and admit that we've made
mistakes because people tend to view mistakes as bad decisions or immaturity. And in many cases,
it can be just ignorance. And I think the reason that I'm so focused on having this conversation
in the veteran community is, first of all, I'd tell you, I think it's one of the biggest problems
in America that no one's talking about. And so it's not just a veteran issue. Having said that,
within the veteran community, veterans have unique circumstances that make achieving financial
security even harder. And you know a lot of these, but just to review them quickly,
83% of veterans will get out of service and make a mid-career change. Most veterans move around
quite a bit before they get out. And so they don't have that same professional network around them.
Many veterans have mature families or dependents and those create financial obligations. And so
all of those things kind of need to go into the game plan, if you will, of successfully
transitioning. I would say on the positive side, veterans have the GI Bill, which in many cases is
probably the largest asset that they'll exit with. And they have a great skill set and brand to be
associated with high performance organizations. And so there's a lot of potential there that I
think we don't do a good enough job of teaching how to turn that potential into dollars and value.
And there's also some challenges that we need to specifically acknowledge.
Yeah. So let's talk about the transition period of getting out of the military,
maybe between exiting the military and starting the first salary-based job or full-time job.
And one, I guess maybe starting the first job that would lead into a career. So
I know a lot of veterans that get out, they'll get that first job, but it's not a career job.
I need to start paying my own bills job or something to get me by until I start school,
something like that. I'm talking before they start the next step in their career.
Let's talk about that window. What mistake do you see veterans and maybe Americans in general
in a transition like that make with their finances? So two things I would say. The first is I think
veterans, the day you join service, you should start preparing to separate. And I don't mean
that as a short sighted thing. I mean it as 83% of veterans will. And so people need to plan that
that's an eventuality. And I think a lot of times, the scenario you described is accurate where
people take a job because they need a job to pay bills. And I would argue if you can prepare
appropriately and give yourself some financial flexibility, I think you're better off taking as
much time as you need to find the right job and the job that's going to offer the best long-term
career options. So the second thing I'd tell you is a common mistake is when we think about our
jobs, we think about them too narrowly and too short-term focused. And when I say short-term,
we ask ourselves, how much is this job going to pay me this year? And obviously that's a real
important aspect of the choice. But I think the better way to think about it is how much can this
job pay me over a lifetime? And am I building a career or not just getting the job? And thinking
about compensation, it's not just how much I got paid in any year, but it's the skills that I've
developed. It's the brand that I get to become because of the organization that I'm affiliated
with. And if you think about managing your employment value over a lifetime, if you will,
I think that's a much better way to think about it than how much can I get paid this year or next
year. A couple of things, and these are just my opinions, but I think if you look at the services,
I think in general, they do a pretty good job when it comes to financial management of playing
defense. And when I say defense, it's don't screw up, don't get the payday loan, don't get the
expensive car loan, don't get the high credit card bill, don't miss your rent payment. I think when
you get out in a civilian environment, it's more important to play offense and learn how to play
offense, which is accumulating wealth because you're getting good jobs and you're learning
how to invest your money in a way that it will grow. And I think it's much easier to save or to
grow your way to independence than it is to save your way. And by that, what I mean is you're
investing your dollars in things that are going to be high return over a long time. The second
thing I think that veterans often get stuck with is, and I think this is appropriate, when in
service, DOD makes it very simple financially. And what I mean by that is we have a more
simplified tax code, tax treatment for veterans, your commissary and your things that you likely
buy, you know you're getting good value there and your healthcare is fully paid for. I find a lot of
vets get out and they're like, oh my God, I never really understood health insurance and what real
tax rates look like for most Americans. And all of a sudden you're not at the PX, but you're somewhere
else. And so I think coming out, just acknowledging that you're not used to the civilian landscape,
if you will, of all those financial choices and spending the time to be very judicious about
how you're going to do that, I think is valuable. If you said to me, what's the most important
advice I could give to people coming out? I would say, number one, financial flexibility is
one of the most important assets you have. And so if you can have a little bit of savings,
and I'm not using those, I'm not suggesting that people use that savings for retirement. I'm
suggesting they use those savings to transition to the best career opportunities they can.
I think that's number one. The second thing is, before you invest in stocks and bonds,
invest in yourself through education, through things that are going to help your career,
maybe entrepreneurship. The third thing I'd say is create that contingency fund.
Life is full of curve balls, and the ability to have a couple months stashed away that will back
you up when something goes wrong, I think is really valuable for that young family that's
transitioning. So if you've done the things that I've mentioned already, you're probably in a
situation where you're not living paycheck to paycheck, and you've transitioned into a good
career. And now you're thinking about, how do I really accumulate wealth for my retirement?
When you get to that stage, this is more on the investment side, I'm a big advocate of
passive investing. And that basically means indexing things like ETFs, organizations like
Vanguard, Charles Schwab, there's tons of them out there. And a real focus on minimizing the
expenses, minimizing the taxes, and just keeping those dollars invested, and keeping consistent.
And what I mean by that is, even if it's 25 bucks a month, 50 bucks a month, a little bit of money
invested toward retirement, over a very long time period where it can compound is really meaningful
dollars. And I think a lot of times we're not, people in general are not good at understanding
the impact of that compounding. So 25 doesn't seem like a lot today, but over 30 years, every
other week out of your paycheck, and if that's growing at a couple percent a year, those are
real numbers. Wasn't it Einstein that said like, one of the greatest inventions is compounding
interest? He did. He did. And the way compounding works is, it's much more powerful if you start
early. And so the longer time period you have to let compounding do its magic, the better off you
are. Yeah, I think it's important to note, and again, this is just from things that I've heard,
and now in my own personal experiences, I have a new career and I'm starting to invest,
is even if Square One is in your 30s, Square One needs to be Square One and needs a start.
I've seen a lot of, I've seen people get discouraged because they aren't the 21 year
old that's starting their Roth IRA right away, and they get discouraged by that. And I think
they almost make excuses as why now wasn't the right time to pull the trigger or what,
like they're already behind the get rich scheme and don't realize that investing needs to start
now in order for it to grow the way that it should. Yeah. I would say on that is,
if any of us could turn back time, wouldn't that be a wonderful thing? So that option's
off the table. And so now all we can do is make the most of what we have available
on a go forward basis. And the good news about financial security is, if you've made a lot of
mistakes, if you do a couple of things, you can usually work your way out of it.
One is get focused on your career, because the likelihood that you're going to create real
financial security if you get a good career will solve a lot of the problems for spending too much
on credit cards and not saving at an early age. The second thing is if you're not ready to retire
at 65, I don't think that's the worst thing. And so you work a couple of years longer,
you save a little bit more, and that can have a meaningful impact in your overall financial
security. And for me personally, I'm a high energy kind of person. I don't really think
I want to retire. I may want to do less, but I want to stay involved and stay engaged. So I'm
not sure sitting at home watching TV retired is really where I want to be either. I've heard so
many people make that same sentiment. And I think the idea of retirement has changed so much over
the past 25 years. Whereas I hear my parents talking about retirement, they're about to
enter their 60s. And what they're looking at is at 65, they're done and they're just relaxing.
Whereas my generation's like, yeah, at 65, I don't want to have to work necessarily,
like quote unquote work anymore, but I'm still going to be doing plenty of things that motivate
me and passion me. And some of those may have income, some of them may not. But the idea of
retirement I think for most people is being able to continue to stay active in a career or elsewhere
without having to be binded by money. Yeah. So one of the reasons why I think
financial literacy is such a big deal is exactly this issue. And so my granddad, for example,
in his generation, people on average retired at about age 65. And on average, people passed away
about four years after age 65, so 69. So you had kind of a four-year life expectancy that you had
to manage financially around. And in many cases, people had social security, but they also had
some kind of defined pension, which is very rare in America today. And so you look at people
today that are retiring, on average, they're retiring at 65, and on average, they'll live 16
years. And so there's a whole different 400% more period that they've got to figure out how to
manage their financial affairs. And so obviously that's great. That's the benefits of better
healthcare and greater longevity, but it comes with a real financial cost. So I think it's a
good planning, but I also think it's revisiting what retirement is about. And if you got the health,
boy, there's so much more good stuff left to do, right? Yeah. I remember when I was growing up,
there was a place called Royal Fork. That wasn't too far. It was a buffet place. And there was a
lady there in her 70s that poured the coffee because she wanted to. She just liked having
a thing to do outside of retirement. And after she retired, she still wanted to have a reason to get
out of the house. And going around the tables and pouring coffee was her thing. And I can only
assume that the little buffet place didn't pay her that much. So clearly, she was able to
set herself in a position where she didn't have to worry about money and could just go do something
that made her happy and active. Hal, if a veteran or anybody who's been listening to this has
been hearing your thoughts on financial independence or financial growth, whatever it may be,
sort of inspired, where can they find more of your thoughts and insights? Yeah. So first of all,
the book is called Family Inc. Using Business Principles to Maximize Your Wealth. There's a
website called familyinc.com. And there you'll learn about the philosophy of the book. There
are some tools and calculators that people can use to kind of assess where they are.
And I've also got some sections specifically focused toward the veteran community. As you
about financial literacy, I've also written a bunch of articles on some of the unique challenges
that veterans face. And those are referenced there as well. Obviously, you can buy the book on Amazon.
The other thing I'd say is I'm trying to partner with organizations that have
a mandate around economic empowerment in the veteran space. And so I've been fortunate enough
to donate books or partner with organizations like the PenFed Foundation, the Institute for
Veterans and Military Families, Student Veterans of America, the Pat Tillman Foundation, because all
of those organizations are doing education, they're doing employment, career management,
financial literacy or entrepreneurship. And those in my mind are the kind of the four pillars
of achieving financial security. Yeah. Doug, I really appreciate you talking to me. Appreciate
the time, man. It's a great cause and I appreciate what you're doing to spread the word. Yeah.