Red Flags Every Dentist Should Know Before Investing – Episode #714

On this episode of The Dentist Money Show, Matt and Will break down how dentists can spot the warning signs before putting their money on the line and explain why clever sales pitches can make risky deals look appealing. They share how dentists can see past the hype by evaluating the real business model behind an investment and recognizing when excitement outweighs substance. This episode offers practical financial planning advice for dentists who want to protect their wealth, make informed investment choices, and build long-term financial confidence. Tune in to discover how to safeguard your money and peace of mind.

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Podcast Transcript

Matt Mulcock: Welcome to the Dentist money show where we have Dentist makes smart financial decisions. I am your host today, Matt joined by my cohost who always makes me feel insecure about my voice. Will Gochnour Will what’s up, man? I, you really do. I I’m just, saying it. I, I call it out every time because it, and for good reason, how many comments a day do you get about your voice for real? A week.

Will: What’s up? Yeah, that’s good. Not usually none, but maybe, I don’t know. I guess I should ask for more praise about my voice. That should be my opening question. Like, do you guys like my voice?

Matt Mulcock: You probably should. How’s my voice guys? Yeah. Don’t maybe don’t ask people that that might get a little weird, but I just assume maybe you, I mean, I get comments about my voice sometimes and, your voice is, I mean, 10 acts better, but anyway, ⁓ we digress. We’re here talking about, red flags to help Dentist avoid being taken advantage of from bad investments.

Will: Yeah. Maybe, yeah.

Matt Mulcock: ⁓ yet another, what I’m coining, think we’re going to start calling these podcast remixes or maybe podcast refresh series. I don’t know yet. ⁓ I make things up as I go a lot, but we’ve been going back into the archives of episodes since the show was coming up on 10 years this year, going back in the archives and finding, ⁓ episodes we feel like are still pertinent 10 years later. And just kind of recycling and refreshing and seeing, we still believe this stuff or are there things that we need to update? So today would be five signs you’re getting pitched a bad investment. And will you and I were talking before we went on, how many store I was like, you have a story about a bad investment that your client’s been pitched? And both of us were like, how much time do we have? We could just tell stories. Just start rattling off.

Will: Yeah, just start rattling them off.

Matt Mulcock: I mean, again, there are endless stories that we get time and time again. Do you have, without identifying obviously any individual person, do you have any fun ones that you’re like, ⁓ this is like the craziest one I’ve, I’ve heard anything that comes to mind initially of just like, and we wouldn’t call it bad investment, just like fun, crazy investment, maybe anything that comes to mind.

Will: One of the most unique ones that I heard was, ⁓ just this somehow, like, again, I’m no idea how this, like my client even got involved in this, but he got pitched to be some seed investor in this new protein popcorn. I feel like they’re making pro like everything is now protein. Like you can. Yeah. And I think that’s probably kind of awesome. Yeah. It was the official, it was the official popcorn of the UFC somehow. So I think.

Matt Mulcock: Yeah. Everything protein. Yeah. Which I fully appreciate. Yeah, I love it. I didn’t know they had that.

Will: I don’t know if they have an official popcorn or an official like pickle of the UFC. don’t know. Like it’s an interesting like niche topic, but I don’t, I don’t think he ended up investing, but I remember thinking like, wow, like how did we get here? How are we talking about protein popcorn?

Matt Mulcock: Yeah. Yeah. How did we get here? Also, I kind of want to protein official protein popcorn of DA. We should maybe talk to them about, love popcorn. Yeah. I love it. ⁓ yeah, I’ve seen it. I’ve never seen that, but I’ve seen a ton of different, and we’ll talk kind of the whole point of this episode is to talk about kind of red flags to look out for, but yeah, a ton of things getting pitched to dentists. ⁓ we’ve talked about this a lot.

Will: Yeah, we should get that. We should have them sponsor us. This is the official protein popcorn.

Matt Mulcock: in our business, Will: , the core problem that we’ve been trying to solve as a business that’s out there that’s pervasive is that dentists retire on average eight to 10 years later than the average American. And one of the main reasons I think that is one of the top five to six reasons that is, is this topic here, that dentists are heavily, heavily targeted by bad investments. ⁓ for, I think for various reasons, but yeah, I think of all the professions and people out there, think Dentist are probably targeted more than most. So would you say that, would you agree to that?

Will: Yeah. I mean, I think a dentist has the financial means to invest in this kind of stuff. So I think that’s why they are ⁓ identified by these people looking to raise money as, this, this person’s probably got some money lying around. Let’s go talk to them and see if they’re interested in investing. And, it’s very obvious in our, you know, just seeing it from our clients, how many of these we get brought to us at all. The email subject line always says like, enticing opportunity or interesting opportunity or something like that. And so yeah, yeah, no.

Matt Mulcock: Always, yeah. No brainer, yeah. I got it. And I, yeah, we get so many of these where, and by the way, we’re not saying this, even though we joke around a lot and we like to have fun. Like we, truly are not saying that any of this, or at least we hope we don’t come off as non-empathetic or disparaging in any way. And, ⁓ like patronizing in any way we’re going to talk about this, but I guess we’ll maybe start here. We understand. We understand why it is so tempting. And we’ll, again, we’ll get more into this, but we understand why it’s so tempting to want to find a shortcut or to hear a pitch from someone. Cause the other part of this being that Dentist is really small. So I think these things kind of circulate around and we understand why it seems appealing. Like this seems like a pretty easy way to fast track my path to, to riches. That’s just human nature. And so I guess we’ll just start with that kind of caveat. Like we get it.

Will: Yeah. I always tell clients that like bad investments don’t usually look bad upfront. And again, maybe they always look exciting. They usually are like some confident sales pitch around like this is going to be the next game changing thing and this new product or software or whatever it is, protein popcorn is going to like take over the world. And it’s hard to recognize and to differentiate between, you know, the sales pitch and like the actual business model.

Matt Mulcock: Yeah. Yep.

Will: Things. So I think that it always is going to be like, man, we should do this or we should, we should throw our money at this, but it helps to take a step back and ask the right questions. That’s what we’re probably get into a little bit today.

Matt Mulcock: Yeah, we definitely will. So just to emphasize why this is so critical to get right, why this is, feel a really important topic and why we looked at the list of old episodes and like, this is definitely something to talk about. I think it’s super. So if we take a step back of like, what’s the whole point of this, right? Of what we do as advisors, what dentists advisors is in existence for it’s to help dentists get to a place of making work optional. Like if I boiled it down to one thing, that’s the, that’s what we’re doing is. Trying to solve the problem I mentioned earlier of this eight to nine year gap between the average American retiring at 62 and the average dentist retiring around 68 or 69. We’re trying to, to accelerate that process. And a big part of that is investing, investing properly. And, the fact that building wealth is basically just a series of good decisions and avoiding big bad ones. And that’s what we’re going to talk about today of these big bad decisions that can completely obliterate decades of, of wealth of wealth creation. It’s really just about avoiding. It’s not about hitting big home runs. It’s about avoiding big mistakes and the consequence of getting this wrong is huge.

Will: Yeah, for sure. think like we’ve the first part of this podcast, we’ve alluded to like maybe private investments or things that you’re going to get pitched. But there’s a whole side of this that could be poor investments within the stock market or within just regular every day. What seems like it should be a decent normal investment that everyone’s buying or everyone’s going after. It’s not just these private things. It could also be you’ve spent your whole life building this wealth and then you make one poor investment decision in the stock market and everything.

Matt Mulcock: You’re out. Yes.

Will: Kind of comes undone.

Matt Mulcock: So yes, I’m so glad you brought that up, Will: . I think it’s important to, as we get into the details of this, to your point, a lot of it always kind of comes back to like these bad private investments, but you’re totally right. It can be in any investment. And I think with that being said, let’s ⁓ outline and really kind of try to make this more simple. Cause I think investing can feel super, super complicated. But let’s just summarize, there’s only, if you really boil it down, there’s only three places, three broad categories you can invest your money. There’s only three. There’s private investments. There’s the public markets, and then there’s real estate. That’s it. Underneath each of those or within each of those buckets are a ton of different ways to go, but that’s really what it comes down to. Private, public, and real estate. And so hopefully that kind of helps as we talk about this. You can be make bad choices or have a bad process or poorly invest in any of those three categories to your point.

Will: Yeah, exactly. And that’s what I think a lot of people, they’re all created equal and you can treat them all poorly if you have a bad process for making these decisions or if you’re not asking the right questions. And to your point, if your behavior, if you have poor behavior with interacting with any one of these investments, some of these types of investments are riskier than others for different reasons. But, ⁓ but yeah, our whole goal, like you said, is to get, get dentists to make work optional went on their terms. And so a lot of, ⁓ I think one of the Dave Ramsey quotes that I’ve heard is like, our goal is to be between you and the big mistake, right? Between you and the bad decision, right? And making sure that you, as much as it is like helping you make good decisions, it’s also like keeping you from making bad decisions. It’s, it’s, it’s a shield in a way to help you from doing anything stupid that derails everything.

Matt Mulcock: Yeah. Yep. It’s, it’s so true. That’s almost more critical. It was like, there’s going to be, there’s a lot of little decisions that add up over time to build wealth. And then there’s a handful of big, bad ones to avoid that are super high consequence. They don’t come around all the time, but to that point it’s, you got to have both. Um, so let’s, we alluded to this a little bit, but let’s maybe summarize some, thoughts around. And again, our understanding around and truly like, having empathy and just understanding why it’s so tempting for what we see dentists kind of being tempted by these things and being targeted. What are things that come to mind for you, if anything around like why these, again, quote unquote bad investments or these bad investment behavior, ⁓ why is that so tempting for dentists in your experience?

Will: I mean, I think one of the big ones is you want to feel like you won. You want to feel like, if, so one of my clients in particular has a neighbor that brought him or an investment recently. And I think there is a little bit of maybe ego tied into it where he’s like, yeah, I want to, I want to be the guy that’s got cash to show these people in my inner circle that I’m investing in this and maybe a little bit of a status play, right? Where it’s like, I’ve got, I got some cash I can take some risks and this is probably gonna be a situation where I make a lot of money from this. So I think that’s one of it is it’s just human nature to wanna feel like you’re getting ahead and you’re putting yourself in the best light possible. Again, it’s not really like a bad thing and I don’t think people are doing that maliciously but it just happens.

Matt Mulcock: Yeah. Yeah. I think it’s a great point. And I love that you said it’s not a bad thing. We’re not, we don’t, we’re not disparaging that and saying like, man, don’t go chase status. I would say to that, I just want people to be honest about it. Like if, this is like, what is driving this decision? And if it is like, man, I just, you know, I’m giving in and people don’t always do this, but like, I’m just like, all my friends are doing it and I don’t want to lose out. I’ve had a client tell me this. That kind of his, his like study club group had like gotten into this investment and he was honest. He was like, man, it would really suck if like they all got into it and Dom and it went off and I didn’t, I felt like I kind of have to do it. It was almost like, can’t live with myself if they win and I don’t. Which is fine. Which again, just be honest about that. It kind of reminds me of like when people try to

Will: Yes. for sure. Yeah.

Matt Mulcock: justify a personal residence purchase with financial justification. Like you hear this all the time, like, well, it’s a great investment. It’s like, no, it’s okay that you just want to like live in a nice house. That’s totally fine. But I think I really do think it’s important to start with honesty for yourself of being like, man, I don’t know. I’m just taking a flyer on this. And the reason I say that is because once you’re honest about it, you can start to build some guard rails around it. Like

Will: Yeah, right.

Matt Mulcock: Cool. You want to take a flyer on it? Let’s go build your plan around that, that, that ability, that, that chasing status or whatever it may be.

Will: Sure. And I think that’s, I put myself in the shoes of watching all my friends make money and like, you know, it would, it would feel, there would be FOMO. You would feel like, man, like there it’s working for them right now. It may not be this long-term thing. And that’s the, that’s the problem is like short-term returns usually never tell the whole long-term story or short-term success usually never tells, you know, what has any indication of the future. So.

Matt Mulcock: Or, the success you hear about is never the whole story. Right. Yep. Yep. Yep.

Will: Sure. You hear about the wins and maybe not the losses or you hear about the returns and not the risk. So with all that said, yeah, I mean, again, that’s to your point. This is why it’s tempting. I think another reason it’s tempting is because we want to people want to take a shortcut. That’s just human nature. If there’s something in front of them that’s like, hey, you could do this, this and this. And it’s boring and like super not really sexy. And it’s you’re going to win. It’s the tortoise and the hare. Right. The hair was like, I’ll just like be fast and chill out. And then you end up losing the race. The tortoise had to go slow the whole time and he ended up winning. So I do think that our brains are wired to take shortcuts and we want to try to skip the line if we can. I want to skip the line. If I could, like, if I could skip the line at Disneyland, I would, it’d be great.

Matt Mulcock: Yeah. Yeah. Hey, if I could skip the London Disneyland, maybe I’d go well, maybe I’d actually, maybe I’d actually find myself at Disney. That’s a good point. No, I think that’s totally true. And I think, ⁓ not that we’re dentists, but we work with a lot of them. Dentistry is a grind being a practice owners, a grind managing a team, worrying about marketing, doing, doing anything for a long time. I don’t care if it’s dentistry or otherwise, like it becomes a grind. And I think.

Will: Yeah, for sure. I think you would love it.

Matt Mulcock: there tends to be, and actually I want to ask I think there tends to be kind of a demographic, meaning age demographic specifically, and like career stage that we start to get more questions from dentists about this. Would you say that’s true? Have you experienced that as well?

Will: Yeah, I do for sure. And I think it depends on the person, I would, I’m curious what you think. I think, is it the more established later mid to later career dentist? Yeah.

Matt Mulcock: Yeah. Yeah. I think it tends to be a mid to near, not even end of career, like established for sure. They’ve built up some wealth. They’re what used to be problems are no longer problems, meaning they’ve got a bunch of liquidity. They built up a good brokerage account. Their net worth is pretty sizable now. They’re no longer super, super concerned about quote unquote being on track. They’re maybe a little bit bored. You know, I think that tends to be the main group we see starting to ask these questions, which is like, which is ironic because if you think about the balance sheet, the actual like finances of it all, like these are the people that probably need this stuff to least like the shortcut, the least like they’ve kind of won the game. So, I’ve actually had specifically a few clients that are, that I’ve literally used that terminology like.

Will: Yeah, for sure.

Matt Mulcock: You’ve won the game. we just having fun now? Which is totally fine. That is absolutely fine. And sometimes they’ll be like, yeah, I’m just having fun. Let me just go throw some money at this thing. And I’m like, cool. But like, this isn’t about winning or losing the game. Cause you’ve already won the only chance. The only opportunity here now is for you to lose by you going too hard on this.

Will: Yeah, I think I love that. And I think, I think there comes a point in somebody’s life where you said it, like, maybe they’re a little bored. Maybe they’re kind of like, we’ve done all the, you know, the normal diversification and investing and it’s all the boring stuff. We’ve got this portfolio built up. And then Ryan, think, I don’t know if Ryan coined this, but it’s a, it’s a thing where it’s like, you know, ⁓ random acts of finance or shiny object syndrome, but you just start seeing stuff and you’re like, Maybe I should go do that. Like that’s different, right? I’ll go chase that shiny object. And it’s fun. Again, like you said, it’s probably not going to make or break your retirement. If you have the right decision making process around it. And if you’re able to like treat it, like if I, if nothing comes out of this, that’s great. I’m literally taking a bet on this thing. That’s fine as well, but there can’t, you know, if you don’t have the right decision making process, then maybe you end up overextending and maybe it ends up actually costing you or being a painful decision that you make.

Matt Mulcock: Yeah, yep. Yeah. Yeah. Totally agree. ⁓ and I, yeah, the random max of finance that was coined long ago. And I think it’s such a good way to put it. ⁓ okay. So let’s jump in. I also realized that I titled this, this is an oversight by me. I’m calling myself out right on the show here. I titled this and I even said it in the intro five signs you’re getting or your, your, ⁓ what did I say? Five.

Will: Getting pitched a bad investment.

Matt Mulcock: Getting pitched a bad investment and I put seven on the list. I just couldn’t help myself. So it’s actually seven signs, seven signs you’re getting pitched a bad investment. No, I think these are really just like red flags things. This isn’t like an end all be all like this means, this means that it’s a bad investment, but I think it should make your ears perk up a little bit. It should probably be sending some red flags up kind of as we go through these. So, ⁓ the first one is what we’re coining kind of the whisper test.

Will: Yeah.

Matt Mulcock: Um, and not, not literally a whisper, but you know what I mean, right? When we say this, like if someone’s kind of like catching you in the corner at a family party, like, man, got to talk to you about this thing. Like, you know, like, again, I think we all did the whisper test. It’s like the person that has to kind of keep it secret.

Will: Right. like that. Yeah. And again, you’re going to get an email, so it’s not going to be a whisper, but it’s going to say something like, Hey, yeah, this is not, you know, I’m only bringing this to you. Yeah.

Matt Mulcock: Download, Yes. Yes. Yes. I’m only bringing this to you.

Will: Or like, I only have five seats. yeah, know, kind of get in or get out because this is not for everybody.

Matt Mulcock: Yep. Yep. Yep. Yeah. Yeah. I think that’s a great way to put it. We, I’ve seen emails directly from clients who afforded them and saying, I’m only bringing this to you and like two other people. And you know, that, that in and of itself should be, should be a bit of a red flag. And I, and I guess this goes to that saying, but maybe we’re not saying that immediately means don’t do it.

Will: It’s just differentiating the sales pitch from the actual investment. Yeah.

Matt Mulcock: Yes. Yep. Yeah. And it just means maybe we should be asking a few more questions and going into this a bit more thoughtfully. ⁓ you’ve you already mentioned number two, ⁓ kind of in the same, ⁓ kind of within the same category, but the urgency or deadlines kind of the, like you just said, ⁓ Hey, we’ve only got a few spots left, man. I’ve only, there’s only one, one more seat on the bus for you. we got it. I got to have your answer by Friday.

Will: Sure. Yeah.

Matt Mulcock: Like that, kind of thing again, I’ve seen this, I’ve seen this exact pitch and you know that, and there’s always going to be some justification for it. this person dropped out last second. Like we only, got to have this answer. This goes with DSOs by the way, too. ⁓ we’ve seen this where Dentist are getting pitched to DSO and they’re like, we’re doing a recap on in, you know, next month, but you got to get in now if you want to be part of the recap. That’s a huge red flag to me. I don’t even need to see the numbers to know like that’s it. That’s, that’s a huge red flag.

Will: Yeah, for sure. It feels like bait. just feels like a good investment is going to be a good investment. Don’t matter, you know, the timing of when you get in or when you get out. And again, you could parallel this with the stock market. If somebody’s telling you like, Hey, you got to get out or get in on the stock market by this date with this certain investment or else you’re to miss out. that’s also, you know, timing is usually not what you want to do in the stock market either.

Matt Mulcock: I’m really glad you brought that up, Will: , because as we said earlier, there’s the three places to invest and we tend to, I think it’s easy to tilt this towards private investments because that’s what we see a lot of in the kind of bad investment type category, but you’re totally right. You, you see.

Will: You could do the whisper test on another type of like that too, yeah.

Matt Mulcock: Totally. You could do that on a, a four, four plucks, right. In an opportunity zone or whatever. ⁓ so yeah, you can do the same test on, on any of those asset classes. ⁓ and then to your point, you could do this kind of urgency deadline. I think it applies really well to the stock market, people selling day trading courses or trying to make you believe that, ⁓ they know what’s going to happen in the market or like something big is coming. You better get out now. Like.

Will: Yeah.

Matt Mulcock: That type of mentality can lead to bad decisions and bad investing within the public markets too. Great point. ⁓ the number three, actually alluded to this earlier, but the number three kind of red flag is what we’re calling kind of a no brainer or guaranteed pitch. The, the, the, if it’s just like they don’t use those terms specifically, but the implication that there’s no risk, there’s only upside.

Will: And I would argue that if it’s a good investment, I would hope that whoever’s pitching it to you, is not a good sales tactic, obviously. So it’s not why they do it. I would hope they would lead with, here are the risks. Like this is actually the worst case scenario. This is how liquid we are. is what, this is who gets paid if it fails. Like these are all, like, I wish that would just be part of the pitch, but if if it’s, if the pitch focuses only on return and says nothing about risk and you have to like, you know, prod and.

Matt Mulcock: Yep. Yep.

Will: Ask like, Hey, what are the, what’s the downsides? Like this obviously isn’t can’t, there’s nothing that’s a guarantee or a no brainer. So if this in the worst case scenario, what does this look like? If that’s not part of the pitch, then that tells you all you need to

Matt Mulcock: 100%. If, if, if they’re not talking about risk in the discussion, you just found the risk. That is it. They’re not even talking about it. That should be, this to me is actually a huge one. This would be as close to walk away as you could possibly get. think is them not actually being honest and transparent about to your point. Well, I agree. Let’s start with the risks of what this, what you’re up against. ⁓ cause this violates the fundamental principle of investing. There is no investing with that risk that the potential return you’re getting requires you taking on risk. That’s just fundamental to all levels of investing. That’s the only reason that you’re, you have any expected return of any kind. ⁓ any premium we’ll call it, ⁓ any premium potential would be you’re taking on risk. So this is a big one for us. If you’re getting a no brainer, guaranteed tight pitch or only upside or, ⁓ you know, Hey, my buddy’s buddies buddy did this. And, know, he’s promised me there’s no, like, that’s a huge, huge red. So that’s again, close to walk away. should have ranked these, but that’s close to walk away level right off the bat for me.

Will: Yeah, I just think that like, again, a lot of times in the way that we engage with clients when they send us these pitches is usually I’ll send a list of questions back and we’ll just say like, Hey, ask him this, this, this, and this. usually it’s something around like, Hey, what are the risks? Can you explain the risks to us? And it’s pretty obvious when you get an email back. It like, it’s very obvious if it’s somebody who’s thought this out or not, or if it actually taking some time to acknowledge the real risks or not. That’s a real easy way to, you know, kind of sift through the good opportunities and the bad opportunities. And then once you know the risks, like if they’ll just say, yeah, the risk is that you lose all your money. That’s great. As long as you acknowledge that and know that that’s a possibility because like these big VC firms, they’ll buy 10 companies and hope one pans out. They know that. Like that’s the whole strategy with a lot of these private investments is like, let’s buy a handful. One will go big. Nine will fail. And we’ll be okay because the one that went big, we were happy about. But for dentists that are investing in like one randomly here and there, it’s a massive risk, right?

Matt Mulcock: That’s such a good point, Will: . I’m glad you brought that up of like the position you’re in as the investor versus who you’re investing with is such a critical piece of this. And that’s the perfect example that the VC structure is set up to account for that, those losses and like mitigate for that with their whole portfolio. But the individual investor, like the dentist, does not have the same structure. Such a good point. I’m really glad you brought that up. ⁓

Will: Yeah.

Matt Mulcock: Okay. What are we on number four of seven? Not five. number four, I want to ask you, will that’s on the list. What did you think of? the number four, just again, sign a red flag. You want to consider and ask more questions is celebrity endorsements. Who, what did you think of when you saw this on the list?

Will: ⁓ I mean, I guess I thought of like…

Matt Mulcock: I thought of one person a couple of years ago. Yeah. Yeah. Yeah. Matt Damon. Oh, fortune favors the bold. Wasn’t it? Yeah. Yeah. Although there’s a lot of people right now listening to this being like, yeah, look, work what happened.

Will: Was it the Bitcoin stuff? Yeah. Matt Damon. Yeah. What was it? What was the quote? yeah baby, fortune favors the bold, let’s go! Yeah, they’re like, yeah, we bought Bitcoin when Matt Damon told us to and look, we actually were pretty happy about it when LeBron James was sitting on his bed telling him that he should have bought Bitcoin in the commercial. We did it. Yeah.

Matt Mulcock: Yep. Yep. Yeah. Poor example by us of bringing up that celebrity endorsement because it clearly is working for people. ⁓

Will: But this is a lot of these are actually like that’s one that was pretty mainstream and it was the Super Bowl commercial grade. But like how many celebrities have done a separate type of cryptocurrency that’s blown up in everybody’s face.

Matt Mulcock: Yeah, yeah. it’s so true. There’s been so many over the last few years. it’s almost like you can see the script play out over and over and over again. You know, what’s going to happen. The second certain people become like internet famous, right? Like, I’m just going to say it. This might get edited out. Who knows? But the Hawk to a girl, right? So you could literally see what was coming. She became famous for nothing, a street interview became like the biggest thing. No one could stop talking about it. And then what happens next? She’s now, I don’t even know where she’s at now, but she was facing at one point jail time for crypto scandal that she endorsed. So that’s we’ve gone, you know, one end of the spectrum to the other. not saying it’s always bad, like with the bad day one, whatever, but I think it just goes, like kind of would raise some red flags of like, okay.

Will: Yeah. Yeah.

Matt Mulcock: You’re obviously putting quite a bit of money into endorsing this with a celebrity that should just again, beg more questions. The other thing I thought of here, Will: is we’re using like Matt Damon as an example, big, big it’s celebrity, but there’s examples in dentistry where like celebrity or dental celebrities doing similar things. I’m not going to name names, but using their platform to, to pitch.

Will: Pitch stuff, yeah.

Matt Mulcock: Crappy investments with really, really bad actors. Some as of the last year or so have gotten really bad. Those things you want to be wary of as well.

Will: Yeah, it’s, it’s not even always celebrities. Like it could just be like, ⁓ somebody in your neighborhood that’s really well to do, or like, could be just borrowed credibility from other like, or a big firm is backing it. Right? Like I’ve heard that before where it’s like, yeah, Sequoia Ventures or something is like backing this. So I got to get into this because these guys are the guys who invested in so-and-so company early on.

Matt Mulcock: Yeah. Yeah. It’s like, I didn’t know who they were yesterday, but I think they’re actually pretty legit.

Will: Yeah. So that’s always, you’re always going to get pitched that as part of the pitch is like, here’s all the people that said yes to us already. And if you don’t, then you’re not as smart as those people. But I just think again, going back kind of to the VC common is like they it’s you’re playing a different game, their risk tolerance, their liquidity, their tax situation, everything these people like usually probably the celebrity, even the celebrities, like if it, if this misses, they don’t care as much as maybe a dentist who’s, who’s taking, yeah. Right.

Matt Mulcock: They got paid!

Will: And the VCs are the big firm that’s investing in it. They don’t care if it fails. That’s just, they just write it off as one of their losses.

Matt Mulcock: Yep. Yeah. Yeah. It’s so true. Yeah. The celebrities already got paid the V C like, Here’s another thing as you brought up VCs that we’ve talked about before, but I promise you here’s, here’s another red flag. I’m just going to throw out there. So I’m on the list. So we’re going with eight, but another red flag is if they’re coming to you, this is in the private space specifically, but if this group’s coming to you and being like, it’s only $50,000 to invest. That’s a huge red flag because I promise you these VCs and private equity groups, I’m just going to say it. They’re not messing with 50,000. Like it is an administrative burden on any legitimate group, any legitimate private equity group, any legitimate limited partner or sorry, general partner, GP that’s trying to get limited partners. It is administrative burden to have a hundred or a thousand $50,000 investors. They would never want to do that unless they absolutely had to. That means they’ve exhausted the options of the legit, legit money. And now they’re trying to come down to the smaller money and be like, it’s only 50 grand. That should truly, that should be a little bit of a red flag.

Will: Yeah, I like that. That’s a good call.

Matt Mulcock: Just, just throwing random ones out as we go. Maybe there’ll be more, maybe we’ll get to 10 as we go. ⁓ all right. Number five, but I guess really six because of my bonus one. ⁓ this is a big one. We see a lot and resonates, I think a lot with dentists, which is, ⁓ the red flag is, man, this is a huge tax play or they’re leading with tax savings. Well, I know you’ve seen this a ton.

Will: We might end up with 10 Yeah, it’s tough because dentists are, you guys have, you make a lot of money, you have high taxes and it hurts. It’s natural to be like, man, I gotta lower my tax liability. How are all these ultra-Uber rich people not paying any taxes? Like that’s you hear, right? And it’s like, well, dentists.

Matt Mulcock: And it hurts.

Will: are not like these real estate moguls that have massive depreciation deductions and riding off all these losses and have a way to like actually get to a lower tax liability. It’s a service business where you make a lot of money and at some point in your career, you kind of run out of deductions a little bit. And so you’re just ending up paying some high taxes. So then you get into this arena where, okay, we can go, if you go put money into something, then maybe you can get a tax benefit out of it, right? You go throw money at the some, I don’t know. technology that they’re developing that gives you this tax deduction and who knows if it’s even going to be anything, but like, you got a tax deduction out of it. What we always say to this is don’t let the tax tail wag the dog. Like don’t make an investment for the tax benefit. It’s got to be a good investment and underlying investment that you believe in that you maybe the tax is the cherry on top. ⁓ but it’s not, it’s not the whole, the whole Sunday or whatever, right? Like that’s not the entire.

Matt Mulcock: Yep, yep.

Will: that why you should be investing shouldn’t be for the tax reason.

Matt Mulcock: So true. just, this goes, this goes with, ⁓ beyond invent. Well, no, I mean, the main investment that a dentist makes is in their dental practices and our, our opinion, right? That’s the, the, the engine of the wealth, the wealth engine that helps you kind of like lead the charge on all of this. But this goes with, with that decision as well. So I had a conversation with a young dentist today, ⁓ not a client and we were, he was asking, so he’s an associate. And he said, ⁓ Hey, is it true that if I’m a practice owner, cause he’s making this decision, like, do I go start a practice or do I, do I stay an associate? And he said, Hey, is it true that if I buy a practice, I’ll have way more tax deductions and that alone will like, you know, that, that, makes it worth it. And I said to him, I was like, I would never advise you to start a business of any kind. In this case, dentistry or buy a practice because it’s more beneficial tax-wise. That’s just not going to be the main reason. Like, yes, you do get some tax benefits for sure as a secondary benefit, but you would buy a practice because it leads to a higher probability of after-tax wealth and higher income. but that, I think that’s what a lot of people, just people, but dentists specifically think like, should I do this for the tax benefit? And it’s like, if that’s the number one reason, that’s a huge red flag that it’s gonna end up being probably a bad investment or not worth your time.

Will: Unless you’re okay with it, knowing that you like, again, unless you’re okay and you acknowledge the risk, like, hey, this money could go away, I saved the taxes on it and whatever, like I’m okay with it. But you just have to acknowledge like that’s why you’re doing it, not like, this is going to be this great investment and I get this tax benefit.

Matt Mulcock: Yeah. Yeah. It’s like, I’m to lose all this money. I’m going to lose all this money. It’s going to be a net negative to my wealth, but Hey, I saved $40,000 on my taxes. It’s like, well, no, you lost a hundred grand. lost a hundred grand. Yes. But I don’t know if people often think about that too often. So I think, I think the red flag is before you start chasing deductions, before you start trying to do

Will: Yeah, lost. You lost 100 grand. Yeah. So you net negative 60. Yeah.

Matt Mulcock: Short-term rentals. hear that I’ve heard this a lot. Will: the short-term rental loophole. This is, I think there’s something going around on Instagram lately or something, because this is coming up. Yeah. Tick tock or something, but it’s coming up a lot more of people trying to get into that. ⁓ and again, not saying unequivocally don’t do it, just saying this should, should probably put the red flags up a little bit. If someone’s pitching you on the tax, the tax benefits. ⁓ yeah, to combine these two.

Will: TikTok,

Matt Mulcock: If the pitch is all about tax savings and there’s no risk involved, that’s like the mega load. That’s like, that’s a double red flag right there. So, ⁓ okay. Number, I don’t even know what number on rain six, but really seven with a bonus, ⁓ no documentation or analysis. So kind of the, just this like vibe investing. ⁓ I think this kind of goes along. There’s a, there’s a really easy test to this. If he’s ever pitching this to you, can they explain it to you clearly? in a short period of time for you to understand it.

Will: Yeah, for sure. I love that one. It shouldn’t just be like, hey, you have some faith that it’s going to work out. They’ve got to be able to say it in plain English. Who makes money? Who gets paid? What could go wrong? can’t just… And a lot of this is leveraged with trust. If it’s a neighbor that’s pitching you on Vibe Investing, they’re leveraging their trust to say, hey, trust me, this is going to work out. But I mean… As we’ve always said, good investing should be boring. And the more vague the pitch is, the bigger a red flag that is. Or truthfully, the more vague, but also the more complicated. If it takes 20 minutes to explain how you’re going to make money and get money out of this, then those are two sides of the spectrum where it’s like, all right, you got to be wary if it’s too vague and too detailed.

Matt Mulcock: Yeah. Yeah. Yeah. It’s a good point. ⁓ I’ve seen this happen a lot where a client will say, will you check, take a look at this? I got this pitch, whatever they sent over all the disclosures, like all this stuff. I’m like, cool. Send it over. We’ll take a look. We do this all the time. We have no problem with reviewing this stuff. In fact, we would rather you send this stuff, let us look at it and just help you assess the, legitimate of this, but almost without fail, the disclosures they say are like the documentation is like a one page.

Will: Yeah. Yeah, like I’ve seen a one pager that was clearly made by chat. JBT and you’re just like, dude, this is like the person put no thought into this. had chat. JBT whip up some quick analysis of like ROI and it’s got all the bullet points and dashes. And you’re like, this is, they didn’t even put any thought into this.

Matt Mulcock: To one pager. It’s like a, 100%. Yeah. Yeah. we’ve seen a ton of that. So, so any legitimate investment investment is going to have legitimate answers to really straightforward questions. I like what you said earlier, like who’s getting paid. What happens if this goes wrong? What’s the debt structure? I want to see the balance sheet. Who else is investing all

Will: If you’re in talks with a DSO and they can’t explain all that stuff, that’s a red flag.

Matt Mulcock: Same thing, same exact thing. ⁓ that’s even more. It’s like, you need to understand the whole structure of that thing. Again, debt structure, who else has invested? What’s the cap table look like? All of that stuff. okay, last one here. This is more specific to the investor, the dentists themselves, but a red flag here is if this doesn’t fit your plan, your specific plan and your specific life might be a good deal, but. There might be some might sound great, but does it fit your actual life and plan and your career stage? Any thoughts?

Will: love that. I just think it’s true. Like you’re playing a different game than everybody else and you should win at your game, not try to beat others at their game. you stay in your lane. It’s like golf. Just play your game, hit your shots, try to do the best you can. Right. And if you start getting distracted by shiny objects or other people or FOMO or all the things we’ve highlighted here, like all these bad, kind of normal behavioral, but damaging to your investment.

Matt Mulcock: Yeah.

Will: decision-making process, then stay in your lane, just try to stay in your lane. If you have a plan, stick with it. What was the quote? The best investment plan is one you can stick with. I genuinely think that’s the quote, right? So it’s like, if you can stick with it and not get distracted, then you’re going to get from point A to point Z so much faster than if you’re hopping around and taking all these different detours along the route.

Matt Mulcock: Yeah. So true. A specific example here. Well, I’ll say it’s hypothetical, but I think it’s specific to dentistry of an example of this would be, let’s say you’re a couple of years into or you’re out of school, you’re an associate and you have a plan to buy a practice and you built up some liquidity. You’ve talked to some lenders and you’ve got it all structured to make your top priority of buying a practice happen. And you’re going to execute on that. And then a buddy calls you and it’s like, man, this is, this is legit. This, investment we got in it, you know, it’s going to require X X amount of your, of your liquidity, but this is going to put that practice purchase at jeopardy. ⁓ even if that investment pops and does what it’s supposed to do, that would be an example of this does not fit your plan. Don’t even look like I wouldn’t even be addressing or looking at any other investment, I don’t care what the numbers don’t even matter at that point. It’s does this impede my desire to execute on my number one priority, which is owning a practice. That would be a huge thing to look at.

Will: I love that because we’re huge on practice ownership is where you should focus. And if it’s an investment that makes you illiquid or something that derails that focus or derails your ability to invest your money in your business, which is we always said is the best investment a dentist can make is own a business and make it a great business. that’s the, that is the, the engine that’s going to drive the rest of these other decisions. You won’t be able to make these other decisions if you don’t get the, income engine correct from the get go, so.

Matt Mulcock: Yeah, so true. So what does the dentist do out there? They’re saying, okay, understand the red flags. They feel more prepared to be able to ask more questions or at least know when to ask questions. The question is how do you protect yourself now? ⁓ What comes to mind for you Will: on steps that dentists can take or things to be considering to protect themselves from this?

Will: think have a plan. I know that’s cliche, but work with an advisor and have a plan. Have somebody in your corner that can help you make these decisions. You’re not just shooting at the hip when something comes across your desk. Usually there’s two spectrums of having a plan. If you don’t have a plan, not only are you going to be stressed when you have to make these decisions, you’ll just do random acts of finance or shiny object, those kinds of things. Or you’ll just have analysis paralysis and you won’t do anything. Like you won’t invest anywhere because you’re like, I’ll just keep all my money in cash. Have a plan, have something you can stick with, write it down or check in with it often and keep stick to that plan. Follow it.

Matt Mulcock: Yeah. Yeah. Totally. Totally agree. ⁓ kind of in that same vein, to the broader plan, understanding your whole like personal financial plan is having an investing system. It kind of goes along the same lines, but I think automating as much as you possibly can. and putting that allowing you to put your focus elsewhere, like to have fun in areas of your life that are not investing, like investing honestly should not. be fun unless you’re Rabih Dimachki ⁓ like it honestly, for most people shouldn’t be the, and the more excited you get about it, probably a bigger sign that it’s you’re getting caught up in the emotions. So I think the more you can systematize, I love what you’re saying. A Kavan overall plan and, and, and then a system that’s as automated as you possibly can, whether that’s through a system you’ve built or you have an advisor doing it for you. Systematizing I think is a huge protection plan as well.

Will: Yeah, take the guesswork out of it. The decision’s made. You’re not making a decision every time you’ve got extra money in your paycheck. You’re just like, know this is what I’m doing with this because the decision’s already been made.

Matt Mulcock: Yep. think a part of this too, to come back to your idea, the first one, which I think is critical is like having the plan. I, we’ve talked about this a lot and I know this gets, sometimes I can like feel the, the eye rolls through the, through the stereo, through the speaker. ⁓ but I think, I think there’s a lot of work that has to go into, ⁓ at some point or another, like what’s the point of all of this? Like understanding your purpose for even building wealth in the first place. The Simon Sinek understands your why I know that’s become a bit cliche. That’s been, you know, just, you know, it’s out there across the, know, ever since his Ted talk and books have been written about it. I get that it’s a bit cliche, but I also it’s cliche for a reason. And that doesn’t mean it doesn’t mean it’s not important. And it’s a lot of the work that we do of pushing clients to really dig into the why and the purpose behind this because. Getting rich can’t be the purpose entirely because at some point that’s going to start to be like, okay, well, what’s like, what’s next? So there has to be some work put into that plan specifically around your purpose.

Will: Love that.

Matt Mulcock: ⁓ I think another one here that I’ll throw out, we’ve mentioned this and, ⁓ is having a third party involved in some way. Having, having a checkpoint, having an obstacle. You said it earlier, having someone in your way to hold you accountable, hold you back from making mistakes and sharing the burden of decision-making I think is critical.

Will: Yeah. You’re like, it’s human nature, you’re blind. Sometimes you can be blinded by, ⁓ influence or FOMO and all that stuff. And having somebody who’s completely unemotional to the situation is sometimes the voice of reason you need to hear to just be like, yeah, you’re fine. You don’t need this. It’s not a need and you’re not going to, you know, so why, why do it?

Matt Mulcock: Yeah. And on the flip side too, I’ve had situations where client comes, brings a deal. We vet the deal. I, we ask a bunch of questions. They, you know, go through the whole thing and they understand the risks. And then we’ve built guard rails and we say, great. You’re going to put X percent. You’re going to put 3 % of your portfolio into this thing. You know that it’s very possible you could lose this, but they feel, they feel great. They’re like, okay, I know what it is. I’ve put guard rails around it. It’s built within my plan.

Will: for it.

Matt Mulcock: I know what’s happening. It scratches an itch for me, ⁓ for whatever that itch is, like it’s all out there in the open, but going through that process was what they needed to feel comfortable with that decision and minimize the regret of whatever the result is later. So I think that’s a big part of this too. ⁓ and then like you said, or like we were saying, just removing the burden of decision-making. I don’t know how many times you’ve, you’ve had this, well, I think both of us probably equal amounts of times of people coming to us and being like, I know what you’re going to say, but I want to talk to you anyway. And then literally all we do is ask some questions. And then by the time the conversation is done about the investment, whatever it is, they kind of like answer their own question. Like, yeah, this is dumb. This doesn’t fit. Like they just know it, but they needed that validation and that presence of an advisor being like, okay, like I just needed to do what, just to talk through it. So.

Will: Yeah. Just to talk through it, yeah. Yeah. Yeah.

Matt Mulcock: Whether it’s an advisor, a CPA, a business partner, someone that you trust, hopefully that’s an objective third party as a deal. mean, I wouldn’t say like your spouse can be, it should be involved in these conversations. Please involve your spouse. If you’re going to start throwing money around in private investments, but I think having a third party in some form or fashion is critical here. So, okay. I think we thoroughly hit seven or eight or 10 or 11, whatever red flags.

Will: Sure. Hahaha Yeah, I love that.

Matt Mulcock: of private investments, Will: . Hopefully, this is helpful. Any final words of wisdom that you have on this topic,

Will: I don’t know why this came to my head. just think like Morgan Howell has a chapter in his book that we love, The Psychology of Money, about like acknowledge luck versus risk and sometimes luck. Like I think some people that are listening to this like, well yeah, I made a good investment decision on this thing that went big and I made a lot of money. And there’s the story. Well, I guess I’ll just relate it. I was playing Candyland the other day with my kids and I…

Matt Mulcock: Heck yeah.

Will: I drew the cupcake, which takes you from like the beginning all the way to the end. Like just because you drew one right card, that was a lucky card, right? And I won the game. And then the next game I played, my son drew the cupcake. And then he also drew like the sucker that took them all the way back to the beginning, right after he drew the cupcake. So a of these, ⁓ a lot of these short, like shortcut, beware of shortcuts because shortcuts, if you hit a home run, on your first at bat in baseball, or if you hit a hole in one the first time you swing a golf club, you’re going to think, I’ll just do that again. Like that was easy. And I think you can get into trouble not having that solid investment plan because your overconfidence takes away the acknowledgement of luck.

Matt Mulcock: That’s such a good point. That’s a perfect way to end this. The confusion of luck with skill. That’s such and the confusion of the result with the actual process. ⁓ as our friend Daniel Crosby says, ⁓ you can be right and still be a moron. I love the way he summarizes that in his books. ⁓ I know you just said it perfectly. That’s a perfect way to end this. So, if you’re still here, you’re still listening. You’re one of the cool ones. We appreciate you. And if this is valuable,

Will: Yeah, I love it. Yeah.

Matt Mulcock: And you think there’s a dentist out there that needs to hear it. Maybe your buddy that keeps getting into private invest bad investments and, ⁓ and, and losing out. I’m just kidding. But if you, this is valuable and you think there’s someone out there that needs to hear it, we’d love for you to share the episode. We really want to share our education and share the good word and hopefully have a positive impact on the dental community. So we’d love for you to share that the show. and if you want to talk to us if you’re out there faced with these decisions of like, man, I do have these private investments that have come up. need another voice or someone else in my corner to help me through this. We would be, we’d love to talk to you. We’d love to hear your story and see how we can help. you just go to Dentist, Dentist advisors.com and click on the book free consultation button. We’d be happy to talk to you. ⁓ for now, we’ll thank so much for being here and sharing your wisdom. Everyone. Thanks for listening till next time. Bye bye.

Keywords: investments, sales pitch, business model, client advice, market trends, red flags.

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