Fan Favorite – 2022 Financial Benchmarks Are In! – Episode #371

Even though 2022 was a tough one for stocks, Dentist Advisors’ clients continued to grow their net worth through smart financial decisions. On this episode of the Dentist Money™ Show, Ryan and Matt examine Dentist Advisors’ year-end data for client averages for income, net worth, debt reduction, and more. How do you stack up as you advance on your own path to wealth?

 

 

 

 

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Podcast Transcript

Ryan Isaac:
Hello everybody. Welcome back to another episode of the Dentist Money Show, brought to you by Dentist Advisors, a fee only, no commission fiduciary, comprehensive financial advisor just for dentists all over the country. Check us out at dentistadvisors.com. Today, Matt and I do probably my favorite episode of the year. It’s the 2022 Dentist Advisor’s wrapped episode. If you’re a Spotify listener, you know what that reference is. This is the episode where we break down a year’s worth of benchmark data. Everything from net worth to spending, to savings rates, debt rates, ages, all kinds of interesting data that paint a picture and tell a story. The way I like this conversation is because we kind of approach this the same way that our advisory services are built around our one-on-one client relationships, where we have all of this data and all of this analysis that kind of tell us a story.

Ryan Isaac:
And so we go through this data, and we go through all these benchmarks, which are really helpful. We dig deep on a few of them. We make comparisons between for helpful personal ratios, which is where the power in these numbers come in. But then we kind of wrap the episode by talking about if this was a client looking at all this average data, what would you tell this client? Are they healthy? Are they in a good space? Are they moving in a healthy, good direction? So this is a really cool episode. Thanks to everyone for joining in to the show for listening over the last year. We really super appreciate it. And if you would like to engage with Dentist Advisors, if you’d like to be a person who tracks this kind of data, who has this kind of insight to personal financial decision making and where you’re headed personally reach out to dentistadvisors.com. You can book a free consultation. We’d love to chat with you and answer your money questions and point you in the right direction. Thanks everyone for being here. Enjoy the show.

[music]

Jess Reynolds:
Hey, there. It’s Jess with Dentist Advisors. Did you know we recently launched a new service called The Dentist Money Membership? It’s an affordable way to support your personal financial strategy with cutting edge technology and guidance from dental focused CFP advisors. The Dentist Money membership includes the Elements Financial Monitoring app, an annual financial checkup, CE courses, an automated investment platform, and more. To learn more about The Dentist Money membership and to get started, go visit dentistadvisors.com/money.

Announcer:
Consulting Advisor conduct your own due diligence when making financial decisions. General principals discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors or registered investment advisor. This is Dentist Money. Now here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to the Dentist Money Show, where we help dentists make smart financial decisions. Happy New Year. I am Ryan and I’m here as always with Matt. What’s happening, Matt? Happy New Year.

Matt Mulcock:
Yo, Ryan, happy New Year. I feel like it’s gonna be a good one. I’ve already had a massive tree branch fall and smash my Pergola in the backyard. That was day two of the year. So it’s only going up from here.

Ryan Isaac:
And it can only get better. It’s cold where I’m at. It’s snowy where you’re at and it feels very…

Matt Mulcock:
Don’t, it’s not cold. It’s all relative but…

Ryan Isaac:
It’s like 55.

Matt Mulcock:
Yeah, it’s relatively cold…

Ryan Isaac:
Yes.

Matt Mulcock:
Compared to what it normally is there, but it is not cold.

Ryan Isaac:
Tomorrow it will be in the low of 60s and sunny. So we’re okay. I’m stoked for this episode because we do this every year and if anyone is a Spotify user, listener, Spotify does their annual Spotify wrapped, like wrapped as in like wrapped a gift, W-R-A-P-P-E-D. I was thinking about like wrapped, like you wrap something because it’s Spotify that seems like it could go, but it’s wrapped like a gift. And they show you it’s… Man, it’s like the coolest… It’s probably like the best marketing for Spotify ever because everyone wants to share what they’ve been listening to. They just share data. They’re like, here’s what you listen to. How many minutes, these were your top artists, top tracks, top genres. I was worried this year. They must filter something because the most listened to thing on my end, like not even close is Brown Noise at night. [chuckle]

Matt Mulcock:
Oh yeah. [chuckle] They’re like, you can’t have that.

Ryan Isaac:
I think they filter it, because, I mean, that’s eight hours a night every single night of my entire life. Every night.

Matt Mulcock:
You’re like a baby.

Ryan Isaac:
I am like a baby. I’m very much like a baby. But it didn’t show up on my wrapped. So I think they… They must filter…

Matt Mulcock:
Yeah, they have to filter that out. They’re like, this guy, we’re not gonna give him his baby music at night.

Ryan Isaac:
So bad.

Matt Mulcock:
We’re gonna give him the stuff that he’s doing when he is awake.

Ryan Isaac:
Are you a White Noise person, Brown Noise person, Pink Noise?

Matt Mulcock:
Yes we are. I’m like a baby. I’m like a baby as well.

Ryan Isaac:
I like the dark, deep Brown Noise. They call it like dark noise. It’s like deep. White Noise is too like scratchy high pitch for me.

Matt Mulcock:
I could see that. I gotta look into the Brown Noise.

Ryan Isaac:
Brown Noise is deep. It’s lulling. There’s actually, it’s almost like the sound of sitting in an airplane at night when everyone’s sleeping. It’s that like dull kind of like…

Matt Mulcock:
Yeah, yeah. Okay.

Ryan Isaac:
Yeah, It’s anyway. So we’re gonna do The Dentist Advisors Wrapped today. So man on top we have things like average age, net worth, savings rate, disability insurance, life insurance, spending, real estate loans, commercial real estate loans, practice loans, incomes.

Matt Mulcock:
Dang, we got a lot of stuff to…

Ryan Isaac:
We have a lot of stuff to cover. I think we’re gonna do a webinar on this. Is that true?

Matt Mulcock:
Yes. Let’s do it.

[laughter]

Ryan Isaac:
I think it’s gonna happen.

Matt Mulcock:
We do whatever we want.

Ryan Isaac:
We do what we want. Without further ado folks, this is our year end Dentist Advisors 2022 wrapped. This is across to hundreds of dentists all over the country on data that we keep. I guess a quick intro to this might be, if someone’s not familiar with dentist advisors, we are a independent investment advisor that started 15 years ago. We only work with dentists and part of like, probably the biggest main job we do is keeping people organized through gathering and collecting data and analyzing data trends and using those data trends to make financial decisions throughout someone’s entire career. We’re also a fairly good size investment advisor. We manage lots and lots of accounts and lots of money for people all over the country, but a lot of our day-to-day jobs are spent organizing and tracking data and using this data analysis to make decisions. So that’s where this… This is why we have this data. And this will be unique. Like this is data that someone, and CPA probably doesn’t keep in this kind of like broad sense. A consultant is not gonna keep most people on their own. We know a few people who do this by themselves. [chuckle] Have their own…

Matt Mulcock:
We do know a few of those.

Ryan Isaac:
There’s a few people, a few nerds out there.

Matt Mulcock:
Spreadsheet nerds. Yeah.

Ryan Isaac:
Yeah. Well shout out to you guys. But that’s where this comes from. That’s like where this comes from. So let’s jump into this. Anything you wanna say, Matt, as a precursor though, before we jump in? Anything you’re looking forward to hearing, that you’ve been thinking about, you’re excited to talk about. What’s on your mind with this data before we jump in?

Matt Mulcock:
Yeah, I think this is, I think it’s great. I think we always get, one of the top two or three questions somewhere in there is always, it’s always, how am I doing?

Ryan Isaac:
Yeah.

Matt Mulcock:
Right? And then, follow up, how am I doing compared to everyone else? So I actually think it’s kind of cool to be able to, for us to share this data, to just be like, here’s the information. Like you said, from hundreds of dentists all over the country. You can kind of get a feel for where you stand. So yeah, I’m excited to jump in. We have a lot of topics too.

Ryan Isaac:
Yeah, there’s a lot. And I mean, this is kind of the way that we think about data too. So this, I mean, we’ll probably just have to cut ourselves off at some point during this conversation because it’s like, well, what’s the average net worth and what’s the average spending and what’s the average savings number? But really what makes those numbers interesting? It’s cool to see them as a group, as a benchmark, but what makes those numbers meaningful is comparing personal numbers together. So comparing your net worth to your spending or your income to your savings dollars, or your disability coverage to your spending. When you start comparing numbers, that’s when those ratios, personal ratios start to really come alive.

Ryan Isaac:
And then that’s the whole, that’s the whole premise behind, the elements system that we have built over the years, which we’re really excited. 2023 is the year we’re rolling this out finally as an app to all of our clients. We’ve been running this spreadsheets, PDFs, five pieces of software for so long, [laughter] and we’re so excited. Shout out to…

Matt Mulcock:
It’s been a long time coming. Yeah.

Ryan Isaac:
Yeah. Shout out to the Elements team. So, the comparing of ratios, that’s what the basis of the Elements app. So benchmarks are one thing, but the comparison of personal ratios are, I mean, that’s kind of everything. So let’s jump in. Let’s start with some ages here, Matt. And are you looking at the spreadsheet or do you want to play the game where you guess? Because, we did that last year.

Matt Mulcock:
Well, I was trying to…

Ryan Isaac:
I think that’s kind of fun.

Matt Mulcock:
We did, I was trying to find it. ‘Cause we got it sent to us from, I don’t know…

Ryan Isaac:
From Jacob. I think it was a group Slack from Jacob, but.

Matt Mulcock:
Okay. Yeah, I was trying to find it. I will…

Ryan Isaac:
Yeah, or we’ll just jump in here.

Matt Mulcock:
Continue to work on that.

Ryan Isaac:
What do you, I kind of like it though. Average age of the clients. So people will ask us this, who’s your typical client, who do you work with? Average age over this last year. It’s actually gone down a couple of years.

Matt Mulcock:
And we’re getting younger, okay.

Ryan Isaac:
We’re at 39.1 years old, is the average age of our clients. It’s always been in low 40s.

Matt Mulcock:
Got it.

Ryan Isaac:
Like 41, 42.

Matt Mulcock:
Yeah. Sorry, you said it’s 39 now?

Ryan Isaac:
39.1. Yeah.

Matt Mulcock:
Okay.

Ryan Isaac:
So what’s interesting about that is, when did we really start making an effort to try to work with, and have a service model, a place for young, new dentists like associates. That was over the last 18 months, maybe two years ago.

Matt Mulcock:
Two years-ish. Yeah.

Ryan Isaac:
Yeah. So that’s showing, that’s starting to, and it’s showing in some of this data. It’s really interesting. So that’s the average age, 39.1 years old. I’m curious, okay. Out of that data, this isn’t in the averages, but I have the raw data, so I’m gonna do this really quick out of…

Matt Mulcock:
Ooh, you’re doing it raw.

Ryan Isaac:
Yes, I am. So I’m, what I was curious about is, what is the ratio of associates? So let me go the total number of people in this data set. Okay. And the number of associates. What do you think it is? What percentage do you think are our associates out of this data?

Matt Mulcock:
I’m gonna say 27.

Ryan Isaac:
Okay. 27%. So the number of, holy crap. Are you serious? It is, it’s 27.2%.

Matt Mulcock:
Is it really?

Ryan Isaac:
Yes dude, shut up.

Matt Mulcock:
Oh my gosh. I’m not kidding you. I’m not cheating. That was a total guess.

Ryan Isaac:
Okay. So, you know what’s interesting about that? That is actually up from last year too. Last year we did this, it was just shy of a quarter. Yeah. So a few years ago we were like, all right, how do we, let’s try to like make a more entry level point for, younger, new grads, associates. Do you wanna talk just two seconds about, DMM though and just kind of like give a shout out to what DMM is and how that’s kind of helping? ‘Cause that’s even newer.

Matt Mulcock:
Yeah, for sure. So yeah, a couple of years ago we, as you said, we went, to more of an entry level kind of approach specifically for associates. We literally call it our associate model.

Ryan Isaac:
Yeah. A little less expensive. We know it’s gonna take a lot less work to work with associates and yeah.

Matt Mulcock:
Yep. But that still, that model still or that approach still, basically was only offering one approach, which is you want full access to an advisor, right?

Ryan Isaac:
You want a personal and financial advisor, you want their cell phone.

Matt Mulcock:
Yeah. You want a personal advisor. Exactly. You want to build this relationship with this person over the long term and really be engaged in this process of multiple communication points a year. And again, like you said, being able to text and call and email whenever you want. And we still got a lot of feedback from people. Obviously that’s great when we get a lot of people that love that, but we got a lot of feedback from people that were like, okay, I love that, but I’m not ready, I still am not ready to commit to that, is there something else? So long story short, we still wanted to basically create a way to bridge the gap between, listening to this podcast, doing our webinars, or whatever, and having a full on advisor. So that was where DMM Dentist Money Membership was born. We just created this, we just rolled this out, I should say. It was a lot of work in…

Ryan Isaac:
Creating, hell yeah.

Matt Mulcock:
Behind the scenes, but we put this out, at mid last year.

Ryan Isaac:
Last year. Yeah, summer.

Matt Mulcock:
Yeah. So what this is, it’s a subscription based approach where someone, you pay an annual fee, it’s much more doable I think for that, for certain people that are just wanting, again.

Ryan Isaac:
Totally.

Matt Mulcock:
Kind of something in between. You’re getting access to the app to get organized, to start tracking your data. You’re getting an annual review with an advisor so that you’re still getting access to a dental specific advisor on our team. It’s just you’re only, you’re getting it once a year. And then you’re able to still message through our portal, basically as many questions as you want. It’s a 48 hour or less response time. You can still ask a bunch of questions. You’re just not getting your own person.

Ryan Isaac:
And premium content that’s not available to the public and access to…

Matt Mulcock:
Yep.

Ryan Isaac:
There’s more things coming. So yeah, that’s the Dentist money membership. And, anyway, that’s really reflective of what’s happening here in some of this data here. Anyway that, I think that’s really interesting. So age 39, 27%, as you accurately called it.

Matt Mulcock:
I can’t believe that.

[chuckle]

Ryan Isaac:
I can, you always do this, we always do the guessing game and you’re just dead on or sometimes way off?

Matt Mulcock:
I feel like I was pretty bad last year.

Ryan Isaac:
To way off.

Matt Mulcock:
I feel like I was pretty bad. Yeah.

Ryan Isaac:
Average. Okay. So this is where it starts to get really interesting. Let’s start with the average net worth. You’re looking at it now, so it’s not fair, but.

Matt Mulcock:
Yeah, now I have the data up. I’m not gonna lie.

Ryan Isaac:
Average net worth. And it still surprises me though. And by the way, this excludes, this is average net worth between zero. And I’m gonna give you different data too here. This is average net worth between zero and $10 million. So this excludes people with negative net worth, which I just ran the numbers. What percentage of our clients have a negative net worth? If 27% are associates, non-practice owners, what percentage have negative net worth? What would you say? This isn’t on the sheet.

Matt Mulcock:
Like 16.

Ryan Isaac:
Okay. It’s 22.

Matt Mulcock:
Oh, all right.

Ryan Isaac:
And which is, I like to normalize that because a lot of people when they first get organized early in their dental career, they’ll see a negative net worth number and they’re like, holy crap, I did something wrong. Maybe dentistry wasn’t for me. Maybe I shouldn’t have done this. But I, that’s not true, that’s not what that picture is painting, that picture just says this is what it’s like when you become a dentist. You come out of school. Especially, I mean, in the last, five, six, seven years, school loans are huge. You got to get a bunch of debt for an asset that probably isn’t built up yet. It’s just what it is.

Matt Mulcock:
And I actually think people should find comfort in that.

Ryan Isaac:
Totally. Yeah.

Matt Mulcock:
It is totally normal. I have several clients I work with right now who I have been working with for years who, when we first started working, they were, started working together, they had negative net worth and now they are very much beyond that and have a very healthy, positive net worth. And I’m not taking credit for that, by the way.

Ryan Isaac:
It’s all you.

Matt Mulcock:
Just saying that, that path is totally normal?

Ryan Isaac:
Yeah.

Matt Mulcock:
And so we get people all the time that we go through onboarding, we get them organized, they look at their dashboard, all of a sudden for the first time they’re looking at that net worth that negative $500,000 staring them in the face. And it’s like they are understandably upset by that, but it’s like, this is totally normal. So hopefully people out there are listening and saying, man, 22% of their client base has a negative net worth.

Ryan Isaac:
Yeah. And this…

Matt Mulcock:
Take comfort in that.

Ryan Isaac:
Yeah, totally. It’s normal. And this wouldn’t have been the case three years ago before we had a lot of associate clients. I was just running the numbers through the average negative net worth too is about 287, negative 287. That’s the average, like an average of quarter million dollars in debt.

Matt Mulcock:
Yeah.

Ryan Isaac:
Which you think about, you buy a practice, you might have a little bit of equity on what it could be worth in it, in your net worth, you might have a house on your balance sheet, which we’re gonna talk about. And then student loans, a quarter million dollar negative net worth. That’s the average. That’s kind of interesting. If you take all of the net worths and you don’t exclude the top end, which we have some, we have some ballers, shout out to the ballers. The average net worth is 2.4. Sort of just jump tremendously because it’s not…

Matt Mulcock:
Okay.

Ryan Isaac:
But that’s north of $10 million net worths, which happens folks. So I guess…

Matt Mulcock:
Well I, so I don’t know if we gave the average net worth though.

Ryan Isaac:
The average net worth is 1.90.

Matt Mulcock:
Oh, okay. Did we say that already?

Ryan Isaac:
Yeah.

Matt Mulcock:
Oh, okay. Okay.

Ryan Isaac:
The average between zero and $10 million is, of net worth is 1.9.

Matt Mulcock:
Got it. Got it. Okay.

Ryan Isaac:
And then if you include all of the positive net worth. It’s 2.4.

Matt Mulcock:
Got it.

Ryan Isaac:
Yep. So average net worth, let’s do, ’cause I want to talk about total term here. For anyone who doesn’t know what total term is, you can pause, go to dentistadvisors.com, just type in total term in the search bar and that’s our main indicator to see how healthy, financially healthy someone is, how close they are to financial independence. But let’s go to annual spending really quick. Do you remember what last year’s was? This is also indicative of a younger client base.

Matt Mulcock:
I was gonna say, I’m pretty sure we are closer to about 18 grand a month.

Ryan Isaac:
Yeah.

Matt Mulcock:
Something like that.

Ryan Isaac:
This year we are, 15,000, almost 16,000.

Matt Mulcock:
Yeah. So it’s come down.

Ryan Isaac:
15,900.

Matt Mulcock:
Which makes sense again, like you said, with the age.

Ryan Isaac:
Yep. Younger demographics. So the average spending from hundreds and hundreds of dentists all over the country is 15,900. Yeah. Last year it was like 18,000, almost 19,000.

Matt Mulcock:
I think it was between 18,000 and 19,000. So.

Ryan Isaac:
Guys.

Matt Mulcock:
Yeah. Now we’re just below 16 grand a month.

Ryan Isaac:
Was that all the Stimmy.

Matt Mulcock:
It had to be the Stimmy. [laughter]

Ryan Isaac:
Was that it?

Matt Mulcock:
Everyone’s spending the Stimmy?

Ryan Isaac:
Yeah. I mean, I don’t know what 2020 was, but 2021 it was like 18,000 or 19,000.

Matt Mulcock:
Yeah.

Ryan Isaac:
So average spending is about 15,900 per month. Anything stand out to you? We’ve had advisor meetings and it’s always kind of funny to discuss spending numbers. We’ve had advisor meetings where some younger advisors, which would be in the age group of, new grads and associates would be like, how do you spend 16 grand a month? That’s crazy.

Matt Mulcock:
Yep.

Ryan Isaac:
And then like, some of the older people are like, I hear that and I’m like, yeah, it’s pretty easy. [chuckle]

Matt Mulcock:
Yeah, that’s exactly what I was gonna say when, looking at this in just the context of age and kids.

Ryan Isaac:
Yeah.

Matt Mulcock:
And life.

Ryan Isaac:
Yeah.

Matt Mulcock:
Life changes as you get older.

Ryan Isaac:
Yeah.

Matt Mulcock:
And again, as you have kids and…

Ryan Isaac:
Housing.

Matt Mulcock:
So you, but when you’re standing, from your, whatever your perspective is, like you said, the young, a young advisor.

Ryan Isaac:
In your twenties.

Matt Mulcock:
I’m not gonna name names here.

Ryan Isaac:
Yeah. If you’re in your twenties.

Matt Mulcock:
Yeah. But you’re in your twenties, you have no kids yet.

Ryan Isaac:
It’s a different story.

Matt Mulcock:
You’re sitting there being like, I can live off, like a king off of…

Ryan Isaac:
Oh my gosh. Oh, yeah.

Matt Mulcock:
Five grand a month. Which is true. And it’s funny, if I, if you look back, I can only imagine my 21 year old self looking at me now.

Ryan Isaac:
What you spend now just to get by.

Matt Mulcock:
What I spend and they’re, and I would… Yeah. And I would, I’m sure my 21 year old self would be like, you’re a…

Ryan Isaac:
You’re an idiot.

Matt Mulcock:
You’re an idiot.

Ryan Isaac:
You’re an idiot, and you’re never gonna retire.

Matt Mulcock:
Yeah. But it’s like, no, I have two kids. And it’s just how it goes.

Ryan Isaac:
Yeah. And you choose and you, and where you choose to live and…

Matt Mulcock:
Yeah.

Ryan Isaac:
It’s all… It’s housing in family size.

Matt Mulcock:
I have to have the Maserati, I’m sorry.

Ryan Isaac:
Matt’s Maserati. Maserati, Matt. If you are on parks…

Matt Mulcock:
Yeah. Maserati Matt.

Ryan Isaac:
If you are a Parks and Rec character, that would be your nickname, Maserati Matt.

Matt Mulcock:
Maserati.

Ryan Isaac:
I can just see it. [laughter] My teenagers are going through Parks and Rec right now and their minds are blown at how funny it is. They can’t believe it.

Matt Mulcock:
It’s so good. It’s so good.

Ryan Isaac:
Okay, so average spending about 15,900 per month. Here’s why I wanted to jump to spending. When you… When… And this is what I was saying earlier, it’s cool to benchmark net worth and then be like, oh what’s my net worth? Because you might hear the average net worth is 1.9 and you have $3 million net worth. And it’s like, well, is that good or is that bad? Well, it’s only as good or as bad as it is compared… When you compare it to your spending. So, what we do is like, in our ratio, in part of the elements, we have a… One of the… It’s probably the most important indicator, the one people are most interested in anyway. It’s called total term, and it’s just a ratio that compares net worth to spending, which basically tells us how many years worth of your spending do you have in net worth. And when that number is a certain high enough number, close to 30 or above, that means you are statistically gonna be pretty financially independent, indefinitely, forever, like pass along money to heirs kind of money. So, when we compare those two into a ratio, it becomes total term. So the average total term for our client base is 8.87, it’s just almost a nine. Which man, I love when data confirms my real world experience and my anecdotal experience.

Matt Mulcock:
Yep.

Ryan Isaac:
Because we’ll tell people this all the time. For the average person who wants to have an average retirement age, meaning like probably, young to mid 60s, you want your total term to be hitting a 10 or double digit, somewhere in your mid 40s and then approaching a 20 in your mid 50s and then approaching a 30 in your young to mid 60s. That would be like an ideal kind of average pace. The first 10 points are really slow. The last 10 are way faster than the first 10. It speeds up, but when I hear the average age is almost 40, it’s 39 years old, and the average total term is…

Matt Mulcock:
Yep.

Ryan Isaac:
Is almost nine. I’m hearing this data tell me that the average dentist advisor client is a good five years, almost… Is like four to five years ahead of schedule on where I would want the ideal kind of average pace total term to be in their mid 40s. So this would tell me that the… If everything just continued to push right now, and these are just averages, but the average dentist advisor client is on pace for probably a five year earlier retirement than a mid sixties retirement. We’re talking about like a 60 year.

Matt Mulcock:
Yep.

Ryan Isaac:
Like a 59 to 60 year old retirement age on average is where this would push. Which I was just thinking like, I wonder if there’s ever a way to record what retirement age is for people, but people don’t retire. That’s not a… That’s not like a…

Matt Mulcock:
No.

Ryan Isaac:
How would you measure that?

Matt Mulcock:
Yeah, exactly.

Ryan Isaac:
How would you measure retirement? Like what age did you retire? What… How would you even do that? That’d be kind of…

Matt Mulcock:
It’s a bit of an ambiguous gray area.

Ryan Isaac:
Yeah, it’d be…

Matt Mulcock:
Yeah.

Ryan Isaac:
What stands out to you, a total term, age, spending? Any of those things, Matt.

Matt Mulcock:
Yeah, so the… I want to come back to a point you made of like how this is all connected and how it’s so critical to be thinking about this. Not in isolation, but thinking about how the relationship to all these different things, right? Because again like you said, you might hear… Someone out there might be hearing that our average spending we’re just gonna round up, is 16 grand a month, and you’re thinking, oh well, I spend way more than that. That’s crazy. I’m spending 30 grand a month. To your point, it all comes back to that relationship of that spending to your overall, and I’m gonna call it your usable net worth.

Ryan Isaac:
Yeah. Okay.

Matt Mulcock:
So basically anything outside of your house, right?

Ryan Isaac:
Yeah.

Matt Mulcock:
There’s a vast difference in someone spending 30 grand a month that has a $10 million net worth, right? Usable net worth that’s not gonna be as big of a deal. So what I was gonna point out here is the percentage, right? I think that’s critical as well. So, our average spending is about 16 grand a month, but what we would call burn rate, right? So how… What percentage of your income is actually going to spending.

Ryan Isaac:
Yeah. What percentage? Yeah. Okay. Yep.

Matt Mulcock:
Yeah. What the actual percentage? It’s about 38%.

Ryan Isaac:
Yep.

Matt Mulcock:
So there you go. I mean, that’s what you should be comparing, really is is 16 grand sound too low or too high compared to what you’re doing? Just take your annual income and take out how much is going to spending or take what’s going towards spending divided by your annual income. And it comes up with that percentage. Your percentage, you could have a much larger or smaller raw number, but your percentage could be…

Ryan Isaac:
Yeah.

Matt Mulcock:
Again, either bigger or smaller, depending on where you are with that total income.

Ryan Isaac:
I was just… Yeah. Perfect example. So if you’re listening to this and you’re going, man, average net worth is almost $2 million. I only have a $1 million net worth but if your spending was 10 grand and not 16 grand, your total term’s almost the same.

Matt Mulcock:
Yep. [chuckle]

Ryan Isaac:
With a lower net worth.

Matt Mulcock:
And then… Exactly. Well, exactly. And that’s the thing is I’ve seen broke rich people.

Ryan Isaac:
Oh yeah.

Matt Mulcock:
That sounds weird.

Ryan Isaac:
Yeah.

Matt Mulcock:
But we all have.

Ryan Isaac:
Yeah.

Matt Mulcock:
I’ve seen rich people that by all… Like on…

Ryan Isaac:
Income and net worth, huge.

Matt Mulcock:
Everything seems like, oh they’re rich, they’re living paycheck to paycheck.

Ryan Isaac:
Yeah. There’s no wiggle room because it’s…

Matt Mulcock:
Yeah.

Ryan Isaac:
All getting spent. Their spending numbers, the burden is…

Matt Mulcock:
Yeah.

Ryan Isaac:
Too high.

Matt Mulcock:
And maybe a better thing to compare to sum this point up is, forget net worth for a moment. Maybe on a day-to-day you should be thinking about… If you are thinking, is my spending too high or too low compared to this raw number of 16 grand a month, it’s what is it in comparison to your overall income. Right? 16 grand a month at different income levels could be high.

Ryan Isaac:
Yeah.

Matt Mulcock:
It might be low. Could be average. But think about that as far as the percentage, not just the raw number.

Ryan Isaac:
Well, let’s get there, average income across all these specialties, and this is a number that has a couple, we can dive deep. This average I’m gonna give you is average income less than a million a year, and it is 423,000. So that’s the average, which is also lower than it used to be. It used to be a little higher.

Matt Mulcock:
Yep.

Ryan Isaac:
Like 450,000, I think.

Matt Mulcock:
I thought we were like over…

Ryan Isaac:
500,000.

Matt Mulcock:
500,000 at one point, but…

Ryan Isaac:
Well, so that’s all the income’s under a million a year. The average is 423,000. But if you go…

Matt Mulcock:
And maybe we didn’t do that last year. I can’t remember.

Ryan Isaac:
Well, we did in different ranges. This is like a really tight range, but I mean, our top end of income is multiple millions.

Matt Mulcock:
Yeah.

Ryan Isaac:
But let’s… Here, I’ll do that right now. So the average all income range across everybody is 535,000.

Matt Mulcock:
Oh there you go. Okay. Maybe that’s what I’m thinking about from last year.

Ryan Isaac:
That’s a hundred… Yeah. A hundred thousand dollars average difference, 423,000 are all the incomes below a million, that’s the average, which feels like a very… I mean, think about that. A 423,000 average income. As I’m saying this in my head, Matt, I’m thinking about the argument we always make that we wish we had an in-house bookkeeper because this would be really…

Matt Mulcock:
Seriously.

Ryan Isaac:
Cool to have everyone’s actual collections data, like really easy to aggregate and pull the data.

Matt Mulcock:
Yep.

Ryan Isaac:
Anyway, if the average is 423,000, that means you have a million dollar practice with a 400,000 or a 42% profitability rate, which is like paying yourself 30% as an associate and 12% on the rest of the business is profit. And that is not like some astronomical high number. Like that’s a good average.

Matt Mulcock:
No.

Ryan Isaac:
I mean, so this is kind of interesting to think like, yeah, that’s a gotta be a fair, successful single location, single doc practice with good profitability and there’s your income.

Matt Mulcock:
Yeah. I think it’s cool looking at the age ranges too on this. So we’ve bracketed this by age.

Ryan Isaac:
Oh yeah, yeah.

Matt Mulcock:
So like the young age group of 27-35, you’re looking at an average income of about 345,000.

Ryan Isaac:
Yeah. 80,000 less. Yep.

Matt Mulcock:
Yeah. All the way up to the 45 plusers, the old guys.

Ryan Isaac:
And girls.

Matt Mulcock:
We’ve got… And girls.

Ryan Isaac:
But we only call the guys old. We don’t call the girls old. Yeah.

Matt Mulcock:
Yeah, of course. No.

Ryan Isaac:
It’s mean. Yeah.

Matt Mulcock:
It’s over 525,000 in that.

Ryan Isaac:
Yeah. So there’s your like life cycle of career earnings, which also goes back to why can you grow total term faster in the last 10 years of your life than you can in the first 10. It’s because your average income is so much higher and higher over multiple years. And oh, do we have this data? Let’s see…

Matt Mulcock:
And your savings should go up.

Ryan Isaac:
Savings rate.

Matt Mulcock:
And debt should be going down.

Ryan Isaac:
Yeah. It’s kind of an interesting, I’d have to dig into that data more. The annual savings in dollar terms for the older group is definitely higher.

Matt Mulcock:
Yeah.

Ryan Isaac:
I mean, your debts are getting paid off, your income’s at its peak. Hopefully your profitability is peaking. That’s why you can grow your net worth so much faster in the end. But man, it’s so important to start early though too, because of how things kind of just snowball over time. Let’s go to savings. Let’s do this part. This is kind of cool. The average annual savings dollar amount is 81,000 per year. That’s the average savings which is about $6700 per month. That’s the average savings across all clients. And that comes out to an average savings rate, percentage of income of about 15.2%. Which, okay, so this also, this tells us a lot about the demographics because in prior years when we…

Matt Mulcock:
It’s been higher.

Ryan Isaac:
When we primarily had a little bit older and mostly just practice owning clients, the savings rate was always low 20s, 22%, 23%.

Matt Mulcock:
Yeah.

Ryan Isaac:
I mean, 15 as a national average is still like, I mean the highest national average of savers is in the older age group and it’s like 5% or something.

Matt Mulcock:
Yeah. This is at the lowest, a double of the national average. Yeah.

Ryan Isaac:
Oh yeah. Yeah. Easily. So that’s the average savings rate. Let’s see here, I want to dig into some savings data really quick here. Let’s go to, this won’t be on the averages. Anything else you wanna say while I’m just pulling this up, if there is at all? Go ahead but…

Matt Mulcock:
I was just trying to find, I don’t have my calculator here. I think my daughter took it.

Ryan Isaac:
Use your phone dude, come on.

Matt Mulcock:
Well I was gonna do… I don’t have the app on my phone. I was gonna do a growth calculation of…

Ryan Isaac:
Oh.

Matt Mulcock:
I was just curious of 81 grand a year for 30 years just with, based on the average.

Ryan Isaac:
Hold on.

Matt Mulcock:
Do you have your calculator?

Ryan Isaac:
Yeah. So the old 10B2 is what you’re referring to.

Matt Mulcock:
Yeah. I don’t have my 10B2, my daughter took it.

Ryan Isaac:
If your daughter’s off 10B2-ing…

Matt Mulcock:
She’s off 10B2. In fact, I don’t have the 10B2. I have like the…

Ryan Isaac:
What do you have?

Matt Mulcock:
HP whatever, 14. Yeah.

Ryan Isaac:
I’m gonna go 25 years ’cause I’m gonna assume that for the first five of a 30 year career, you don’t even save any money.

Matt Mulcock:
Sure.

Ryan Isaac:
And then you start saving 6700 bucks after year five. Let’s give it a 8% growth rate or seven, let’s start at seven. If you grow your money at 7% over 25 years, you start with zero. You save 81 grand a year, you have $5.1 million. If…

Matt Mulcock:
You’re doing okay. You’re doing all right.

Ryan Isaac:
If you grew it at 8%, it’s almost $6 million. If you’ve got a 9% growth rate on that thing after 25 years, which like statistically is not, like that’s what the market’s, market’s doing more than that. You have $6.9 million. So our average save if they just… Dude it just…

Matt Mulcock:
It works people, it works.

Ryan Isaac:
It’s silly how it’s not easy to get to that. You get to the point where you’re a like a dentist, you got through school, even if you own a practice, you’re saving 6700 bucks a month. That is not easy to do because of all the other things going on. But it’s just crazy to think about doing that consistently. You have 5 million bucks at a low rate of return. That means your portfolio is, I mean, what is that equivalent? That’s, oh, I don’t think we can give numbers, but that’s a very moderate, almost old person portfolio. It’s very conservative…

Matt Mulcock:
Yeah.

Ryan Isaac:
To get a 7% long-term 25 year rate of return, that’s a…

Matt Mulcock:
Over a 25 year period.

Ryan Isaac:
That’s a conservative portfolio. So you need…

Matt Mulcock:
If we say this with the caveat of course of past return…

Ryan Isaac:
Not indicative of future results.

Matt Mulcock:
And not guarantee of future results, but 7% rate of return on average over a 25 year period.

Ryan Isaac:
Yeah.

Matt Mulcock:
First of all, that would be the worst 25 year rolling period we’ve ever seen in the history of the market.

Ryan Isaac:
Ever. Yeah.

Matt Mulcock:
Just kind of like really bad case scenario you’re still doing just fine.

Ryan Isaac:
And then what do you sell the practice for? You sell… You get a million bucks out of the practice. Do you have some home equity in case you blow through all this by age 80?

Matt Mulcock:
Yeah.

Ryan Isaac:
Dude like lesson here is savings rate. You just save some money and just do it for a long period of time. You’re gonna be in shape. I was just doing this really quick here though, annual savings. I was doing the whole thing. I wanted to make sure that average, because I think we average a lot. I don’t know if that included… Yeah, that included. Okay, cool. So 81,000. That’s perfect. That’s what I thought it was. I was wondering if that included, because we have new clients who aren’t saving yet, so I wanted to know…

Matt Mulcock:
Yeah.

Ryan Isaac:
Among those, that is among those who are saving. So among those who are saving, that is 81,000 a year. That is so doable though.

Matt Mulcock:
Yeah.

Ryan Isaac:
‘Cause what are you talking about? You’re talking about like if you and a spouse are on 401K this year between the two of you, that’s almost 50,000 of the 80,000 just by maxing out a 401K for you and a spouse if you have a spouse on payroll.

Matt Mulcock:
Yeah.

Ryan Isaac:
Or a spouse has a job that’s doing 401k. Oh, I was gonna say annual income. I don’t know this and I’m just wondering this, I don’t… I think that annual income is just dental practice income. I don’t know if this is household from spouse income. Actually, I could tell you by…

Matt Mulcock:
Oh, that’s a good question.

Ryan Isaac:
I can tell you actually by one of my… A few clients I know who have very high earning spouses and I’ll tell you right now. I don’t think this includes a household spouse income.

Matt Mulcock:
This is just the dentist income.

Ryan Isaac:
I think this is just dental income. I’m looking at some of my clients who I know have very high earnings, like seven figure earning spouses and I don’t see it in there. So there you go. And that makes sense to me though, on that average. Alright. Anything you wanna say about savings rate before we move on?

Matt Mulcock:
No, I just wanna re-emphasize just that quick calculation of just how it works and this whole idea that it’s so simple. It’s so obvious, but it doesn’t mean it’s easy and we know that that’s, we wouldn’t, like, it’s not easy. And those are two very different things.

Ryan Isaac:
Simple and easy.

Matt Mulcock:
But the solutions generally are… To like, the solutions to get you to success generally are very simple and very obvious. It’s like, get organized, start saving some money, invest, don’t stop investing. And it works like, so anyway, I just wanna… It’s just cool to see that data and be like, okay, 15% of your income, we preach 20, but even at 15%, could you get to a place where you’re a multi multimillionaire after a 25 year career? Of course yes, you can.

Ryan Isaac:
And I was just thinking like that 80 grand, 81 grand at 8% growth turns into $6 million. $6 million in today’s money, will pay you an indefinite stream of income of almost 20 grand a month forever and not run out of the $6 million. So, that’s a lot of money now and in the future, 20 grand a month, but will probably feel like 13 or 14. We don’t know. But that’s why, and how many…

Matt Mulcock:
You’re saying today’s dollars?

Ryan Isaac:
In today’s dollars. Yeah. But it’s like, dude, how many people do you know that are saving more than six grand a month? You know? And savings rate should kind of line up with your spending. I bet if we ran this data in terms of highest spenders and then highest savers, those should match up in a lot of cases, those who don’t match up. That’s what having this data is cool because you could run the data and be like, let’s run data for high spenders with low savings rates because that, it could be, that could be one clue that we’re not headed in a good path. And it’s cool that someone in your life knows that. It could just mean that you don’t put all, tracking spending that goes to building your seventh practice or 15th practice that’s kind of hard to track as a savings rate. So that doesn’t mean it’s like you’re dead in the water, but that’s a good step of being, like, this is just how you investigate through data if you’re on a personal good path to good financial future.

Matt Mulcock:
And last thing I’ll say on this too, coming back to that earlier point we were making about spending and people being maybe nervous or like, oh, I spend more than that, whatever. Like you said earlier, savings rate is everything. So for the most part, when it comes to that middle row of elements and we talk about this all the time, this idea of reverse budgeting, right? If you have your savings rate locked in and it’s consistently working, the spending that’s left over, I genuinely don’t care. What it is, where it goes. As long as you have that figured out on your savings rate and that’s consistently happening that that system is running your, don’t worry about your spending number.

Ryan Isaac:
It’s a big goal of mine for this year. I’m sure we’ll do a resolutions podcast coming up soon. I’d like to do that. That’s a big goal of mine is, I have an automatic savings to our 401k plan, but my other savings is discretionary month to month since I moved. So it was locked in and then I moved and then I undid it as we all do.

Matt Mulcock:
Life got a little pricier.

Ryan Isaac:
Yeah. You move and then it’s just so funny when you let all of the money come to your personal checking account first, and then you’re like, I’ll decide what to save after that. It’s funny how much lower that’s…

Matt Mulcock:
Can’t do it.

Ryan Isaac:
Dude that savings is so much lower than if you just get rid of it first. Because now I think about my checking account and I’m like, I don’t know man. I kind of wanna, I wanna use all this money. I can easily use all this money. I can find a place for it, no problem.

Matt Mulcock:
Easy.

Ryan Isaac:
But when it doesn’t even show up first because it’s going to a brokerage account before it even hits my checking account. It’s funny how life still goes on.

Matt Mulcock:
And you just adapt.

Ryan Isaac:
And you just adapt.

Matt Mulcock:
It’s wild how that happens. You just adapt.

Ryan Isaac:
You have to actually check your balance and be like, can I spend, can I buy this today? You’re like, nope, can’t buy it today. And you’re like, okay. That’s an adult decision. Good.

Matt Mulcock:
And it’s funny, had just that change. My wife years ago told me, “Hey, you gotta remove whatever money you don’t want me to spend, you gotta move it.”

Ryan Isaac:
Let’s move it out of here.

Matt Mulcock:
‘Cause if I see a balance that’s a decent size, it’s almost like, and I give her credit for being aware of this, but it’s almost like subconscious, right? You’re not even, you’re just at the store, you’re doing something. Or let’s be honest, the scary thing now is you’re sitting on your couch. And you’re scrolling. And all of a sudden something pops up and it’s a two clicks and you’ve got something at your door.

Ryan Isaac:
Buy now, You can buy it now.

Matt Mulcock:
Yeah. But if you are checking yourself with, like you said, you remove that balance, there’s a direct correlation to how quickly you’re gonna hit that buy button. And that the size of your checking account.

Ryan Isaac:
Yeah. And that buffer’s in there, you just keep, especially the person who’s doing the spending. If you see that cushion in there, you’re like, it’s fine. I’ll just keep a hundred bucks here or 70 bucks there. Like, dude, that’ll…

Matt Mulcock:
Adds up quick.

Ryan Isaac:
You can pull up your money. So lesson learned there. Let’s talk about some debt. Average debt. This is kind of cool.

Matt Mulcock:
Favorite topic.

Ryan Isaac:
Okay, let’s start with personal real estate debt. So we categorize personal real estate debt as obviously the house you live in and any personal use real estate. So like vacation home stuff. The average real estate debt is $507,000. $507,000.

Matt Mulcock:
Does that seem higher or lower than you would’ve thought?

Ryan Isaac:
That seems about what I would picture across an entire country of living where we have people in expensive coastal cities. We have people in less expensive Midwest or rural towns. In rural towns, $507,000 is getting you 10 acres and a 6000 square foot house that’s brand new with a pool out back.

Matt Mulcock:
Yeah, for sure.

Ryan Isaac:
I’m guessing, someone let me know in the middle of Oklahoma or something. Can you, what does $507,000 get you these days? $507,000 in coastal, let’s say San Diego, an old condo, maybe not very close to the beach.

Matt Mulcock:
Right. Yeah.

Ryan Isaac:
Yeah. $507,000. How does that strike you? Average Personal real estate?

Matt Mulcock:
I was curious. I just did a little Google search.

Ryan Isaac:
Oh, okay. Oh yeah.

Matt Mulcock:
‘Cause I was just curious of how this compares to the average.

Ryan Isaac:
Stacks up. Yeah.

Matt Mulcock:
So according to bank rate, the average mortgage balance as of September of 2022. So it’s a little old, but what… I’ll go… I’ll let you guess ’cause you don’t have it in front of you.

Ryan Isaac:
So the average mortgage balance as of September, 2022 nationwide from bank rate.

Matt Mulcock:
Across the country. Nationwide, yeah.

Ryan Isaac:
Average I’m gonna say $273,000.

Matt Mulcock:
$346,000 and some change.

Ryan Isaac:
Yeah. So people are carrying more mortgage debt than probably, like, that’s probably just like going up and up and up. That’s as of 2021 or ’22? ’22.

Matt Mulcock:
That was as of 2022.

Ryan Isaac:
Yeah, that’s kind of crazy, man. Yeah, $507,000 for the average. And I’m just running something else here. What’s the average value of a single family house in America?

Matt Mulcock:
Ooh, I can do that as well.

Ryan Isaac:
And while you’re doing that, I’m gonna tell you what percentage of our clients do not carry any personal real estate debt at all?

Matt Mulcock:
Ooh.

Ryan Isaac:
So this is how many…

Matt Mulcock:
Percentage that does not carry any debt. I’m gonna say it is 17%.

Ryan Isaac:
Let’s see here. I’ll tell you momentarily, man.

Matt Mulcock:
No, it’s probably higher. It’s probably higher than that.

Ryan Isaac:
Yeah, it’s gonna be higher. The percentage of…

Matt Mulcock:
40%.

Ryan Isaac:
The percentage of people who do not carry personal real estate debt is 26%.

Matt Mulcock:
Okay. All right. So I said 17%, then I said 40%, it’s in between.

Ryan Isaac:
So if I look, and it’s funny ’cause if I look at this list of names, obviously a lot of these are clients I don’t know ’cause they’re other people’s clients, but some of these are clients I have, and I know that they have paid off mortgages. But I know that this list, I mean, if it’s 26% and we said, what was our percentage of associates again? I already forgot. 27%?

Matt Mulcock:
27%, Yeah. Yep.

Ryan Isaac:
So think of how that lines up. You know, these are a lot of people who are younger in career who haven’t purchased houses yet. I know a lot of these people have to be, well, I guess, I could actually filter, I’m looking at it right now. Everyone who has, yeah, I’m looking at the zero balance personal real estate column and looking at the practice type column for associates, and mostly it’s associates and the ones who are owners have paid off real estate. Is that interesting?

Matt Mulcock:
Yeah.

Ryan Isaac:
So there you go. So you know, I like this lesson here. I mean, getting rid of debt I think is one of the most noble things you can ever do in your personal finances. And arriving in a place where you end your career and your life with a high enough net worth to sustain your spending and no debt is fantastic. I think it’s a…

Matt Mulcock:
It’s great.

Ryan Isaac:
It’s very noble. There’s a way to do it responsibly. Paying off debt versus investing for your future. You can’t live off of no debt in the future. You need net worth to live off. You need assets. You can’t just…

Matt Mulcock:
Yeah. Assets exactly.

Ryan Isaac:
You can’t spend no debt [laughter] you know?

Matt Mulcock:
Yes.

Ryan Isaac:
Like, it’s cool, like get there, but the main number.

Matt Mulcock:
But not at the cost of not building assets.

Ryan Isaac:
Yeah, because the main number, like, it doesn’t matter if you have millions of dollars in debt, if your net worth is big enough to sustain your spending and you pay everything off, like your net worth is what tells a story, not your debt number. And that’s what we really have to keep in mind, especially in the younger age of people realize that a successful dental career will allow you to spend the money you wanna spend. You’re gonna travel, you’re gonna have the stuff that’s important to you. You can get it, you can live like you wanna live and you can pay off your debt. Like, you’ll be able to do that. I mean, imagine when youre $14,000 a month practice loan finally comes off in 12 more years. It’s hard to imagine.

Matt Mulcock:
Yeah.

Ryan Isaac:
But when it does, if your savings rate’s already high and your liquidity’s already high and you’re maxing out retirement plans, you can take 14 grand a month and just start chipping away at stuff, you know, for the last half of your career. I mean, it’s substantial, you can get there, but the lesson isn’t, you don’t live sustainably because debt’s gone. You live sustainably because your net worth is high enough.

Matt Mulcock:
Because you’ve built assets.

Ryan Isaac:
Yeah. And that’s a balance. And it’s hard for dentists because of how much debt they carry. All right. Average commercial real estate debt.

Matt Mulcock:
Wait, did you wanna know Average house value?

Ryan Isaac:
Oh, yes, please. Yeah. Average house value, lemme guess on that.

Matt Mulcock:
Average house value.

Ryan Isaac:
Average. A single family home house value in the country I’m gonna say $392,000.

Matt Mulcock:
Holy cow. It’s $393,000.

Ryan Isaac:
Oh, shut up. No way. I promise I did not even look at it.

Matt Mulcock:
$393,935. So $394,000 we’ll round up a little.

Ryan Isaac:
Okay. Geez.

Matt Mulcock:
So $394,000.

Ryan Isaac:
All right, well…

Matt Mulcock:
Dang dude.

Ryan Isaac:
There you go.

Matt Mulcock:
Good for you. That’s not bad.

Ryan Isaac:
My guessing abilities in that category worked out. Average commercial real estate debt, we’re gonna talk about the people who don’t even have commercial, but the average debt load is $686,000. That’s the average debt. Now these aren’t values of buildings. And that wasn’t value of houses?

Matt Mulcock:
No, it was just the… Yeah, the debt only.

Ryan Isaac:
Yeah. The average debt. That would actually be kind of a cool follow-up that wasn’t in our explicit data set here. I don’t… There’s so many tabs on here. I would actually like to see the average value of a house, but that’s kind of like very subjective too.

Matt Mulcock:
It’s really hard to get. Yeah.

Ryan Isaac:
Very subjective. The average commercial real estate loan is $686,000. Now the percentage of people… Tell me what you think the percentage of people without commercial real estate debt is.

Matt Mulcock:
Oh, I’m gonna screw this up too, I’m gonna go something similar to the other.

Ryan Isaac:
What’d we say, 26%?

Matt Mulcock:
26% for no debt at all. I’ll say this is 30%.

Ryan Isaac:
Okay. So we’ve got… And we’ve got… No way. Can that be real?

Matt Mulcock:
What does it say?

Ryan Isaac:
75% don’t have commercial real estate balances? Let me see some of the… It could be.

Matt Mulcock:
I guess that might make sense because if you think about we’ve got a 27% on associates.

Ryan Isaac:
27% are associates, they’re not even practice owners. That’s a quarter.

Matt Mulcock:
Yeah. And then how many… What’s the percentage of people that are…

Ryan Isaac:
Leasing.

Matt Mulcock:
Owners of practices, but they’re leasing.

Ryan Isaac:
That means… Yeah.

Matt Mulcock:
Plus our older demographic who have paid off their loans.

Ryan Isaac:
Exactly. And that’s what I was just looking at. So I’m looking at the people I know of. Commercial real estate loans is zero balance. Let me just look, I’m just scanning these names here. I can see some that have zero balances on their commercial real estate loans. But that does make sense because we’re seeing a quarter of these people are non-practice owners and they’re not gonna own commercial real estate. And then we’re saying what another half of these clients don’t…

Matt Mulcock:
Are leasing buildings.

Ryan Isaac:
Either leasing or have paid off their building debt, which most of them are probably just leasing.

Matt Mulcock:
Yeah.

Ryan Isaac:
That makes a lot of sense because it’s not as common as people think that you get to own the space you work in. And especially the more dense and expensive the city you live in. It’s just the chances of owning those things are just less and less. So that’s it. That did take me by surprise though.

Matt Mulcock:
Yeah. That’s it. That was higher than I would’ve guessed, for sure.

Ryan Isaac:
That is…

Matt Mulcock:
Clearly it is ’cause I guessed 30%. [laughter]

Ryan Isaac:
Excuse me.

Matt Mulcock:
Clearly, it’s a little higher than what I thought.

Ryan Isaac:
Yeah. It’s a little higher. Does that tell you anything about commercial real estate?

Matt Mulcock:
I think, well I think what it tells me is that based on all the data we’ve already looked over of the averages. Right. And it just solidifies for me what we always preach, which is every decision you make as a practice owner, as a dentist should be based around the practice itself and your ability to produce as a dentist to create more income, more value and not get lost in this idea that you have to own your building to be successful.

Ryan Isaac:
Clearly no, I mean what did we say earlier, that the average age is 39. The average total term is almost a nine. That puts someone on an average career path about five years ahead of schedule. So we’re saying our average dentist advisor’s client is five years ahead of schedule from an average age retirement and only 25.

Matt Mulcock:
And a good chunk of them don’t even own their buildings.

Ryan Isaac:
25% of them don’t… Only 25% own commercial real estate. So what does that tell you about the ability to build a practice, a career, save money, make money, spend money, build a net worth without owning commercial real estate? That tells you what?

Matt Mulcock:
Now it might be a little lower than or higher than that just because the ones that have paid off their buildings and still own them. But let’s even say it’s 50/50. I think it’s pretty safe to say that it’s… Let’s say 50% of our practice owning clients don’t own their building. That’s probably a pretty safe guess.

Ryan Isaac:
Yeah. Now let’s go to practice debt. If you weren’t looking at this, don’t look at it. Avert your eyes. Avert your eyes.

Matt Mulcock:
It’s too late.

Ryan Isaac:
Really? ‘Cause I was gonna ask you, would you assume practice debt is higher or lower than the average commercial real estate debt? What would you assume if you were just asked that question? I don’t know if you’re like looking them both next to each other.

Matt Mulcock:
I would’ve guessed that the practice debt would’ve been higher.

Ryan Isaac:
Oh, that practice debt would’ve been higher? I would’ve guessed the opposite. Just because I’m so condition.

Matt Mulcock:
What do I know.

Ryan Isaac:
I mean, my guess isn’t, doesn’t mean anything.

Matt Mulcock:
I guess that would make sense that it would be lower. Yeah, I take it back. I go with your answer.

Ryan Isaac:
It just, it seems like buildings are so expensive, but, I mean, but a building you buy once you get debt for it once, I mean, you can refinance it, but a practice you can add like…

Matt Mulcock:
Well, so let me walk through my line of reasoning. Our demographics are younger.

Ryan Isaac:
Yes.

Matt Mulcock:
So I would’ve guessed that…

Ryan Isaac:
Oh, loan balances right now, this phase of life…

Matt Mulcock:
Loan balances would be higher as a younger…

Ryan Isaac:
Average age is 39. Yeah. You’re right.

Matt Mulcock:
So like a practice owning dentist that’s 39 is gonna have a higher balance on their practice. Right. So that’s kind of what I was thinking possibly, but…

Ryan Isaac:
No, that actually makes sense. And I wonder, see if we had like an Excel guru who was like throwing out pivot tables with hot keys. You know those people?

Matt Mulcock:
0:48:44.4 Matt: Yeah. Let me just put… Yeah, we are. Let me just put that pivot table in the pool of hotkey here.

Ryan Isaac:
You know those people who can hotkey a pivot table. [laughter] If that’s not in someone’s Tinder bio that you can hotkey at pivot table in your sleep.

Matt Mulcock:
Oh my gosh.

Ryan Isaac:
Then you’re missing out. That’s a free Tinder tip for me who’s an old, I’ve been married for 20 years. I’m 42. I know nothing about dating, but you should put a hotkey a pivot table when you sleep.

Matt Mulcock:
Hot key a pivot table.

Ryan Isaac:
Yeah. But if you could do that, you’re right. I didn’t even think about that. The average age skew is lower, so the balance is still gonna be higher. I was also thinking even though buildings are very expensive, if you think about the practice, you can constantly be getting debt and little chunks, not even little chunks, big chunks along the whole way then you buy a buy-in loan, you might have like a remodeling loan, which you could call that the building. But if you lease and you get like a build out loan for your practice, that’s not a building loan, that’s a practice loan.

Matt Mulcock:
Yep. It’s on the practice. Yeah.

Ryan Isaac:
And you could constantly be putting 50 to 75 to a hundred grand in there every few years.

Matt Mulcock:
New equipment. Yeah.

Ryan Isaac:
So that makes sense. So what do we say average practice loan is 670,000. So it’s almost the same as average building loan.

Matt Mulcock:
Right. Yeah. Really close.

Ryan Isaac:
What would you say the average, or what would you say the percentage of clients who don’t have practice loans, it should match the associate data plus a little.

Matt Mulcock:
Well, I was already blown away at the other one. I’d say 55%,

Ryan Isaac:
46%. So closer.

Matt Mulcock:
All right, I’ll take that.

Ryan Isaac:
Yeah. ‘Cause I was thinking if 27% are associate non owning, practice owners.

Matt Mulcock:
About another 20%,

Ryan Isaac:
Or people who have paid off their…

Matt Mulcock:
That have paid it off. Yeah.

Ryan Isaac:
Paid off their practice loans, which if I’m just scanning the again hotkey pivot Tabler would be able to do this really like beautifully. I am jealous of people who can like, run data out of Excel like that. But I’m looking at all these zero balances and there are quite a number of people in their 40s and 50s on this zero balance list. You know, so this is easily half are those associates and then, well another 20% are clients who have paid off their practice loans. So, okay. This tells me another story about debt too. A lot of times I think it’s easy early in career to get really worried, discouraged, frustrated that like, oh my gosh, if I had put money in my 401k or I invest, like, yeah, yeah, yeah, I know it’s important, but this debt is just staring me in the face. It’s so big, it’s never gonna go away. The minimum payments never make, you know, they never make a difference. But this tells me that like, all in due time, people pay off their practice loans, people get out of debt and it happens. Like you just can’t.

Matt Mulcock:
Yeah. And there’s a schedule for it. It’s like, it’s…

Ryan Isaac:
There’s Schedule, there’s a time.

Matt Mulcock:
You can’t, the system is built in for you in the AM schedule.

Ryan Isaac:
Yeah, your retirement’s not on a schedule. No one’s forcing you to make minimum payments.

Matt Mulcock:
No.

Ryan Isaac:
Like no one could… Nobody, unless you hire us, we care a lot. But nobody could care less if you’re gonna make it and, like if you have money later on. But everyone in our, all of our lives cares a lot if we pay our debts back to our lenders.

Matt Mulcock:
Yeah, you have to.

Ryan Isaac:
And I’m gonna go back to a statistic here. We’re running long, but bear with us folks. This is kind of cool. I’m gonna go back to the total term statistic. We track something else called change in total term for you math nerds, that’s called delta.

Matt Mulcock:
It’s called the old Delta.

Ryan Isaac:
The Greek symbol Delta represents change. So the delta TT, [chuckle] triangle TT, that’s delta, right? It’s a triangle. Okay. [laughter]

Matt Mulcock:
Yeah. Triangle.

Ryan Isaac:
The average one year change in total term, this actually shocked me quite a bit, is 2.45 points in total term.

Matt Mulcock:
That surprised me as well.

Ryan Isaac:
That surprises me a lot. The average quarterly change in total term is 0.82. People are making… All that is just to say people are moving their total term needle a lot. When your net worth grows, when that total term grows, it grows in three different ways. You add raw cash to the pile of your net worth. Your investments grow, your practice, your real estate value, your investment accounts. Not last year they didn’t, but they will over time. Don’t worry about it. Or and you pay down debt. Those are the three ways that you grow your net worth. New cash, investment growth, and debt reduction. I’m always surprised. And our clients are too, at the amount of debt reduction that happens year over year, by minimum payments alone. It doesn’t feel like it, but we… You chunk down, you dentists out there chunking down like sometimes six figures easily in debt reduction on minimum payments alone. So don’t sweat it. Don’t stress it. There’s a time and a place where your debt will go away. Even just for minimum payments. It’s just gonna go away eventually. Insurance, we have two categories of insurance that we’re tracking. For those who aren’t familiar, we are not insurance agents. We don’t sell it. We don’t know. We do not sell whole life to people. And we don’t earn.

Matt Mulcock:
It’s a side hustle.

Ryan Isaac:
It could be. We don’t earn a penny from insurance. We consult on it. We care a lot about it ’cause it’s very important. The average life insurance policy that people hold is $2.5 million. Now, if you compared that to the average net worth of almost $2 million, that means when our average client… If, when, if our average client passes away, something happened to our average client, their family, their estate, their heirs will be getting a combination of almost an average of $2 million of net worth, plus $2.5 million dollars of life insurance money. An easy way to think about how far that money would last you. If someone was handed $4.5 million after the death of a loved one that family could pull about 15 grand a month indefinitely in perpetuity off of that $4.5 million forever. Or they could spend more than that. And the $4.5 million would dwindle a little bit depending on how fast you’re taking out. In other words, how does that strike you? The average of two and a half million dollars held in life insurance does that seem like healthy? Too little? Too much? How does that strike you in average age being 40?

Matt Mulcock:
Yeah, it’s probably fair with the average age being 40. I was actually a little bit surprised. I thought that number would be a little higher.

Ryan Isaac:
Do you find that most dentists are typically underinsured with life insurance?

Matt Mulcock:
Yes. I think on average they’re probably, I think in both categories, but more so disability. We’ll get to that. But they’re more likely to be underinsured in disability, but also with, they’re just coming to us, they usually tend to be underinsured in life insurance as well I think. And that seems a little low. I’m seeing this, and then again, we’ll hit disability, then I’m like, man, we gotta go do like a review of everyone’s insurances.

Ryan Isaac:
Yeah. And the way to think about this is, again, easy way to think about life insurance every million bucks can pay your family probably 35 grand a year indefinitely or you could take out a hundred grand a year and it’ll be gone in 10. So think about life insurance that way. If you’re a brand new associate, if you’re not married, you don’t have many kids, your need is probably smaller. Mid-career is probably the highest peak of life insurance need. You probably… That’s the time you’re most likely to have the biggest family living with you. The most debt and the most obligations.

Matt Mulcock:
You’re the most vulnerable to an early death, or you’re family is at stake.

Ryan Isaac:
Your family’s the most vulnerable to an early death at that mid-career point. Later career, we help clients start transitioning out of insurance by dropping some of it. They let things lapse because they are more self-insured. When we do this calculation, so we’re looking at like, what is your current net worth? What do you have to spend every year? How much spending are you gonna get out of your net worth if something happened to you? And we gotta make up the difference with your life insurance. Now, hit us with the disability average.

Matt Mulcock:
Yeah. Disability average for the… This is a monthly payout is…

Ryan Isaac:
Yeah. Monthly disability benefit.

Matt Mulcock:
I’m just gonna round up a bit 9400. It’s 9394. 9400 a month. This is also… This one hits me even harder than the life.

Ryan Isaac:
Why? Yeah. Why?

0:56:43.1 Matt: It just seems low.

Ryan Isaac:
Compared to?

Matt Mulcock:
Like if you… The spending, if you say you’re spending 16 grand a month and your average disability policy, if something were to happen which doesn’t take much for a dentist to become disabled. You break a thumb, you break a finger, you hurt your elbow.

Ryan Isaac:
Yeah. It’s not a lot.

Matt Mulcock:
So your payout is what, just over half of what your… Just your spending number is on average. That seems low.

Ryan Isaac:
Why do you think dentists tend to be underinsured in life and disability? Do you have any theories? I could guess at something, but…

Matt Mulcock:
It’s paying for insurance sucks.

Ryan Isaac:
It sucks, A. So yes, and I feel that, I agree with that.

Matt Mulcock:
Disability specifically…

Ryan Isaac:
Expensive.

Matt Mulcock:
Is ’cause it’s more expensive. Which is interesting because it’s only more expensive. There’s a direct correlation to why it’s more expensive. It’s because it’s more likely to happen.

Ryan Isaac:
To get paid out. Yeah.

Matt Mulcock:
Yeah. So I think it’s somewhere around 25-ish percent of people who take a disability. This is dentist, by the way. So I think I saw this from the ADA. Somewhere in the 27%, or 25% to 27% of dentists who take out a disability policy will end up using it.

Ryan Isaac:
Geez.

Matt Mulcock:
One in four.

Ryan Isaac:
Yeah. Wow. Okay.

Matt Mulcock:
So one in four. ’cause again, if you think about it…

Ryan Isaac:
Not surprising. The littlest thing can get… Yeah.

Matt Mulcock:
Yeah. The chances of you being disabled. I have a client, I’m gonna be very vague about this. Just to protect the innocent, but he had a very normal accident, just doing something fun with his family. And hurt his arm for, it was like six or eight or nine weeks or whatever and he was out.

Ryan Isaac:
We were talking about this earlier as a group, how common mountain biking accidents are. How many mountain biking dentists do you know? I know a ton. [laughter]

Matt Mulcock:
A ton.

Ryan Isaac:
Think about like, just the vulnerability in your hands in your clavicle in your wrists, in your… And then you’re falling.

Matt Mulcock:
We don’t wanna scare you people from not living your life. But it’s like, we gotta get you insured here.

Ryan Isaac:
It’s expensive, disability’s expensive. I think dentists are rightfully a little skeptical of insurance people, and I think that’s a healthy, healthy skepticism. And they don’t want to feel like they’re getting sold too much life or disability insurance. So I think maybe there’s some hesitation there. I also think people don’t know how to buy it. Meaning how do you pick a number? What are you supposed to pick? And usually the only people that you’re asking are the people who are selling it. And there’s a conflict there. And so you’re like…

Matt Mulcock:
Yeah, you go to a car salesman, they’re gonna sell you a car.

Ryan Isaac:
Yeah. Like, how much should I spend? They’re like, double your budget. You don’t know if you can trust them. So, yeah. If the average spending is 16 and the average disability is nine, now that doesn’t quite paint the whole picture because if the average net worth is also $2 million. Again, there might be some usable net worth to use your term if there was a disability. But disability’s interesting because it’s not usually permanent. And so a lot of times you’re not looking at a situation where you can liquidate your net worth and be like, well, I have a net worth, so I’ll just like liquidate everything. You’re like, well, that disability might only last nine months or 12 months and you don’t want to liquidate everything and start over again.

Matt Mulcock:
Yeah.

Ryan Isaac:
Matt, To wrap this up, if this were a scorecard of a client, and by the way, this is how we see client’s data, this is how we think as financial advisors. This is why we built a system that scores this stuff, that analyzes this stuff and puts it into pretty little boxes. And that’s why the Elements team, shout out, spent three plus years working their butts off building this app that we’re so excited to roll out. But if you were looking at this scorecard for a client, anything stand out? How would you grade them? They’re doing good? Does anything worry you?

Matt Mulcock:
I’d say…

Ryan Isaac:
Anything bother you? What would you reach out about?

Matt Mulcock:
Yeah, so that’s a great question. Overall I’d say we’re gonna do the old Compliment Sandwich.

Ryan Isaac:
Yeah. Oh, okay. Compliment it. Let’s go.

Matt Mulcock:
Compliment Sandwich where you give them the positive, you hit the negative and…

Ryan Isaac:
Is this manipulative? [laughter] Yeah, okay, all right. Got it.

Matt Mulcock:
Yeah. Very, very. No, but I think, so overall I’d say they’re doing great. The fact that… The number one thing I’d point out is that, they’re not even 40 yet. They’re nearing a $2 million net worth.

Ryan Isaac:
And a nine total term.

Matt Mulcock:
And a nine total term. They’re right on pace for that. We feel comfortable there. Again, there’s context there. So if this client was telling me, well, I want to be done at 50. Well okay, we better pick up your savings rate, ’cause right now you’re only saving 15%. But if you are wanting to get to a place where at 40 years old or close to 40, you’re thinking, oh, I’ll retire at 65. You’re right on pace. Even at that savings rate. You’re totally on pace. So I feel really good about that. I think the debt is healthy. Burn rate’s healthy. The only thing that I’d say that I’d be pointing out to this client is insurance. Especially on the disability side, I would want to at least dive a little deeper into that.

Ryan Isaac:
I would too. Yeah. I would probably make a recommendation for increased disability if this were a client. Even with that net worth at that age, at 40, I’d be like, yeah, get some more disability. Get some, And you, and yeah. And a disability conversation is a whole other conversation. Life insurance, I would probably say, Hey, look, if something happened to you, your family’s getting $4.5 million and that’s gonna pay them 15 grand a month forever. You spend 16, you good with that? And they’d probably be like, yeah, I’m good with that. That’s good. So there you go, man. All right. Matt, thanks for spending an hour of Dentist Advisors Wrapped with me. This might be our longest episode ever, but I think it was worth it.

Matt Mulcock:
I thought it was great. Hopefully it’s helpful.

Ryan Isaac:
That’s my jaded opinion that it was worth it. We’ll see who made it with us. Thank you all for listening, actually. Thanks for another year of the Dentist Money Show. We entered another year with highest download numbers we’ve ever had. It means just more people are listening. I hope that means people are getting good information and making smart financial decisions. And I hope it means it’s helpful to people. Which hopefully that’s what the download numbers tell us. So thanks for tuning in and thanks for listening. And share an episode with a friend, [laughter] It’s like, Hey buddy, I listened to something. This is for you. Listen to this episode.

Matt Mulcock:
Hey, check it out.

Ryan Isaac:
Listen to this episode. Matt, thanks again and thanks everybody for tuning in.

Matt Mulcock:
Thanks Ryan.

Ryan Isaac:
We’ll catch you next time on another episode of the Dentist Money Show. Take care now. Bye-bye.

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