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Financial Fiery Pits of Hell – Episode #321


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Give a small financial flame enough fuel—being careless with multiple accounts, misunderstanding the principle of risk—and soon you have a raging inferno. On this episode of the Dentist Money™ Show, Ryan and Matt look at five different fires that may be burning in your investment accounts. While each may be hardly noticeable, when combined, these festering embers could be costly.

 


 

Podcast Transcript

Ryan Isaac:
Hello everybody. Welcome back to another episode of The Dentist Money Show, brought to you by you know who, Dentist Advisors. Dentist Advisors, we are a no-commission fiduciary comprehensive financial planner just for dentists all over the country, going on like 15 years strong now. Check us out. Let’s have a chat, dentistadvisors.com. Today on the show, Matt and I are talking about a burning gaseous fiery pit of hell that has been burning for 50 years in a foreign country, and what it has to do with your investment portfolio, and what you need to and should do about it this year to get some peace of mind and put out those fires and move on.

Ryan Isaac:
Thanks for joining us today. If you have any questions, go to the Dentist Advisors discussion group on Facebook, post a question, we’ll post an answer, or tell us what you’d like to hear in a future episode, we’d love to cover it. And if you wanna chat with us, go to dentistadvisors.com, click the Book Free Consultation link, schedule a chat with one of our friendly dental specific advisors. We’d love to talk to you. Thanks for being here with us. Enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a 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 and avoid the bad ones along the way. I am Ryan Isaac, and I’m here as always as your expectations will be met with the Hollywood Mountain, Matt Mulcock. Matty, what’s up? What’s happening?

Matt Mulcock:
Yo, Ryan. How are you? You feeling okay? I’m worried about you.

Ryan Isaac:
Yeah I’m good, I’m good. The voice is scratchy again. I swear, this is like the third round of like…

Matt Mulcock:
I know.

Ryan Isaac:
Cold, flu, COVID, who on earth knows, but my voice goes shot and then it sounds like this for weeks.

Matt Mulcock:
I think there’s only one answer here. This is… The universe is pointing to one thing, which is we gotta get you back to Utah. That’s it. You’ve been sick three times since you’ve been in California.

Ryan Isaac:
You’re right, yeah.

Matt Mulcock:
We gotta get you back.

Ryan Isaac:
I need to come back and sit in the snow and think about the waves all day long.

Matt Mulcock:
You probably do, yes.

Ryan Isaac:
And then travel here once a year and just be depressed.

Matt Mulcock:
Exactly, that’s it. That’s my life.

Ryan Isaac:
Good plan. Yeah, good plan. Well, welcome everybody back to the show. We are… January 2022. 2022 full force. I said that there, I saw that meme a couple of months ago that 2022 is basically just 2020-2.

Matt Mulcock:
0.2, yeah.

Ryan Isaac:
Like number two.

Matt Mulcock:
Yeah.

Ryan Isaac:
Yeah, I don’t know how it’s going for everyone. I hope it’s going okay. If you’re a new listener, then shoutout to you. Thanks for being here with us. This is really cool. Every Wednesday we have a new discussion, a new topic. And I actually was just pulling up a… I’ll just say this really quick, I won’t name any names ’cause they didn’t ask me to do this, but…

Matt Mulcock:
Well, that’s lame. That’s boring. Give them a name.

Ryan Isaac:
I was just reading a message from someone literally like 10 minutes ago that’s… He’s like a pretty long-term associate dentist, so kind of like in that career associate track. And he just reached out and said, “Hey, I really appreciate the podcast on career associates ’cause that’s kind of where I’m at, and ownership sometimes doesn’t seem like worth the trade-off. I’m loving life, loving career. And thanks for doing that. That was really helpful.” So that’s what I’m getting at. We’re here to help, and we hope it helps.

Matt Mulcock:
We love being helpful and bringing education to the dental community. And so I’m not just saying that. Just getting those little comments like, “Thanks so much much, you guys are doing a great job,” I love it.

Ryan Isaac:
Yeah, and I’d love to hear specifically what was helpful because it helps us know what kind of content is gonna be the most helpful. So let us now. Hit us up. Let us know what you don’t like.

Matt Mulcock:
Basically, I’m fishing for compliments. We’re fishing hard, like real…

Ryan Isaac:
Matt’s thirsty here, guys.

Matt Mulcock:
I’m like ice fishing in Wisconsin right now.

Ryan Isaac:
Tell Matt what you love about him.

Matt Mulcock:
Yeah. [laughter]

Ryan Isaac:
So here’s a quick invitation then. Anyone new to the show, you can just message us directly, tell us something you’d like to hear about. Even if we’ve done it in the past, there’s always a new perspective. I mean even if it’s a topic we’ve covered 20 times, there’s new perspective, there’s new cases, there’s probably new laws. We’d be glad to do it. So message us directly, privately. You can go to the Facebook group, Dentist Advisors discussion group, post in there and let us know what you’d like to hear about and what’s helpful, ’cause we just… Yeah, it’s so meaningful and it means a ton to just know that it’s actually helping somebody out there. So thank you. Shoutout to you. Alright, I have a story here, as we normally do.

Matt Mulcock:
It’s story time.

Ryan Isaac:
Matt… Okay, I’m not gonna be able to pronounce some of these places. Matt, have you ever been to the, what I’m assuming is a country called Turkmenistan?

Matt Mulcock:
Oh yeah, man. Every summer.

Ryan Isaac:
You’ve been to Turkmenistan?

Matt Mulcock:
Every summer, yeah, that’s our family joint, family place. Yep.

Ryan Isaac:
You head over there. I heard it’s actually hard to get into, so good for you. [chuckle]

Matt Mulcock:
It’s pretty hard right now, but we have a hook-up. Yeah, no, I can tell you right now that that country has never crossed my mind, ever.

Ryan Isaac:
Turkmenistan. I’m sure you’d know the region, just to go there on a map if I said go find it. You’d kinda know about where to go. But I don’t know where Turkmenistan is.

Matt Mulcock:
I’m gonna guess somewhere near Turkey. Let’s just go with that.

Ryan Isaac:
It’s near all the “stans”, I think.

Matt Mulcock:

Oh yeah, Uzbekistan and Kazakhstan.

Ryan Isaac:
Yeah, it’s by the “stans”.

Matt Mulcock:
Oh, it’s one of the “stans” yeah, got it.

Ryan Isaac:
So there’s news out of Turmekistan… No, Turkmenistan. Turkmenistan. [chuckle]

Matt Mulcock:
Turkmenistan.

Ryan Isaac:
Anyway, I read this article, there’s this…

Matt Mulcock:
You’re part of a Turkmenistan Facebook group, aren’t you? This is where you got the story, is that right?

Ryan Isaac:
It’s private, yeah. It’s private though, yeah. So this story comes out this week, I’d never heard about this before and I thought it was so interesting and I saved it, ’cause I’m like, “Oh, this is such a topic.” There’s this giant pit in this country, it’s a couple hundred miles outside of the capital which is also called Ashgabat, I’m guessing…

Matt Mulcock:
I knew that, obviously.

Ryan Isaac:
You knew that. You knew the capital of… Turkmenistan.

Matt Mulcock:
Yeah, I thought about naming our son Ashgabat.

Ryan Isaac:
Ashgabat, yeah, middle name.

Matt Mulcock:
Yep, middle name, exactly.

Ryan Isaac:
Anyway, so that’s the capital. Outside of this capital, there’s this giant pit that’s called Gates of Hell, that’s the name of this pit, and it’s, actually… If you look this up, go find it on YouTube, it’s been around for a long time, the story’s kind of funny, it looks like a Lord of the Rings backdrop. It’s literally… It’s a pit that’s over a couple hundred miles… No, no, no, a couple hundred feet across. Miles would be insane. A couple hundred feet across, about 70 feet deep, and it’s on fire. Are you looking it up right now?

Matt Mulcock:
I am looking it up as you speak. Turkmenistan’s leader wants Gates of Hell Fire put out.

Ryan Isaac:
Yeah, well we’ll get there, but describe what…

Matt Mulcock:
Oh, I’m sorry.

Ryan Isaac:
Yeah, describe what you’re seeing. What is the picture? Describe it for the folks at home. It’s literally like Lord of the Rings, basically.

Matt Mulcock:
Oh my gosh. Lord of the Rings is a perfect example. If you are listening to this, literally go look this up.

Ryan Isaac:
Like Bilbo walked up to the edge of that thing and… Was it Bilbo? No, it was…

Matt Mulcock:
Frodo.

Ryan Isaac:
Frodo, not Bilbo.

Matt Mulcock:
Yeah, come on, man.

Ryan Isaac:
It’s Frodo. Come on, man. Come on, man. My daughter’s reading that book right now.

Matt Mulcock:
This is like literally… This is the top of Mordor.

Matt Mulcock:
This is one of those things where I’m like, “How is this a real thing on our planet that I don’t know about?”

Ryan Isaac:
Yes, exactly. It is one of those things that you’re like, “There’s no way that’s real.” Here’s the other funny thing, there’s a video, I don’t know his name, it was the leader of Turkmenistan at the time, there’s a video of him in 2019…

Matt Mulcock:
Oh, Carl? Is it Carl?

Ryan Isaac:
It’s probably Carl.

Matt Mulcock:
Or Gary?

Ryan Isaac:
It might be Gary. He’s in a SUV and he’s like doing doughnuts around the edge of this thing. It’s like the most brazen leader, like “Check me out” thing that maybe any leader of any country in the world has ever done before. You get a truck and you go to the Gates of Hell and you do doughnuts around the edge of it. I don’t…

Matt Mulcock:
That kind of sounds like an Elon Musk move, I’m not gonna lie.

Ryan Isaac:
It might actually… [chuckle]

Matt Mulcock:
Was it Elon?

Ryan Isaac:
That’s so true.

Matt Mulcock:
Is he the president of Turkmenistan and we had no idea?

Ryan Isaac:
Oh my gosh, that is so Elon. Okay, so…

Matt Mulcock:
There are people standing at the edge of this thing. There are pictures of people just standing there.

Ryan Isaac:
Yeah, for sure. So how did this happen? So what’s crazy about this story is that it started in 1971. So this goes back… Now we’re 50 years. 50 years. Oh my gosh, that’s crazy. 50 years ago, it’s a natural gas drilling site, but there was a huge collapse, there was a big thing and a big collapse, and this pit collapsed, had something to do with the gas that was trapped underground and all these pockets of empty space. Pit collapses, all this gas is being released into the air. Their solution at the time, 1971, was…

Matt Mulcock:
I’m sure was great.

Ryan Isaac:
Light it on fire, it’ll burn itself out in a couple weeks.

Matt Mulcock:
Of course. Sure.

Ryan Isaac:
That’s literally how it started.

Matt Mulcock:
Just burn it down.

Ryan Isaac:
Yes, they’re like, the pit collapsed, it’s a big gaseous fire pit that they said would last a couple of weeks, and it is 50 years later, and it’s still burning, like active gas being released from the pit in the ground is still on fire from 1971.

Matt Mulcock:
That is unbelievable.

Ryan Isaac:
It’s unbelievable. It’s like it’s not believable, like you said.

Matt Mulcock:
No, it really is not.

Ryan Isaac:
You look at the picture and the story, that’s not a thing that happens on this Earth in a normal, in like an actual country, but it totally… Gates of Hell, people, look it up. I read this story and I’m thinking, “Alright, it’s the first of the year, we’re in resolution mode, we’ve already talked about this, but there are totally big giant gaseous pits of financial fires that all of us have burning in our lives somewhere, that… It imploded, it collapsed, it wasn’t great years ago, we lit it on fire, we’re like, “It’ll burn itself out.”

Matt Mulcock:
Just lean into it.

Ryan Isaac:
“It’ll burn itself out. Let’s just let some time go by. It’ll figure itself out.” But you… And you know what we’re talking about. It could be your spending, it could be that insurance policy, it could be that big profitability issue in the practice, it could be so many things. But we all have these giant gates of hell, burning fire pit, financial problems in our life that we’re just ignoring and pretending is not on fire, and we might even be doing doughnuts in a truck outside of the edge of it.

Matt Mulcock:
Yeah, just taunting it.

Ryan Isaac:
Just taunting… But we have these things. And I wanna talk about one of the common ones because it’s just… It’s the first of the year. If you’re listening to this, maybe this spurs other ideas. And I was actually gonna say this earlier, Matt, when we were talking about the people and the listeners, and we’re just so appreciative of it. And if you’re a new listener, just so you know, a lot of people call us for the first time because of this show. It’s probably responsible for 80-plus percent of the new people that we get a chance to meet, might be higher than that. Every single day, usually multiple times a day, there’s emails that hit all of our inboxes, our team, saying, “This person would like to talk to you guys and they’ve scheduled on your calendar.” And so if you’re listening for the first time and all of these ideas spur something in your brain and you’re like, “Oh yeah, I’d really like to fix that thing,” or “Yeah, this makes me think of a thing I need to finally work on, I have a fiery pit of hell burning in my life that I need to put out and extinguish and change,” then do what all of these hundreds of people are doing, and then just go to dentistadvisors.com and click the Book Free Consultation link and chat with us.

Ryan Isaac:
So we’re gonna talk about one of these burning pits. I know people out there listening, this is totally an issue. And we’re gonna talk about the burning pits of a poorly built and probably ignored investment account somewhere. We’ve all got them. It might be the old Roth IRA that you did when you were in college and you had a good idea, and you put some money in Roth, and then you haven’t touched it. It might be your old company’s 401K. It might be a gigantic brokerage account that you’re just sending money to. It might be your company’s 401K or a pension plan, it’s actively getting contributions, but you’ve… It’s burning on fire in some places.

Matt Mulcock:
It might be your day trading account.

Ryan Isaac:
It might be… It might be your crypt… It might be your Coinbase, yeah.

Matt Mulcock:
Might be your crypto, yeah.

Ryan Isaac:
Yeah. I haven’t logged in to mine for a while. I don’t know what it’s doing. Is it doing good?

Matt Mulcock:
I would stay away.

Ryan Isaac:
Is crypto okay? Stay away from crypto?

Matt Mulcock:
I’d stay away right now if I were you. [chuckle]

Ryan Isaac:
Then I won’t look. I don’t look anyway. Okay, so I’m gonna talk about… I came up with six different fires that might be burning in this investment account. And again, these are just really, really super common things, and if they’re happening to you and you’re like, “Alright, this is the year 2022, I’m gonna fix these things finally,” then just go get on our calendar, like Frankie did, and dentistadvisors.com and…

Matt Mulcock:
Go, Frankie.

Ryan Isaac:
Let’s chat. Let’s talk about these fires. Fire number one, I hear this is pretty common. Matt, I’m curious, how often you hear this. It’s kind of like a myth, but this fire that people have accounts in random multiple banks around. They’ll have a Fidelity, a Schwab, a TD, a Vanguard, whatever, all these different banks, and the thinking is that they are protected somehow, right? Does this protect me if I…

Matt Mulcock:
They’re diversified.

Ryan Isaac:
They’ll say, “I’m diversified by having money in different banks.” Matt, what do you wanna say about that little fire pit there of having… Maybe it was thought out and it was intentional, but more than likely, if you have accounts in all these different banks, it was unintentional, it just happened over the years, and Matt, what do you have to say about that?

Matt Mulcock:
Yeah, I mean I’ve heard this so many times, “My current Fidelity,” I heard this a lot, “my current here,” more times than not, this comes down to a misunderstanding of the principle of diversification. So whenever I hear someone tell me that, my response always is, “Diversification is how you invest, it’s not where you invest.”

Ryan Isaac:
Yeah, yeah or even like what type of account it’s in.

Matt Mulcock:
Exactly. Now, that can play a role…

Ryan Isaac:
That’s a type of…

Matt Mulcock:
With other things like asset location, where you’re locating those assets…

Ryan Isaac:
Yes.

Matt Mulcock:
Certainly has a role, but it’s not really…

Ryan Isaac:
But like different banks, that’s not diversification.

Matt Mulcock:
Yeah. No, no.

Ryan Isaac:
What are people thinking when they say that? When they’re saying, “I’m diversified by having multiple banks,” what are they really thinking? What’s going… Why are they saying that?

Matt Mulcock:
I think from the bank perspective, there’s… And I think this is a great… That’s a great question, ’cause I think people get confused on like FDIC insurance coverage on banks and how that correlates to investments at, let’s say, a brokerage firm like Fidelity, Schwab, or any place like that. So I think they confuse the two. They’re like, “Oh, I can’t have more than… ” FDIC insurance right now is 250,000 with the banks, so they’re kind of thinking the same thing with their investment accounts. But I always tell people a story from when I was at Fidelity, I had an older gentleman say this very thing, he had multiple seven figures, and he had it across different accounts and different institutions, Fidelity, Schwab, e-Trade, whatever. And I asked him why he has that, he goes, “Oh, for diversification.” And come to find out, he had Apple in every single account. [chuckle] So again, it’s… I’m like, I had to explain to him, “You are not diversified.” And again, it’s not where you invest, it is how you invest.

Ryan Isaac:
Yeah, I’m glad you brought that up. There’s probably a whole other episode we could actually just dive into this, but I’ll just say really quickly, the… If someone’s thinking about from a protection standpoint, you mentioned the FDIC, which insures banks, so that’s like… It’s up to 250 grand per person, per type of account, has some nuanced rules in there, but that just means if you’ve got cash in a bank, cash, checking, savings account, and the bank goes under, then they… Well, they will insure up to that amount for your… The cash… And for that reason, people who… I have met people with a lot of cash for business reasons, have put it in different banks, kind of like, “I wanna protect it just in case,” but the scenario where the bank goes under is the scenario where other banks are taking over the assets. It’s kind of like insurance companies. You buy life insurance policy and the scenario where that insurance company isn’t around anymore or isn’t solvent anymore, it’s taken over by other insurance companies, it’s not just like, “Bye-bye, sorry.” It’s gone.

Matt Mulcock:
Yeah, and there’s a key distinction here, right? So again, bank versus investing. Let’s say you invested in several different stocks at TD or Fidelity, or insert any brokerage institution you want. If that institution… The difference here is if that institution goes under, let’s say Fidelity goes under, it’s not gonna happen, but let’s say it does, and you own five shares of Apple stock as an example, that’s on that platform, nothing happens to your Apple stock.

Ryan Isaac:
Yeah.

Matt Mulcock:
Nothing. You still own the Apple stock, you just happen to be holding that on a platform that is called Fidelity. But Fidelity as a business could go under, and your shares, you still own them.

Ryan Isaac:
Yeah.

Matt Mulcock:
So that’s a huge difference that people misunderstand.

Ryan Isaac:
Totally, totally. There’s a thing… So different than FDIC is the SIPC.

Matt Mulcock:
Yeah.

Ryan Isaac:
Do you know what it stands for? Pop quiz.

Matt Mulcock:
Yeah.

Ryan Isaac:
I didn’t know. I can’t remember…

Matt Mulcock:
Securities… Security Insurance something-something.

Ryan Isaac:
Yeah, and it’s exactly what it is. Securities Investor Protection Corporation, SIPC.

Matt Mulcock:
There it is.

Ryan Isaac:
Yeah. That is a different amount, it’s up to 500,000 in total coverage, but it’s not investment losses.

Matt Mulcock:
No.

Ryan Isaac:
It’s… It doesn’t cover like if the… If it gets hacked, unless the firm was forced to… Like a total liquidation because of a hack. So it’s not like if it gets hacked, you’re not protected. Investment losses, no. Bad or inappropriate investment advice, no. It doesn’t protect that. It’s literally like… If the institution just goes away, then it’ll protect up to those amounts. So when people say there’s this little… We’re calling these little fires that are burning because people will have… I mean it’s pretty common when we bring on new clients. They’ve got accounts everywhere.

0:18:19.8 MM:
Yep.

Ryan Isaac:
And I would say most of the time, people know that’s an issue, ’cause like, “I don’t even know it’s in there, or who’s even looking after it. I have no idea what it’s being invested in. They’re not working… ” Your accounts… Like most dentists, especially over a long career, will have multiple accounts, quite a few.

Matt Mulcock:
I would… Yeah, I would think so.

Ryan Isaac:
They should play nice together, right? They should communicate, speak the same language, play nice together, and all be working in a little band together, playing the same song for your retirement song. Another one burning out there, and this is also… It’s actually pretty related, but it’s a different topic, and it’s having, we also deal with this quite a bit, multiple advisors managing different accounts, and the person… Usually it’s not by intention… Again, having accounts scattered around different institutions and different advisors in charge of it even, is usually not intentional. Usually it’s like they just get set up along the way and forgotten about, and you move on and do something else. Sometimes though people will do that and they’ll think that, “Well, I’m gonna just get four advisors managing different accounts and see who wins.” [chuckle]

Matt Mulcock:
Yeah, that’s what we call a dumpster fire, and I want no part of that.

Ryan Isaac:
Yeah, when a client comes to you, Matt, and says, you’re gonna be one of four or five advisors managing my money, I’m gonna see who does better over like,” and then some totally arbitrary random period of time where they will check in and see who’s doing better, what’s your thought about that? What do you communicate to the client? You’re not a rude person, so I doubt that you would just say, “I don’t want any part of that.”

Matt Mulcock:
No, no.

Ryan Isaac:
“I don’t want any part of that. Please leave.” [chuckle]

0:19:53.9 MM: No, I joke. But I think, again, all of these come down to a very understandable misconception, like we just talked about the first one. It’s just a misconception and a misunderstanding of the process or the rules or the regulations, or the industry. In this case, when people bring this up and they say that that’s their intention, it’s to me a misunderstanding of what a true fiduciary advisor should be doing for you on.

Ryan Isaac:
Yeah.

Matt Mulcock:
This isn’t like… To me, this isn’t 1985, Gordon Gekko…

Ryan Isaac:
Yeah, who’s the best trader right now?

Matt Mulcock:
We’re gonna be slinging stocks to you. Yeah, this isn’t Wolf of Wall Street. But it’s interesting how even with younger people, that mindset is still… This shows the power of marketing in this industry that’s still… That mindset’s still so pervasive in our industry. So I think I usually come down to having that conversation about what truly should a quality advisor do for you and what should they not. And if this comes down to I wanna compare performance, like you said, across an arbitrary period of time, I’m like, “Look, we’re probably just not the best fit for you ’cause that’s not the value that we really add.”

Ryan Isaac:
Yeah, I’ve had that conversation… I can still specifically remember a few people, like great people that I had a chance to meet that had advisors already, and I was being interviewed as we were being interviewed as maybe another one to add to the team to see who will beat who, and the conclusion was, and there were great conversations, was just like, “Go back to your current one and… ”

Matt Mulcock:
Tell them what’s missing.

Ryan Isaac:
Yeah, figure out, “Why are you even reaching out to other people to see if they can beat your current person? Just go back to your current one and fix the relationship somehow? And here’s some ideas on how to do that.” And give some feedback on like, “Here’s where you might be thinking about this the wrong way.” Now, if someone is out there hiring three different hedge funds, actual hedge fund managers, whose sole job in life is to just beat returns from other people and other markets, then you could say “I hired three hedge funds,” but I’ve never met a dentist who hired any hedge funds at all, let alone three and they’re comparing. Usually it’s just like the brother-in-law manages an account, and then the friend from dental school that you met as a neighbor became a financial advisor manages an account, and there’s the 401K account manager, and then they meet a new one and it’s like, Oh, I’ll just kinda keep them all around and we’ll just see who does better.” But it’s so arbitrary, and more than likely, there’s gonna be some nuance to this.

Ryan Isaac:
Every advisor’s gonna do things differently, especially depending on how they’re paid and incentivized to do things, but it’s gonna be probably likely that a lot of the advisors will be similar in the way they think, at least philosophically about markets. So if you find yourself in this boat, again, it’s kind of funny, I didn’t intend for it to stack up this way, but I’m looking at these lists of fires here and it’s kind of funny how just the disorganization of having random accounts scattered in different places kind of really bleeds in… All these fires are merging now. They’re becoming one giant fire, one pit of hell.

Matt Mulcock:
It’s one pit of just fiery hell.

Ryan Isaac:
Fiery hell.

Matt Mulcock:
It’s funny when you brought this up and we started talking about it, the first thing that came to my mind, and I know for people that listen to us all the time, this is gonna… They’re gonna roll their eyes at this. But it’s true, there’s a reason why there’s repeating over and over again, is I just thought of disorganization. They’re like the fiery pit of hot garbage that is your disorganized financial life that a lot of people are dealing with. And they know it’s disorganized, and they know they have to do this or that. I just thought the overall fiery pit of hell is disorganization.

Ryan Isaac:
It is. I mean it’s the… And when someone asks us, “What’s the number one reason dentists don’t reach their financial goals?” I will say that, disorganization. We call it a bunch of different things. What do we call it? Random acts of…

Matt Mulcock:
Guesses make… Random acts of finance is my favorite.

Ryan Isaac:
Yeah, random acts of finance…

Matt Mulcock:
Guesses make messes.

Ryan Isaac:
Guesses make messes… Yeah, so I totally agree with that. It’s just kind of funny how these all… They all bleed into each other. I’m… Like the next one, the other little fire that’s out there burning, and it’s made worse when there’s multiple accounts, multiple people in charge of them and you don’t really know what’s going on, are the fire that’s burning with high costs in the accounts. Matt, how often do you meet a new dentist that’s bringing a portfolio or a bunch of accounts over and they’re saying, “Take a look at these, what do we need to change?” and you’re like, “Geez, you’re paying one and a half or more percent, and each of these mutual funds, just the fund costs alone, you’re paying multiple percentages in fund costs”? And for… This is a whole other episode, but for those of you not familiar, when you have investments, there’s cost to pay, obviously, ’cause these are companies involved that have revenue and they need to get paid. So some of the costs involved are costs that you pay to the mutual funds called expense ratios, and they’re disclosed in quotation marks. They’re disclosed… Usually…

Matt Mulcock:
Yeah. If you can’t see out there, he’s doing the little rabbit ears.

Ryan Isaac:
Yeah, they’re not… They’re disclosed, but if you don’t know where to look for them, you’ll have no idea even what to look for and where to find them. And they range from basically free to egregiously expensive, crazy expensive. But it’s really, really common to have very expensive funds in your accounts, especially if there’s multiple accounts and multiple banks, and especially if the bank holding the money, which is like most banks nowadays also have their own products. They make their own mutual funds. I mean, This is most places nowadays. So cost inside your portfolio is when it’s just kind of like this pit out there burning that you set fire to a few years ago and you’re like, “I don’t really know what’s going on with that thing.” It’s highly likely that there’s high cost funds in there that are unnecessary, can be easily replaced, easily fixed, and you can put out the fire and move on pretty and clean.

Matt Mulcock:
Yeah, and I think the key here is like, what are you getting for that cost, right? ‘Cause what I always tell people when this topic comes up is price only matters in the absence of value. So if you really think about, or what you just described, there’s a key distinction here between what you just described, which is expense ratios on a fund, that you could easily be getting elsewhere. Meaning you could find a comparable fund, get the same exposure to the same asset underneath that or within that fund for a hundredth of the cost, a fraction. There’s no need to be paying that 1% to 2% of expense ratios for what you’re getting. Now, that is very different ’cause I can already hear… I’m sure people out there are thinking like, “Well, don’t you guys charge fees in your portfolios”? Yes, absolutely, we do. But again, it depends, it’s not just a comparison of this or that, it’s like, what are you getting for what you’re being charged? Again, price only matters in the absence of value. So that’s why expense ratios… There’s no need to be paying expense ratios within funds that are going up over 1%.

Ryan Isaac:
There’s just not anymore…

Matt Mulcock:
When you could be getting exposure to this… There’s no point. And then don’t even get me started on 12B-1 fees.

Ryan Isaac:
Yeah.

Matt Mulcock:
Go look at your funds, people. If you’ve got 12B-1 fees in your account, on your funds, we need to talk.

Ryan Isaac:
Yeah, it’s tough. That is a whole other episode itself too, like what are all the ways that you can pay inside of an investment account? You have the fund costs, which are not optional, so you can’t opt out. You can choose which ones you want, but…

Matt Mulcock:
Yeah, that’s optional to change. Yeah.

Ryan Isaac:
But you have to pay fund costs. You’ll have banking costs, transaction costs at some level. There’s ways to not have it, but that’s a type of cost you can have. And then an optional cost for sure is an advisor. You don’t have to have an advisor. You can do everything by yourself, totally.

Matt Mulcock:
I just got flashbacks to when I watched like the Ring of Fire, Johnny Cash… Great song.

Ryan Isaac:
I was just gonna say, I wish we could outro this episode with the burning… With the Ring of Fire.

Matt Mulcock:
Ring of Fire, I know.

Ryan Isaac:
Gosh, man, can we… We gotta figure that out. And make this happen. Actually, I think you can if you play it. Like if you… If I grabbed a guitar and I sing right now, then we could do it. Then we could totally…

Matt Mulcock:
Okay. We’ll pause. Go ahead, grab your… [chuckle]

Ryan Isaac:
Yeah, I’ll be right back. Matt, it’s time.

Matt Mulcock:
Time for what, Ryan?

Ryan Isaac:
It’s time to book a free consultation at dentistadvisors.com. Just click on the big Book Free Consultation button on the homepage and talk to one of our friendly advisors today. Next fire. Man, this is so funny. I did not mean for it to come out like this, but you’re right, disorganization is at the root of all of these issues. ‘Cause the next one I had listed was not doing… It’s kind of a myth that… Let’s say I’m a passive investor, I’m not trying to time markets, I’m just a long-term passive investor and I wanna get a market return over a long period of time, great. But there’s this assumption sometimes that you don’t have to do anything with your accounts ever, like ever, ever, ever. Now, you don’t have to do what you see on TV with your accounts or on movies, but there is maintenance that has to happen to keep accounts in balance.

Matt Mulcock:
There’s a system, right?

Ryan Isaac:
I’m dying here. Sorry for the coughing. Yes, there’s a system. The system is called re-balancing. When you set up an account and you pick, “I want 80% stocks and 20% bonds,” or “I want this much in the US and the S&P, and I want this much in a foreign market, or this much in emerging markets, or this much in real estate,” you pick those ratios inside of your account. That’s how you build an account, hopefully that’s what’s happened, a lot of times it didn’t even happen that way. But that’s what happens when you build an account. But the second, they are live in the market, you put your money in, they go out of balance every single day. It doesn’t mean you have to bring them back into balance every single day, but over not too long a period of time, that 80% stocks that you once had in the account could drift to 85 or 75, and the problem obviously is then it becomes something that you didn’t choose, which begs the question, did you choose something in the beginning at all to start with?

Ryan Isaac:
Did you have any idea? Did you start with a philosophy at all, or did you just pick random stuff, or did someone pick random stuff for you you don’t really know? And I’d encourage you to really know. I think it’s really important that people try to understand what’s in their portfolios. But this is kind of another fire that gets… That’s just left alone and burning where this account, even if it was chosen wisely in the beginning, it just drifts as markets change and shift every single day, and it’s never brought back into balance. And…

Matt Mulcock:
Well, and kind of along those same lines, do you have a system in place where you’re talking… You have an ongoing communication with someone, even if it’s once a year at a minimum, like for us, it’s far more frequent than that, but let’s say it’s once a year at a minimum, that you’re re-evaluating, not what’s happening in the market… It’s good to know that, right? It’s just for education. It’s interesting. But it’s, “Hey, am I… Each and every year, am I re-evaluating what I define as success, and is my portfolio supporting that? Or do I need to make any changes?” That should be happening at a minimum of once a year.

Ryan Isaac:
Yeah. Oh…

Matt Mulcock:
And if it’s not, then that to me is definitely a fire.

Ryan Isaac:
It’s a problem. And I just think about… Especially in brokerage accounts. So we have hundreds of clients and thousands of accounts probably at this point, yeah, I mean, geez…

Matt Mulcock:
Oh, definitely, thousands. Yeah.

Ryan Isaac:
Thousands. So I think about… It’s really common in after-tax brokerage accounts where dentists will save money, but brokerage accounts are liquid, so that’s a place you can go get money in cash if you ever need it for down payment, practice expansion, emergency, another type of investment, something like that. And as soon as you pull money out of an account, you have to decide how you wanna pull the money out, if you wanna take the shares that have the most gain in them and pay more taxes, if you wanna take the shares out that have the lowest gain, pay less taxes, if you want to out money in a way that leaves the account balanced the way that you originally chose it, which usually means higher taxes, or do you wanna take out money in a way that maybe lowers your taxes when you pull out money, but leaves it out of balance? And then you have to ask questions about like, “Well, how do I get it back into balance? And how long will that take? And if I went from… ”

Matt Mulcock:
And is there new money coming in? And can I use that to re-balance?

Ryan Isaac:
Is there new money? Or maybe this is a chance for me to be like, “You know, it’s time to have a more aggressive account, this is fine.” So this whole re-balancing, like I don’t have to do anything with my account, it just sits there, is not true, and it does require attention. It’s just not the kind of attention we see in movies and TV shows about people on Wall Street trading on their computers and yelling and screaming about prices and buying and selling. It’s not the kind of… It’s just…

Matt Mulcock:
I mean, sometimes Ryan and I do that just to keep things spicy, we just get on Zoom and be yelling at each other, like wearing a suit and tie…

Ryan Isaac:
Buy! Buy! Yeah.

Matt Mulcock:
Yeah and we just do it for fun. But it’s more like role-playing. It’s like LARPing more than anything.

Ryan Isaac:
LARPing. Everyone that was a fake story because you said “I would put on a suit and tie.”

Matt Mulcock:
Yeah, I was gonna say, the second I said “suit and tie”, they were like, “Yeah, you’re a liar.”

Ryan Isaac:
I haven’t seen that in years. Last fire here, and it’s funny, this goes right in line with what we’re just talking about, and this is, usually people don’t really know what kind of risk they’re taking in their accounts, especially if there’s multiple accounts with multiple advisors, multiple banks, they haven’t checked in on them in a while, there’s no process, there’s no accountability, there’s no communication around them. And I’ll just… We’ll say this is a whole other topic obviously, because we could kinda show you the math behind all this, but the amount of risk that you’re gonna take in your accounts, even if it makes your accounts like grow or not grow a couple of percent over a lifetime, that is a monumental amount of money when you’re figuring a 30-plus-year investing career or like 50, 60 years of living, when you have investment accounts.

Ryan Isaac:
We all will be investors, investors even after we’re done working. So these are very long-time horizons. And if you’re not taking enough risk as a young person in your investment accounts, that’s a problem, and it should be addressed, and you should talk to somebody about what is appropriate for your situation. And you might need to be a little uncomfortable in order to take the appropriate amount of risk. And I think… You’ve talked about this a lot Matt, especially when… Just over the years, when you joined our firm, I remember you talked about this a lot, which is, “Is our job as advisors to push younger people into being more aggressive? Because we know, unless the world ends, which is a whole other story, then we know a low-cost, globally diversified portfolio held for a long period of time, it’s gonna grow.” And pushing someone to be more aggressive in their younger years, they will be glad they did. Maybe not at certain periods ’cause there will more volatility in that, but that’s just a… It’s a big question.

Ryan Isaac:
And there’s a lot of people who are either taking way too much risk… You know all the stories everyone heard about the market crashes, especially in ’08, because it lasted a lot longer than March of 2020. But the stories around like “I had some parents or friends or a family member or something, who was gonna retire, but they couldn’t ’cause the market crashed, they didn’t have enough money,” that’s ’cause they’re taking too much risk at the wrong period of their life. But that also has the other side of the coin, is like not taking enough risk when you’re a young person, too. So there’s too much, there’s too little, and when there’s disorganization, that’s a fire that burns pretty hot and it’s a problem because, again, it’s not a linear growth path. Compounding interest in growth on growth on growth over years, like even a couple of percentage points, makes a massive difference in net worth and account balance later. I can think of younger clients who started with a lower tolerance for that kind of a risk for volatility, who picked portfolios that were a little more conservative, but over the years were like, “No, just like pedal to the floor.” They hit 40 and they’re like, “I’ve got 20 years left, just jam this thing down, I don’t care.”

Matt Mulcock:
Yep. Yep.

Ryan Isaac:
And I… You don’t wanna make someone do what they’re not… They don’t want to do, because there is that emotional side to it that does matter, and as an advisor and a client, that’s where the communication and the relationship happens. You gotta really know what is… What can we tolerate? What can we really handle? But also, I think you gotta push it when you’re younger. Because if it really is 20, 30-year money, get the… Squeeze the most out of it as you possibly can. Just get as much as you can…

Matt Mulcock:
Well, like you said, 20, 30-year, I mean, it’s really more like 40, 50, 60-year…

Ryan Isaac:
Oh yeah.

Matt Mulcock:
If you’re 30 years old right now or 35 years old…

Ryan Isaac:
You’re an investor, yeah.

Matt Mulcock:
Yeah, you’re an investor for the rest of your life, which hopefully is…

Ryan Isaac:
Long time.

Matt Mulcock:
85-plus, we’re talking 50-60 years, so… The door does not shut on investing at retirement. It’s a much longer timeframe than that.

Ryan Isaac:
Yeah, and it matters a ton. So there’s probably more, but those are the ones when I read the article about the fiery pit of hell still burning since 1971, it just reminded me…

Matt Mulcock:
In Turkmenistan…

Ryan Isaac:
Turkmenistan…

Matt Mulcock:
Capital being…

Ryan Isaac:
Ashagab.

Matt Mulcock:
Azkaban.

Ryan Isaac:
It’s probably Azkaban, yeah.

Matt Mulcock:
It’s probably Azkaban.

Ryan Isaac:
It’s Azkaban. And the president Thor, right? Is that…

Matt Mulcock:
President… President Carl Thor.

Ryan Isaac:
Someone’s gonna kill us for this. We don’t know what’s gonna… [chuckle] Like Marvel fans are gonna be mad right now. But I… Look…

Matt Mulcock:
Oh, Marvel fans? I thought you were talking about the people editing this podcast.

Ryan Isaac:
They might too. Yeah, that’s actually true. But hopefully… Here’s what I hope. I hope that spurs some ideas. And again, we’re all excited. It’s still January, so, at least when we’re recording this, and we’re still excited to make some changes this year. That’s a really common one, a really common area where people have just these fires that have been burning for years and years. And you kinda know it and you’re just like, “I gotta deal with it at some point.” So maybe this is the year-year, maybe it’s not. Maybe let it burn for another year. It’s up to you.

Matt Mulcock:
No, this is your year.

Ryan Isaac:
It’s your money.

Matt Mulcock:
No, no no, this is your year.

Ryan Isaac:
It’s your money, but Matt says it’s your year.

Matt Mulcock:
Stop lighting… Stop… It’s your year, people. Stop lighting your money on fire in the pit of hell.

Ryan Isaac:
Dude, I like that. Alright, that’s the next t-shirt, “Stop lighting your money on fire in the pit of hell”. That’s the next t-shirt.

Matt Mulcock:
That’s it. That’s it.

Ryan Isaac:
Thanks everyone for tuning in. If you have any questions, again, do what hundreds of people do every year and go to dentistadvisors.com, click the Book Free Consultation link. It’s… We’re chill people to talk to. I think it’s an easy conversation. At the very least, we’ll just do a little Q&A and point you to the right direction.

Matt Mulcock:
You are extremely easy to talk to, I’m just saying.

Ryan Isaac:
I think I’m easy to talk to.

Matt Mulcock:
Yes.

Ryan Isaac:
I think it’s easy. So go there…

Matt Mulcock:
Yeah it is easy.

Ryan Isaac:
Book an appointment, let’s chat about your fiery hell pits, and let’s see if we can get them fixed and put to rest, and let’s make some beautiful gardens on top of those things, right? Hell pits to gardens, right? That’ll be the back of the t-shirts, like a beautiful garden, and…

Matt Mulcock:
Hell pits to gardens, I love it.

Ryan Isaac:
Hell pits to gardens. Matt, thanks for being here.

Matt Mulcock:
Yeah, thanks, Ryan.

Ryan Isaac:
Thanks everyone for tuning in. We’ll catch you next time on the next episode of The Dentist Money Show. Take care everybody. Bye-bye.

Getting Organized

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