Find Out How Your Finances Compare to Other Dentists – Episode 316

Making comparisons to others can be beneficial as knowing how those with similar circumstances are doing provides motivation that drives self-improvement. For the final episode of the Dentist Money™ Show for 2021, Ryan and Matt examine Dentist Advisors client averages for income, net worth, debt, and more. It’s powerful information to help inspire you to make smart financial decisions.

 

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Podcast Transcript

Ryan Isaac:
Hello everybody, and welcome back to another episode of The Dentist Money Show, sponsored by Dentist Advisors, a no-commission, fiduciary, comprehensive financial advisor just for dentists all over the country like you, just like you. Check us out at dentistadvisors.com. Today on the show, the last show of 2021, Matt and I are doing our financial advisor data analytics version of Spotify Wrapped. So we’re gonna talk about how this year ended with our clients and some data averages about net worth and spending and savings. And there’s a lot to talk about, we didn’t even get to cover all the stuff we wanted to, but it’s a little bit longer episode, so put this on 1.5, 1.25 if you want. But stick around for the whole thing, this is a really fascinating deep dive into what dentists are doing out there in their financial lives, and it was really fun to cover this kind of an end of year. So thanks for tuning in and thanks for listening. If you’ve got any questions for us, you can post a question in the Dentist Advisors discussion group on Facebook, and you can also go to dentistadvisors.com, post… Not post. Just go there, [chuckle] and book a free consultation, and then talk to one of our advisors and that would be a great way to do that. So Happy New Year to everyone listening. Thanks for always listening, and enjoy the show.

Announcer:
Consult an advisor, 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 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 and avoid the bad ones along the way. I am Ryan Isaac, and I’m here with the yuleiest of logs, the Hollywood Mountain, Matt Mulcock. What is up, buddy?

0:01:54.9 Matt Mulcock: Yo, Ryan. I am a yule-y log, I feel like.

Ryan Isaac:
You have a lot of yule in your step.

Matt Mulcock:
I do. I have some yule-y steps lately. It’s the holidays. We both have our backgrounds, our Christmas backgrounds. We missed last week, not like a record… Obviously you had an interview. It was a great interview.

Ryan Isaac:
Yes.

Matt Mulcock:
You did a fantastic job.

Ryan Isaac:
I missed you though.

Matt Mulcock:
Yeah, but honestly, I feel like it was too long between our recordings. I’m just…

Ryan Isaac:
It was. What is a yule log? Okay, actually, yule log is a dessert? Is this where this comes from?

Matt Mulcock:
Yes, it is a dessert. My wife and her sister do it every year.

Ryan Isaac:
A French… Oh, France, Belgium, Switzerland. I’m just looking this up. So all over the place. So a yule log is actually… Well, I guess it actually refers to…

Matt Mulcock:
A log of yule.

Ryan Isaac:
Yeah, okay. According to Wikipedia, for everyone wondering, the yule log, the yule clog or Christmas block is a specially selected log burnt on a hearth as a winter tradition in regions of Europe…

Matt Mulcock:
And we now know what a hearth is.

Ryan Isaac:
We know what a hearth is.

Matt Mulcock:
Yeah.

Ryan Isaac:
So the original is… The original folk custom is unclear. So really this started as just a block of wood that was like kicking off the season right?

Matt Mulcock:
Yeah.

Ryan Isaac:
Okay.

Matt Mulcock:
And now it’s turned into a dessert.

Ryan Isaac:
Now it’s a dessert, and it looks chocolate-y and has swirls on it. [chuckle]

Matt Mulcock:
Yeah. Honestly… So my wife and her sister do this every year. They make this cake thing that looks like a, literally a log and with like… I don’t even know how they do it, but they frost it all nice and it looks incredible. It looks like a actual log. It looks like they were contestants on Great British Bake Off.

Ryan Isaac:
Oh yeah, yeah.

Matt Mulcock:
It’s amazing. Every year they do it.

Ryan Isaac:
It’s like real life.

Matt Mulcock:
It’s really cool.

Ryan Isaac:
I think we need to post… I’m gonna go do this this week. I want everyone to post pictures of their favorite holiday dessert or food, but mostly just dessert. I wanna see a picture of everyone’s favorite holiday dessert, whether it’s super delicious…

Matt Mulcock:
And if it’s not eggnog, then…

Ryan Isaac:
Yeah, it’s getting deleted.

Matt Mulcock:
We’re not friends. We did this in the webinar, and I was pleasantly surprised.

Ryan Isaac:
How much eggnog love there is.

Matt Mulcock:
And how many people were loving eggnog.

Ryan Isaac:
For all you eggnog lovers out there, we’re gonna… This episode actually should be our New Year’s Eve episode-ish, kind of around New Year’s Eve, yeah, like right before New Years. This is basically it for the year 2021 in the books…

Matt Mulcock:
Yeah it’ll come out on the 29th, right?

Ryan Isaac:
29th. It’s in the books. We made it… Matt, do you have any… ‘Cause what we’re gonna do, by the way, I guess we should tease this first, we’re gonna do… For any of you Spotify listeners, and maybe this is like annoying for… Some people make fun of people who post this, but I love it, ’cause I love music so much, we’re gonna do the Dentist Advisors’ financial data version of Spotify Wrapped.

Matt Mulcock:
Yeah.

Ryan Isaac:
And we’re gonna see, how did the year end up? Alright, so Matt, we don’t have to spend a lot of time on this, but I just think this is funny because I just love music, so I think this is really fascinating. I’ll just tell you, I’ve got my little recap here, so I’m just gonna… My top artist.

Matt Mulcock:
Oh wait. Are we doing this? Are we gonna do Spotify Wrapped?

Ryan Isaac:
I’m just gonna go through mine really fast, just ’cause I think it’s fast. I’m gonna fast.

Matt Mulcock:
I wasn’t prepared for this.

Ryan Isaac:
This is annoying to some people, so you can hit fast-forward for 60 seconds. But I just wanted to tell everyone my top artist was Angels and Airwaves, but also included Taylor Swift…

Matt Mulcock:
Was it really?

Ryan Isaac:
Angels and Airwaves, Taylor Swift close number two, and then Blink 182. So basically, the members of Blink 182 and all of their ancillary bands were my top three and Taylor Swift.

Matt Mulcock:
I love that.

Ryan Isaac:
Yeah. I will say that one of my top genres, my number five top genre, this is how you know you’re old, people, my number five top genre was ambient noise. [laughter] Because I listen… I put on my computer…

Matt Mulcock:
Just turn it on while you work.

Ryan Isaac:
Brown noise at night. You don’t want… I don’t like white noise. It’s too sharp. It’s too high.

Matt Mulcock:
Yeah.

Ryan Isaac:
Brown noise is… It’s just a low hum like an airplane. So yeah. And I listened to 103,000 minutes of music last year. My top genre though, number one top genre was punk. So my 16-year-old self would still be proud of me for having punk rock be my top genre. What about you? Where did you land? I love this stuff, yeah.

Matt Mulcock:
I gotta… Let me see how… You gotta teach me how I find this. I had it, but where did it go?

Ryan Isaac:
It’s in the… You’d log in the homepage and then it’s probably gone by now. You can just share your top number one artist though, because I just think that’s cool, and you shared that with us right when they came out.

Matt Mulcock:
Yeah. So my top… Yeah, my top artist by far… It is…

Ryan Isaac:
By a long shot.

Matt Mulcock:
By a long shot, and I don’t know what this says about me, but Post Malone. So I’ve got… Kind of the top three for me, and full disclosure, again, getting vulnerable here, when I work out, I basically only listen to hip-hop, so Post Malone, Eminem, Joyner Lucas…

Ryan Isaac:
Yeah, Joyner. Yeah.

Matt Mulcock:
Drake.

Ryan Isaac:
Yeah.

Matt Mulcock:
That’s pretty much my top four. But it’s kind of funny ’cause then you go down the list, then you’ve got The Lumineers, you’ve got Vance Joy, you’ve got Camp. I’m very much a folk music lover, if I’m just hanging out, if I’m working or if I’m going on a walk or something. And then mixed within there is like Frozen soundtrack, Moana…

Ryan Isaac:
The kids’ stuff.

Matt Mulcock:
‘Cause every time I’m in my car driving with my daughter, that is what we have to listen to. So I have a very eclectic nice mix of music on my wrap.

Ryan Isaac:
That is a good mix. And shoutout to kids. My daughters… My teenage daughters, they’re really into indie beach rock kind of stuff with all their friends and I found some really cool artists. That’s in my genre too. So alright, that’s the music wrap. If you don’t know what that is, Spotify, music streaming service, I mean you should know what Spotify is, but if you don’t use it…

Matt Mulcock:
I mean, you should know what that is, yeah.

Ryan Isaac:
If you don’t use that, I don’t know if other music services do this, but they just… They take all the data and they just show you what your average and top numbers have been, and it’s really cool to see. We’re gonna do the same thing. So here at Dentist Advisors, if you don’t know who we are, we are 15 years in the making, and we are a no-commission, fiduciary, comprehensive financial advisor for just for dentists, that’s all we’ve ever been, just for dentists for 15 years. The comprehensive financial planning part means that we’re your more than just investment advisors. That’s a huge job of ours. Yes, we invest all kinds of retirement plans and personal accounts and kid savings, and all those kind of things, but financial planning is all the other things that are not like financial products. So in our industry, it’s really common for people to sell insurance and call that financial planning, or open a 401K and call that financial planning.

Ryan Isaac:
Financial planning really is all the other questions about profitability and spending and net worth, and is this all worth it? Am I growing enough? Do I have too much debt? Or are my interest rates too high? Do I pay too much in taxes? Did I save enough? That’s financial planning. And then all of the decision-making that’s mixed in with that all year long every year for a career and after, that’s what financial planning is. So we’re in a unique position, not only to do this job, but we track tons and tons of data. It’s pretty meticulous. It’s kind of messy. You just look at this stuff on a spreadsheet, you’re like, “Man, this is a big mess.” And we’re gonna talk about this today. We’re gonna talk about average numbers and kind of… It could be seen as benchmarks. We will be clarifying what could be considered a benchmark and not. And I guess the disclaimer here with an average is that your personal financial situation is very personal. It’s very, very individualized, it’s very personal, but I think average tells at least part of a story, and at the very least, it’s interesting to hear what’s going on in people’s lives.

Matt Mulcock:
Well, and everybody wants to see… I mean it’s just human nature to know where you stack up.

Ryan Isaac:
You wanna know. Yeah, you wanna know. It reminds me I gave a presentation, I think it was this year, time flies by so fast, it was the Mother of Pearls Orthodontic Conference, and we did some live polling, some live anonymous polling. And as soon as I said, “Hey, we’re all gonna like… We’re all gonna see each other’s spending and net worth and income numbers… ”

Matt Mulcock:
Everyone perked up.

Ryan Isaac:
Yeah, big time, ’cause it’s anonymous, so you could be honest, first of all. And then we do, we just were curious creatures, we wanna know what’s going on with our neighbor. So we’re gonna share that. So this data comes from, again, our process of doing comprehensive financial planning for 15 years across hundreds and hundreds of dentists all over the country and all over the spectrum. We have… Actually… And a lot of this stuff, by the way, I’m gonna just kind of sort live, I told Matt that a lot of this data is, it’s ready to go, but I didn’t wanna spoil it for myself.

Matt Mulcock:
Yeah, this is a surprise for both of us which is fun, because normally, it’s just me that gets sprung on with all this stuff, and now it’s both of us.

Ryan Isaac:
Usually I just spring it on you. Yeah, so I just wanted to see here, out of this data… So let’s start with this. We work with practice owners, we work with associates, we work with multi-location DSO owners and operators, we work with retired dentists who already built their career and they’re done. If you’re a dentist, we work with you. That’s probably the right way to put it. But on this data, just for context here, so this is hundreds and hundreds of dentists about… Man, this is more than I thought. I’m kind of surprised. We’ve been trying to make it more accessible for new associates, new grads to access financial planning, and we’re still working on things to make that, but about 20% of this data comes from non-owners, Matt.

Matt Mulcock:
That’s cool.

Ryan Isaac:
Which I don’t… Does that surprise you at all, the data with 20%?

Matt Mulcock:
Yeah, that’s a bigger number than I would’ve thought, but…

Ryan Isaac:
18 months ago, that was probably five.

Matt Mulcock:
Yeah. Yeah, we made a concerted effort, right? We made a big focus on the younger dentists, and we’re still doing that with new things coming down…

Ryan Isaac:
Yeah, sure we got…

Matt Mulcock:
Here pretty soon, but… Yeah, I think it’s probably… This is a result of that focus of getting to the younger dentists…

Ryan Isaac:
Okay let’s start with average age. Matt, do you have a guess on this? ‘Cause I think this is kind of fun. Average age across hundreds of people that we work with. And it’s skewing… It’s still pretty average for what it’s always been, but it’s skewing a little lower as time goes on.

Matt Mulcock:
I… Okay, I am going to go with… No, I’m gonna give a year. I’m gonna go with 41.

Ryan Isaac:
Very close, man. Yeah, 40. So there’s kind of three phases, that beginning phase where 20% of these people are coming from, is like grind, long weeks, long hours, how do I get my income boosted up, get into practice ownerships as soon as I can, that mid-life where you’re like, “Okay, I’m kind of hitting a comfortable level. How do I start to exchange some money for time?” and then that third tier where it’s like, it’s… You did it, now, how do you…

Matt Mulcock:
Yeah, you’re there.

Ryan Isaac:
Now, how do you hold on to it and enjoy it though, too? So these are the questions people are asking. These are the questions people ask that really lead them to hire a company like ours that’s so much more than just like, “I need an account, or I need someone to pick me some mutual funds,” or “I need an insurance policy.”

Matt Mulcock:
Yeah.

Ryan Isaac:
These are the real-life things that eat at you, that make you go, “Okay, it’s time to get someone in my corner who’s gonna know the data, know my life, know my situation, and help me make all these decisions and walk through this with me ’cause it’s a long path.” That’s what really makes that decision. So any… We’re belaboring here, but I just think it’s interesting.

Matt Mulcock:
We are belaboring that point.

Ryan Isaac:
Average income. I’m gonna sort this from highest to lowest. We have some high-income earners folks, and there’s some people…

Matt Mulcock:
Yes we do.

Ryan Isaac:
Hey, what this tells me is there are some people really maximizing the career of dentistry, just really getting after it. So average income across everybody, and then I’m actually gonna take out the top, I’m gonna take out all seven-figure earners after this, average income across everybody is…

Matt Mulcock:
Do I get to guess again?

Ryan Isaac:
Oh yeah, yeah. What do you think, dude? What do you think? Average age, 40, 80% are owners.

Matt Mulcock:
Average income, I’m gonna say it is 450.

Ryan Isaac:
It used to be there. It’s grown so much. It’s 581.

Matt Mulcock:
Wow, okay. Wow.

Ryan Isaac:
Isn’t that crazy?

Matt Mulcock:
I was way off.

Ryan Isaac:
This tells me two things. This tells me, number one, that you can make a lot of money in dentistry. And most of these people, I’ll exclude the seven-figure earners here in a second, most of these people are just running like what you would picture as a normal practice. None of this… It’s not only the exceptional or the elite. I mean these are everyday people. The career of dentistry is lucrative.

Matt Mulcock:
Yes.

Ryan Isaac:
It is lucrative. I think this also tells the story that successful people tend to hire other people in their lives to make sure they maintain and grow their success.

Matt Mulcock:
Yeah.

Ryan Isaac:
And…

Matt Mulcock:
There’s some self-selection bias here yeah.

Ryan Isaac:
There’s some selection bias because that’s not… It’s definitely not the average dentist wages. And I know publicly what’s posted is W2 data from the Department of Labor, which lists like average dental wage is like 120 grand. That’s not… That’s not the whole story, as everyone knows. But even if you added what a normal dentist takes from net income from a practice, if they’re an owner, that’s still… These numbers are still… They’re gonna be higher, they’re gonna skew higher because this is kind of like the self-selecting group of people who’s saying like, “I’m doing well, I’m successful. My life’s complex. I wanna move on to other things. I wanna take stuff off my plate so I’m gonna hire people.” But anyway, so… Yeah, go ahead.

Matt Mulcock:
I wonder Ryan, too, part of this, for this year in particular, maybe you factor this in, but I wonder if this skews a little bit this year, just with some of the government funding the dentists received. I know some of that counted as income. I don’t know if we’re counting that in these numbers or we got that [0:16:12.2] ____…

Ryan Isaac:
So if we did our job right, [chuckle] if we did our job right…

Matt Mulcock:
Questionable, questionable.

Ryan Isaac:
I’m sure a little bit of this snuck in here because we’re taking this… We’re taking this data from tax returns and P&Ls. And P&Ls especially, P&Ls are a mess all the time. They vary completely wildly from bookkeeper to bookkeeper. So that can sneak in there. But this would be data without PPP fund money.

Matt Mulcock:
Okay, cool.

Ryan Isaac:
This would be without it for sure. And I’m glad you bring that up. So if I remove the seven-figure income earners, the average income is still 420.

Matt Mulcock:
Yeah, wow.

Ryan Isaac:
So… And it spans the whole range. We’ve got brand new associates like sub six figures that are just starting to work, and then we’ve got people breaking that ceiling of seven figures. So anyway, that’s just really, really cool. Any other thoughts on income there?

Matt Mulcock:
Yeah, I should have been a dentist. Yeah, I’m gonna go back to school.

Ryan Isaac:
Any other thoughts? Yeah I should… I used to think that all the time.

Matt Mulcock:
Yeah, I’mma sign off here and I’m gonna go start studying.

Ryan Isaac:
For all the advisors in our firm listening to this that are still in their 20s, it’s not too late, guys. You could still do it. It’s way too late for me. Alright, let’s move on here. Let’s go to… Ooh, this is fun. Annual personal spending. Let’s go to that. I’m gonna sort this from highest… No way. Oh my goodness. [chuckle] I just sorted this list from highest to lowest, and look, if it seems like making $1 million a year would be impossible to spend, you’d be wrong.

Matt Mulcock:
Yeah, go ahead and re-think that, ’cause we’ve seen it.

Ryan Isaac:
I’m looking at it right now. So FYI, just so everyone knows, it is totally entirely possible to spend $1 million a year in personal spending. Personal spending includes personal… Real estate that’s personal use, so your house, vacation properties, homes, which is really where a lot of the… Travel and personal use real estate is where you’ll get cash flow spiking, but shopping, utilities, car payments, groceries, kids’ activities…

Matt Mulcock:
Think back five, 10 years, that version of yourself would feel so appalled. And I try to think about that whenever I think of someone else’s spending and like, “Oh my gosh, how could you ever spend that amount?”

Ryan Isaac:
It’s all relative.

Matt Mulcock:
It’s all relative.

Ryan Isaac:
It’s all relative. If you had more time on your hands and you had $1 million more of…

Matt Mulcock:
A seven-figure income, yeah.

Ryan Isaac:
Yeah, of like free cash flow. If you had seven figures of free extra cash…

Matt Mulcock:
Yeah, I’m pretty sure I’d be spending more money…

Ryan Isaac:
Well, and it depends on your time and your preferences. ‘Cause there are people who have that much money, but they don’t travel much or they might not buy big, expensive vacation homes, and it kind of just gets saved. But other people… I would probably go through that and travel, and probably some real estate, honestly. Shocker. I…

Matt Mulcock:
Shocker. [chuckle]

Ryan Isaac:
I would own some real estates in…

Matt Mulcock:
Crypto and real estate, yeah, totally.

Ryan Isaac:
Yeah, getting crypto. But okay, so here’s what’s cool though, even as high as this skews, I actually think the average has come down a little bit, but this would make sense given the fact that we’re…

Matt Mulcock:
Demographics.

Ryan Isaac:
 We’re growing that portion of early career dentists that aren’t spending enough. You’ll get there. You’ll spend more later. [chuckle]

Matt Mulcock:
Yes.

Ryan Isaac:
When you’re saying that, man, I’m thinking at some point, your future house payment will be like your dream monthly budget. What you spend on just your house, what you’re thinking would be nice to spend total in a month.

Matt Mulcock:
Yeah.

Ryan Isaac:
And you’ll end up spending not just on a house payment one day. It’s crazy.

Matt Mulcock:
And then you’ve made it. And then you’ve made it.

Ryan Isaac:
Then you’re still stressed. Okay, so…

Matt Mulcock:
And you’re still stressed about…

Ryan Isaac:
Average monthly spending is just shy of 17,000, which has actually come down a little bit from a year ago when it was around 19.

Matt Mulcock:
I was gonna say 18.

Ryan Isaac:
Yeah, 18, 19, and it’s come down to just shy of 17,000. So thanks to all of you newer career dentists who don’t spend a lot yet. [chuckle]

Matt Mulcock:
Who are bringing that down… Who don’t have the ability to spend that much money. Thank you for that.

Ryan Isaac:
You can’t spend it yet, you will, but you can’t yet. Let’s move on to…

Matt Mulcock:
So 17 grand.

Ryan Isaac:
Yeah.

Matt Mulcock:
So 200 and what?

Ryan Isaac:
It’s like 200, yeah. A little shy over 200…

Matt Mulcock:
About 200-ish?

Ryan Isaac:
Yeah, just a little over 200. Yeah. 212 or something.

Matt Mulcock:
Yeah, 204.

Ryan Isaac:
Yeah.

Matt Mulcock:
That’s not… Yeah, I mean if you think about… If you factor in the income numbers we just referenced and what that equates to, and then saying you’re spending about 200, that’s probably pretty fair.

Ryan Isaac:
It’s pretty fair. It ends up being 25% to 50% for most of this demographic which is right in line. The average is gonna be like a third or something.

Matt Mulcock:
Yeah, that puts you in a burn rate in the 30% if you’re in that high five range.

Ryan Isaac:
Uh-huh. High five. Let’s…

Matt Mulcock:
Yeah, high five, [0:21:08.7] ____.

Ryan Isaac:
Let’s make a distinction too. When we’re tracking spending, just so everyone is clear, what we’re talking about, this is not the baseline expense of bills you have to pay every month. This is the baseline of bills you have to pay… I would say if the average is 17, then baseline bills for most of these people on average is gonna be like 12, somewhere around there. And then the extra spending just comes from a whole year of stuff that happens, right? So that’s vacations, that’s landscaping, that’s furnishing the new place, ripping out the kitchen, re-piping, that’s travel, that’s medical bills, it’s fixing cars, buying stuff, shopping. So you’re basically… If you’re hearing that, you’re like, “Wow, that’s a lot of money.” Your baseline is not really what you spend every month on average, or certainly not in a year. Your baseline is your baseline, but after a whole year, we’re all spending more than our monthly bill amounts.

Matt Mulcock:
Yeah, I think it’s safe. There’s nothing empirical about this, it’s just purely anecdotal. But if you… So to your point, when you ask someone, or if you’re just out there thinking “How much do I spend on a monthly basis?” you’re always gonna turn to that every day, like mortgage, utilities…

Ryan Isaac:
: Yeah 10 grand.

Matt Mulcock:
Gas…

Ryan Isaac:
Yeah.

Matt Mulcock:
Yeah, 10 grand, or whatever it is.

Ryan Isaac:
We spend 10 grand.

Matt Mulcock:
Yeah, take whatever that number is, and basically add anywhere from 20% to 30%. That’s probably pretty safe.

Ryan Isaac:
: I was just doing the math on that, and I would call it about 30, yeah.

Matt Mulcock:
Yeah, so if you add 30% to that number, that is gonna be your actual monthly spending.

Ryan Isaac:
Yeah, after a whole year goes by of like stuff that happens.

Matt Mulcock:
After a whole year, exactly.

Ryan Isaac:
And some years are way higher just because stuff goes on, but… Let’s move on to net worth. We have some people with some high net worths and that’s, again, very, very cool to see. If I look at this list here and I exclude everyone who I know for a fact, I might be missing a few because some of these are not my personal clients, but if I exclude everyone I know for a fact sold to a DSO some time in the last five or so years, I exclude them, there are still some very, very high net worths. Excluding the DSO people, we’re still getting net worths approaching in the 20s, 20 million net worths is what I’m saying, without…

Matt Mulcock:
Yeah, yeah, not $20, $20 million.

Ryan Isaac:
No, yeah, without selling to a DSO. If you’re listening to this five years in the future, if you are, thank you, that’s cool, but the time that we’re in right now, there’s just some really highly inflated numbers for buyouts from DSOs. But anyway, so average net worth across all these people, you wanna take a stab, average net worth?

Matt Mulcock:
Average net worth… So here’s the problem. It’s skewing high with the factor of net worth growth has been incredible this year for various reasons, but it’s also probably, you got a little bit of a headwind pulled down because of the younger demographic as we’ve highlighted. But with that, I’m gonna say our average net worth is somewhere in the 1.2 million.

Ryan Isaac:
2.6. [chuckle]

Matt Mulcock:
: Oh my gosh, I was so far off.

Ryan Isaac:
And by the way, this includes quite a bit, I don’t know what the percentage would be here, the percentage would be about, let’s see… There’s gonna be maybe 15 or so percent of this data are people with a negative net worth…

Matt Mulcock:
Wow.

Ryan Isaac:
Which is normal. That’s a totally normal thing.

Matt Mulcock:
Yeah.

Ryan Isaac:
So the average of everybody, so we’re talking like a good chunk of this data is negative net worth, because you’re a brand new graduate and…

Matt Mulcock:
Yeah you’re just starting. Yeah.

Ryan Isaac:
You have no worth. [chuckle] I’m just kidding.

Matt Mulcock:
You have no worth right now.

Ryan Isaac:
That’s not true.

Matt Mulcock:
It’s okay. You will someday.

Ryan Isaac:
That’s not true. You have lots of worth. But yeah, so this includes everyone, including the recent DSO sales all the way up, or all the way down to brand new graduates with negative net worth. So the average is about 2.6. If I got rid of everyone above 10 million or more, the average is then, this so fun, this is… I love data. The average goes to 1.8.

Matt Mulcock:
Okay, so more in my ballpark.

Ryan Isaac:
Yeah. If we went everyone five million and below, the average net worth five million and below is 1.2.

Matt Mulcock:
See, that’s what I was thinking about. I thought you wanted to know the average net worth of all of our clients five million and below.

Ryan Isaac:
Five million and below. That’s what you thought I was asking.

Matt Mulcock:
Okay, I misunderstood the question.

Ryan Isaac:
It makes total sense, yeah.

Matt Mulcock:
Yeah.

Ryan Isaac:
So very cool. Again, this data is going to skew towards the more successful end of dentistry, just because that’s kind of typically who’s hiring an advisor, especially like a comprehensive partner like we are, but this shows though, again, the vast majority, 90-plus percent of this data are from very, what would be considered very normal practice owners, very normal people. These are not the outliers of your industry. There is so much room for success here.

Matt Mulcock:
How cool is this as a young dentist out there listening to this thinking, “Okay, your average client is in their early 40s… ”

Ryan Isaac:
Yeah.

Matt Mulcock:
Right? “Making 400,000 to 500,000+ and has an average net worth of over $2 million.”

Ryan Isaac:
My people.

Matt Mulcock:
That is pretty… That’s gotta give you a lot of drive and a lot of hope to be like, “Holy cow, we are in a killer profession to build a lot of wealth here.”

Ryan Isaac:
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. Let’s go to… Alright, so while we’re on, we just did spending and net worth, so the natural next step is to talk about total term.

Matt Mulcock:
What is total term?

Ryan Isaac:
Total term, folks. Total term is our mother of all measurements, you could say, and…

Matt Mulcock:
You could say that.

Ryan Isaac:
It’s really the number of people want to know more than any other number which is, “When am I done? When did all this work… ”

Matt Mulcock:
“When can I get out of here?” Yeah.

Ryan Isaac:
Yeah, “When is work optional?” And the short math way of doing it is by basically just dividing your net worth by the annual spending that you have, so net worth divided by annual spending. That’s a pretty shortcut way to do it. It’s a little bit more nuanced with that with taxes and kinda how it breaks down, but that’ll get you close within a few points. And mathematically, someone is going to be financially independent at around a 30, score of a 30. So by the way, go to dentistadvisors.com, just search “total term”, there’s videos, webinars, podcasts, free downloads, free calculators, download the free thing and you can calculate your own. But yeah, so it’s the comparison between net worth and spending. And see…

Ryan Isaac:
Okay, back to what I was saying earlier. The definition of real actual comprehensive financial planning and why it’s so much more than just setting up like an insurance policy or opening an account or picking a mutual fund, and it’s even so much more than just knowing what is my net worth, ’cause a lot of people might know what their net worth is, or they might know what their spending is, it’s even more granular, you have to start taking all those pieces of data and then comparing them to each other. You have to start dividing them into each other. And that’s where you get these ratios, ’cause ratios are really what starts to tell the story, like how much… We’re gonna get to this, like what percentage of my money goes to taxes or savings? Or what’s my profitability? Those are ratios. That’s why a ratio of net worth to spending will tell us how healthy your net worth is. So average… Okay, this is cool. What do you think average total term is?

Matt Mulcock:
Man, I’m going to say…

Ryan Isaac:
And I’ll tell you why… This makes me happy, why I like this.

Matt Mulcock:
I gonna say it’s somewhere in the high teens. I’m gonna go with 18.

Ryan Isaac:
You’re very optimistic.

Matt Mulcock:
Is it way low?

Ryan Isaac:
It’s not way lower, but it’s about 11.

Matt Mulcock:
Okay, alright.

Ryan Isaac:
But keep in mind… Okay, so what does this mean? Okay, again, we’re talking about ratios, right? Numbers by themselves don’t mean enough. They mean something, but they don’t mean enough. You have to compare them. So compare then a total term, which is already a comparison of spending to net worth, compare total term to age. That’s another comparison. So if our average age is 40 and the average total term is 11…

0:30:00.7 MM: I see where you’re going here, yeah.

Ryan Isaac:
And if I told you that in order for a dentist to have a 30 total term at a normal retirement age, somewhere in their 60s, that by their mid-40s, 45 years old, you need to have about a 10, you need to have a 10 total term. This would tell me that if the average age is 40, the average total term is 11, that our average dentist is hitting their ideal total term markers several up to five years ahead of time, ahead of schedule for what we’d want to see an average retirement age for someone to be wealthy. And our… Look, our measure of this total term is conservative. You don’t actually… You don’t have to hit it so high in order to be okay, but let’s err on that side.

Matt Mulcock:
Yeah for sure.

Ryan Isaac:
But that’s really cool to see that, to see, “Okay, compared to average age, average total term is really skewing… It’s telling us that people are… They’re pushing further ahead.” And we don’t have data outside of our clients other than what gets nationally published, which is kind of crummy data. But I will say anecdotally all day long, that the average dentist who is not like working on this stuff proactively, which really means they have someone else working on it proactively like we do, they’re not near these numbers. It’s not normal, it’s not normal to be 40 years old and have a 10 multiple of your annual spending in net worth. That’s not average for the average dentist out there. It’s totally achievable, it’s not like some impossible thing, it just takes… It’s like anything worthwhile, it just takes a lot of little steps and over a long period of time with a big dose of accountability along the way, and that’s how you get there, and that’s how these people have achieved where they’re at right now, which is cool.

Matt Mulcock:
Yeah, and I would say the average dentist is probably not tracking any of this stuff, and we talk about this all the time…

Ryan Isaac:
Not at all.

Matt Mulcock:
That the key to all of this, the first step is actually organizing this data for yourself, actually knowing what your income is, knowing what your spending is, knowing your net worth and tracking this data, and if you have your net worth, you have your annual spending within a reasonable range, you can figure this stuff out, right? You can figure it out… You could go right now back of a napkin, and figure out, if you know your net worth, just write it all down, your assets minus your debts equals your net worth, and then you figure out your monthly spending pretty much at 30% and say, “Okay, if my lifestyle pretty much stays where it is now, let’s figure out what our… ” You take that number of your net worth divided by your annual spend, that’s your total term. You can do this literally right now.

Matt Mulcock:
But most people are not, A, doing that in the first place, and then B, tracking all the things along the way. This is a… It’s a lot of time and effort and work consistently to keep track of this, your progress, and make sure you’re moving in the right direction.

Ryan Isaac:
Like doing small tasks that we’re not in love with, it’s a chore and we don’t keep it up, and this is reflected incessantly in health and fitness. This morning, I was trying to put for the first time some chemicals in my hot tub, and it is a five-minute job and it’s pretty simple, and it took me like an hour and I was really confused…

Matt Mulcock:
Makes me feel so much better that you said that…

Ryan Isaac:
I was really confused…

Matt Mulcock:
‘Cause I’m that guy.

Ryan Isaac:
I was really confused. I got on the phone with the hot tub place twice. I asked so many questions, I know they hate me. But I’m like, if someone knocked on my door right now and was like, “I’ll do this for you like 50 bucks a month right now,” I would just be like, “Just do it.” [chuckle]

Matt Mulcock:
Done. Done.

Ryan Isaac:
‘Cause I won’t… Now, my kids, we get in there enough and the water was green today, so there’s enough of an incentive. But some things are slower, like your spending getting out of control, your savings being too low, your net worth not growing enough, your weight gain, your muscle mass, your flexibility, those are slow burns, your profitability in your practice, those are things that don’t turn green overnight, like a hot tub does or a pool. Those are slow and you can let those things go for years thinking everything’s fine until… It’s kind of like your patients, dentists who are listening, your patients who don’t show up for five years ’cause they’re like, “Oh, I don’t have any pain, I’m good,” and then they show up with really expensive, really painful stuff that has to get done on an emergency schedule, and you’re like, “We could have avoided this along the way.” Annual savings, average annual savings. Now, this ranges from very, very high six figures. There are people saving very high, saving, not earning, not spending, saving very high six figures every year, getting close to seven figures every year, all the way down to a good chunk of this data is zero, because they’re brand new dentists just trying to get organized, they’re not even saving yet. Average savings per year is about 80 grand. Right around 6,500 bucks a month is average dentist savings.

Matt Mulcock:
Pretty damn good.

Ryan Isaac:
Yeah, I mean it’s a… That’s really great. That’s pretty cool to see. Let’s do some debt. Everyone loves this.

Matt Mulcock:
Average debt load?

Ryan Isaac:
Yeah. Personal… Well okay, so let’s do average personal real estate. So in our data, this is anything that’s a home you live in or vacation homes. Interesting. This is some really interesting… Okay, do you have any guesses on this one?

Matt Mulcock:
Wait. Sorry. You said debt load just for real estate?

Ryan Isaac:
Yes, personal real estate loans. Yes.

Matt Mulcock:
Personal real estate, like the total loan?

Ryan Isaac:
Uh-huh.

Matt Mulcock:
Oh, man. Oh, okay. I’m gonna go with… I’ve been so off the last two, I feel like really self-conscious. Let’s say 700.

Ryan Isaac:
Average personal real estate debt.

Matt Mulcock:
700, final answer.

Ryan Isaac:
Okay. Yeah, that was high. The average here, I’ve got…

Matt Mulcock:
I was gonna say six. I was initially gonna say six.

Ryan Isaac:
You were gonna say six. I’ve got an average in the mid-fours.

Matt Mulcock:
Wow. Man, I’m gonna stop guessing.

Ryan Isaac:
Average personal real estate debt is in the mid-fours, mid-400s, so that’s kind of interesting. Let’s do average commercial real estate debt numbers.

Matt Mulcock:
No, I’m not guessing anymore.

Ryan Isaac:
You won’t even go there?

Matt Mulcock:
Okay, I’ll guess. I’ll go. I’m not afraid of failing over and over again. Average real estate loans, I’m gonna say 700. I’m gonna go with 700 again.

Ryan Isaac:
Well, here’s… You know what, we need to make a caveat here. I’m going total data, and this is taking… In this kind of a data, you can’t have zeros for an average. That doesn’t make sense. Well, I guess you could, but where it skews… There’s a lot of people who don’t own real estate. I guess that’s the number. If you took out the zeros of personal real estate, then it’s 500. Average personal real estate loan is 500. The average across all clients for commercial real estate is about 300, but if you took out the zeros, then the average commercial real estate loan is about 740.

Matt Mulcock:
Okay, let’s go with that one ’cause I guessed 700.

Ryan Isaac:
Okay, so this is such a fun lesson. We’re doing this on-the-fly because I wanted to do it this way. It’s such a fun lesson for what data and benchmarking, where it falls short or where it can be manipulated. And you have to know the context of things, like the next time you’re hanging out with your buddies and they’re saying that they made more money than you had paid no taxes, don’t just get mad and then call your advisor or your CPA and then be like, “My friend made more and paid no taxes,” understand some context there, because the context might be that your buddy has no idea what they’re talking about, [chuckle] which is highly likely.

Matt Mulcock:
Most likely. Highly likely.

Ryan Isaac:
Very highly likely. They don’t understand how 179 depreciation works when you buy a $4 million building, and that’s why they have no taxes. But context matters. So I think that’s kind of an interesting lesson here. So when you take out the zeros in a situation like this, then… Of people who don’t own commercial real estate which is fair. But you know what’s crazy, is it’s about… Let’s see, I’ll tell you, out of all the people who… Let’s do… What percentage of people do not own commercial real estate in this data? And it’s about… It’s almost 40% of people do not own commercial real estate. So that’s some of the practice owners who don’t own their building.

Matt Mulcock:
Wow, that’s a lot.

Ryan Isaac:
It’s a lot. Or there’s a lot of people who just lease because in their city, their town, the best setup for their practice growth and future is a lease, or there just is not available. Let’s do this, practice loans, average practice loans. And I’m gonna just take out the zeros. Just FYI, I’m doing this moving forward because there’s… Again, there’s a lot of… A lot of associates who don’t have practice loans, there’s a lot of people who’ve paid off practice loans, different parts of their career out of those who still carry practice loans, the average is 736.

Matt Mulcock:
Wow, okay.

Ryan Isaac:
But the top is like $10 million.

Matt Mulcock:
Yeah, pulling that average up a little.

Ryan Isaac:
Uh-huh. So okay, let’s do… Alright, total debt across everybody, this includes all categories, all zeros, everything, total debt average. What’s your guess? Total… This is personal, practice, real estate, student loans, everything.

Matt Mulcock:
I’ll say around… It’s gotta be around seven or like a million. You’re laughing at me, so now I’m feeling very, very self-conscious.

Ryan Isaac:
You shoot low now.

Matt Mulcock:
Okay, two million. Let’s go two million.

Ryan Isaac:
Yeah. Well it’s 1.4. That’s the average total debt the people carry.

Matt Mulcock:
: Man, you’re messing with me. You’re in my head. You’re in my head. I was gonna say… I was gonna say 1.5 million, to be fair.

Ryan Isaac:
Yeah.

Matt Mulcock:
But you got in my head.

Ryan Isaac:
I got in your head. Alright, I’m gonna ask you this question, Matt. If the average person on this data set is 40 years old, what is the average amount of life insurance that is carried?

Matt Mulcock:
Let’s go with four million.

Ryan Isaac:
Okay, 2.7.

Matt Mulcock:
Okay.

Ryan Isaac:
So average, average… And again, does that really mean anything more than just being an interesting statistic? Not really. Because maybe you need like five times that much, and there’s people that have five times that much life insurance, or maybe you need a lot less, a lot… It depends on your spending, your debt loads, your other assets, your net worth, your liquidity, all that kind of stuff. So…

Matt Mulcock:
Yeah, there’s probably… Again, also skews lower because of our demographics got younger this year.

Ryan Isaac:
Way younger. I mean, look, there are maybe 50% of this data is under $2 million of life insurance.

Matt Mulcock:
Yeah.

Ryan Isaac:
But it’s a lot of younger people with less debt and lower spending. That’s…

Matt Mulcock:
And maybe no kids at this point.

Ryan Isaac:
Maybe no kids, like younger families, less children, lower spending, less debt. It’s just so funny how individual this is. Average disability… So for our average spending, this is kind of cool, our average spending is close to 17. Our average disability is coming in right at about almost 15, which is really healthy because that’s telling us that on average, people are carrying about as much as they spend in personal disability insurance, which is really…

Matt Mulcock:
Or close to it, yeah.

Ryan Isaac:
Yeah, really helpful. That’s kind of what I’ve got for you, Matt. That’s our breakdown of our 2021 Dentist Advisors Wrapped data set.

Matt Mulcock:
So what have we learned here today?

Ryan Isaac:
What did you learn? Yeah, I don’t know. What did you learn?

Matt Mulcock:
I learned that I…

Ryan Isaac:
You can’t guess numbers. [chuckle]

Matt Mulcock:
Suck at guessing these… I started off hot, and then I just started clanging them off the rim. I was missing the whole…

Ryan Isaac:
Don’t ask Matt.

Matt Mulcock:
I was missing everything. I was air balling.

Ryan Isaac:
Don’t ask him. Yeah, really interesting. What did I learn today? Well, I learned that… Well I learned something that I like, which is that my bias was confirmed with data. I like when my bias is confirmed. My bias is that in our data set, the people we work with, not every dentist out there on average, but on average, the people we work with are ahead of schedule in net worth-building, their savings rate is ahead of where it should be, it’s very healthy savings rates, and they’re well-insured and they’re saving enough so they’re not spending too much, and this is just… It was cool to see. It was cool to have some of these hunches confirmed that I’ve seen working with people along the way. There’s still more data. I’m sitting here wondering like average profitability, which is so hard to calculate ’cause everyone’s P&Ls are so messy. Average tax rates would be really interesting to look at over time, average amount of years of liquidity, there’s so much we could do.

Ryan Isaac:
By the way, these are statistics we keep as a comprehensive financial planning for dentists. This is the stuff that we know about our clients, and it’s not perfect, sometimes it’s messy, and we gotta get together throughout the year and we have to update data and update our dashboard and clarify things. We need some interactions back and forth. But having someone in your life that knows this stuff will make, no question, your decision-making easier, and like we say in the beginning of the show, you will make smarter financial decisions, and you will avoid bad ones along the way when you have a partner making decisions with you that has access to this kind of data in your life. It’s just really, really powerful information that helps you make smarter financial decisions throughout your whole career and afterwards. So it was cool. Thanks for indulging us. This was a long episode.

Matt Mulcock:
Yeah I know, it’s really helpful to see. Yeah.

Ryan Isaac:
Thanks for indulging us in this long episode. Maybe we’ll cut some stuff from the beginning from Spotify. If it gets cut, then I’m just gonna say we, one time, mentioned our Spotify Wrapped preferences and I’m still true to my punk rock roots and that’s my top genre.

Matt Mulcock:
And the producers did not feel it was appropriate.

Ryan Isaac:
It didn’t work out. Thanks everyone for tuning in. I guess this is it for the year. So really, thank you for supporting our show and listening and asking us questions, and we just wish everyone a great new year coming up and all the best of luck in the whole world to just keep pushing forward. If you have any questions for us, go to the discussion group, the Dentist Advisors discussion group on Facebook, post a question, we’ll add it on the podcast, or go to dentistadvisors.com and schedule a consultation with one of our advisors. Matt, Happy New Year…

Matt Mulcock:
Yeah, Happy New Year, Ryan.

Ryan Isaac:
I hope you burn the yule log of both ends and just get soaked in eggnog.

Matt Mulcock:
Yeah. [laughter] You too.

Ryan Isaac:
Alright. Does that sound good?

Matt Mulcock:
I want that as well. [laughter]

Ryan Isaac:
Thanks everybody. Happy New Year, and we’ll catch you next time. Take care. Bye-bye.

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