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What Dentists Want to Know — Listener Q&A #25 – Episode #331


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On this listener Q&A episode of the Dentist Money™ Show, Ryan and Matt offer advice on estate plans, Buy-Sell Agreements, and what defines a recession. When should you start thinking about an estate plan? Want to partner? Learn why you’ll want a legally-binding exit document to prevent future problems. And with so much talk about recession, how do you know if one is occurring?

 


 

Podcast Transcript

Ryan Isaac:
Heyo everybody, welcome back to another episode of The Dentist Money Show, brought to you by Dentist Advisors. Who else would it be? No commission, fiduciary comprehensive financial advisor just for dentists like you all over the country. Checks us out at dentistadvisors.com, check us out. Today on the show, Matt and I are continuing our live discussions from the Voices of Dentistry Conference. Such a fun time, January 2022, Scottsdale, Arizona. It’s a great place to be in January, Scottsdale, Arizona. Thanks to everyone who put on the show, you did such a fantastic job and it’s cool to be back there and see all of our friends. And today on the show, Matt and I bring you some questions that we get when we go to these things, and they’re very good questions, they’re common questions, and the things that people are probably up there wondering, we wanna share our responses with you, our dear listeners and our friends.

Ryan Isaac:
So today on the show, we’re talking about what is a recession, are we in one, are we headed for one, what does it even mean? We’re talking about estate plans, and do you need them, and why they are important, and how to think about them, a little context about estate planning. And we’re gonna talk about buy-sell agreements in a partnership. Disability, death, other circumstances with… What are known as buy-sell agreements if you are in a formal partnership. So some really important common questions a lot of people deal with, and if you have questions you would like us to answer or feature on the show, go to Dentist Advisors discussion group on Facebook, post a question, we’ll post an answer, and we’ll use it on the show. We’d love to do that, it’s very cool. And if you wanna chat with us directly, go to dentistadvisors.com and book a chat with one of our very friendly dental-specific advisors today ’cause we’d love to talk to you, we’d love to help. And thanks for being here folks, 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:
And welcome to The Dentist Money Show, where we help dentists make smart financial decisions. I am a guy named Ryan Isaac, and I’m here with another guy drinking a Diet Sprite at the Voices of Dentistry extravaganza, Matt “The Hollywood Mountain” Mulcock.

Matt Mulcock:
Yo Ryan, this is actually quite refreshing.

Ryan Isaac:
It does seem refreshing.

Matt Mulcock:
I like it.

Ryan Isaac:
That seems like a refreshing can of… It’s not called “Diet Sprite”, it’s Sprite…

Matt Mulcock:
It’s Sprite Zero Sugar.

Ryan Isaac:
Yes.

Matt Mulcock:
I prefer chemicals over sugar.

Ryan Isaac:
Yeah, that’s true. Chemicals over sugar.

Matt Mulcock:
Yes.

Ryan Isaac:
That’s like balance over burnout.

Matt Mulcock:
Balance over burnout, chemicals over sugar, people.

Ryan Isaac:
We are still here at the Voices of Dentistry. It’s still a little noisy and you might hear some people making announcements over… Okay, so here’s the deal. Every time we do this conference, which we love being here, we always end up somehow being straight in front of the giant speakers that play music and make announcements. Every time.

Matt Mulcock:
Man, you’re not kidding. We’re like 10, 20 feet from the speaker.

Ryan Isaac:
It’s staring right at us and it’s right between us.

Matt Mulcock:
Yes. [chuckle]

Ryan Isaac:
Every time.

Matt Mulcock:
They were blaring music yesterday, it was so loud.

Ryan Isaac:
Voices of Dentistry is such a fun time. If you’ve never been at this conference, go next year. It’s literally one of the most fun, definitely the most laid-back dental conference. All of your favorite nerd podcasters are here, and great speakers, and dentists, and industry leaders, and mentors, and influencers are here.

Matt Mulcock:
Dare I say, “influencers”?

Ryan Isaac:
Are you an influencer, Matt?

Matt Mulcock:
I’ve got…

Ryan Isaac:
You influence.

Matt Mulcock:
400 Facebook friends.

Ryan Isaac:
Okay, and you never check messages.

Matt Mulcock:
I never check messages and I’ve got at least 50 followers on Twitter. So…

Ryan Isaac:
That’s enough.

Matt Mulcock:
You tell me.

Ryan Isaac:
That influences.

Matt Mulcock:
You tell me.

Ryan Isaac:
As we’ve said previously, at these events, we always have a chance to meet everybody, meet listeners, meet clients, and it’s just… It’s so cool, it’s cool to be back on the road, see people. We get lots of good questions. People come up to the booth and they ask us really great questions, and we want to share those with you because they’re good questions everybody should hear because they are questions other people are always asking, we know it. I want to… Here’s what we’re gonna hit today. Two of them, I think are a little bit quicker, and then I wanna end with the longer one. Questions are, “Do I really need an estate plan? What does that even mean? Do I really even need that?” Question number two is, “What is a buy-sell agreement with a partnership? When does that come into play? What do I need? How does it work?” Question number three, “What’s a recession? Are we in one? Are we headed for one? What does that even mean for me?”

Ryan Isaac:
And I wanna do recession last, that’s why I listed it last, maybe spend a little bit more time on it if we can. But these questions, they come to us live, they come to us from clients. And a little shout-out, the Facebook group, Dentist Advisors discussion group on Facebook, if you post a question in there, we would gladly love to answer it and discuss it on the podcast. And if you are asking it, dear listener, then many listeners are asking that same question. And probably the more basic the question, the more common it is. So ask the questions. So, you know how sometimes, Matt, you don’t… When you’ve been doing something for so long, you kinda forget that there’s a lot of really basic questions out there that need to be answered.

Matt Mulcock:
Oh, we take stuff for granted all the time, yeah.

Ryan Isaac:
We take it for granted. I’m sure dentists do that all the time too. You just… You’re in your craft for so long and you know so much about it. You know more about dentistry than we know about anything, but…

Matt Mulcock:
Let’s be real.

Ryan Isaac:
But that’s not what we’re saying.

Matt Mulcock:
You know more about life than we know about anything.

Ryan Isaac:
But you know so much about dentistry in your craft that you kinda forget that there’s some really basic questions that you once asked. You didn’t know the answer to and there are a lot of people who do. So that’s why these are cool.

Matt Mulcock:
Or sometimes you just want a little refresher.

Speaker 5:
Ladies and gentlemen, the Voices of Dentistry will begin in five minutes.

Ryan Isaac:
Did you hear that folks? Five minutes.

Matt Mulcock:
There it is, five minutes.

Ryan Isaac:
That voice…

Matt Mulcock:
Five minute warning.

Ryan Isaac:
That speaker is probably louder than us sitting in front of these microphones.

Matt Mulcock:
Yeah.

Ryan Isaac:
I felt like… That felt like bass from a concert in my chest.

Matt Mulcock:
Yeah, I felt it.

Ryan Isaac:
That was a baritone voice.

Matt Mulcock:
It was very deep, we should get that person on.

Ryan Isaac:
We need to know who that is.

Matt Mulcock:
Yeah.

Ryan Isaac:
Alright, question number one, “Matt, do I really need an estate plan?” I think this came from someone you were talking to.

Matt Mulcock:
Yep.

Ryan Isaac:
What was the context there, what were they trying to ask?

Matt Mulcock:
Yeah, a younger doc. I think the main point of it was like, “What’s the point of an estate plan? I’m young… ” They’re married, but no kids. So they were, again, they were just like, “Hey, why do I… I hear a lot about estate plans and wills and these type of things. Do I really need that?”

Ryan Isaac:
Yeah. How about let’s start with for the average dentist, like a practice, married, maybe a couple kids, a house, maybe a building. What does an estate plan even mean? It’s such a intimidating term.

Matt Mulcock:
Yeah. So to simply put from my…

Ryan Isaac:
You’re an attorney, Matt, why don’t you… [laughter]

Matt Mulcock:
So let me tell you from my extensive attorney knowledge.

Ryan Isaac:
From your legal background?

Matt Mulcock:
My legal background in law school that I didn’t do. No. So we obviously, again, like you said, we’re not attornies, but we do deal with this stuff…

Ryan Isaac:
Consultant attorney.

Matt Mulcock:
All the time, consultant attorney. We do deal with this stuff all the time and we do answer a lot of these questions and we help facilitate…

Ryan Isaac:
Yeah. The relationship.

Matt Mulcock:
The relationship and getting something in place. And we’re usually the first group that brings it up a lot of times to our clients.

Ryan Isaac:
Hey, go to an attorney.

Matt Mulcock:
“Hey, we need to get this in place.” So really what an estate plan is, is a protection plan, if you will. Oh, now a guy’s walking around with bells.

Ryan Isaac:
Hey, you guys know the conference, how there’s people who walk around with the little chimes. I love it. I want a chime.

Matt Mulcock:
He’s got the chimes.

Ryan Isaac:
Reese used to have a chime on the podcast.

Matt Mulcock:
Reese used to have a chime. I know we gotta bring the chime back. It threw me off my game here. [laughter] The guys walking around with this…

Ryan Isaac:
With this live chime.

Matt Mulcock:
Live chime.

Ryan Isaac:
Live chiming.

Matt Mulcock:
Live chiming.

Ryan Isaac:
Just live chiming, chiming in. Did he just chime in?

Matt Mulcock:
He chiming in.

Ryan Isaac:
He just chimed in.

Ryan Isaac:
Like I just chimed in.

Matt Mulcock:
He’s chiming in. So an estate plan is basically a death and disability plan, right?

Ryan Isaac:
Yeah.

Matt Mulcock:
So people are like, “Oh, what… Isn’t that insurance?” That can be part of it. Your insurance can be part of it but basically if you have kids or if you have any assets that you’re wanting to control either beyond the grave or if you become incapacitated in any way, then you need an estate plan.

Ryan Isaac:
Yeah. What are… Okay, so it’s this plan for death or disability. It’s really kind of like, where does the money go if something happens to you, who gets the kids and how should the stuff we own be titled?

Matt Mulcock:
Be titled and distributed.

Ryan Isaac:
And distributed.

Matt Mulcock:
If I… If you were to die.

Ryan Isaac:
So the outcome of this is usually it’s like… How many hours does an estate plan take to start to finish, put together that you’ve seen?

Matt Mulcock:
It depends, right? If you’re going to an attorney, it’s gonna take a pretty in-depth discovery, discussion and review.

Ryan Isaac:
Few hours.

Matt Mulcock:
Few hours there, then they’re gonna go draft all the documents, come back review again and then put it in force. So I think all in all, you’re probably talking about, if you’re going through an attorney, you’re talking about…

Ryan Isaac:
10-12 hours.

Matt Mulcock:
Yeah. Five, 10 hours, something like that. There’s a lot of groups now and groups that we’ve even worked with in the past and continue to try to build relationships with, that can help you create a pretty straightforward estate plan for really low cost and not a lot of time.

Ryan Isaac:
Using technology and stuff to kind of be the go between. The outcome is you spend those hours, you figure out what you’ve got, what insurance policies are in place, what assets and debts there are, who should own them? Like, should you own them personally? Should you own them jointly? Should you have a trust that owns them? Who should own your insurance policies? The outcome is usually when a client does estate planning, the attorney will email us and say, “Hey, will you title these accounts in this trust name. And let’s switch the insurance.” So we’ll help facilitate the titling of assets. But yeah, you walk away with just a document in place that says here’s where my stuff and my little people go if something happens to me.

Matt Mulcock:
And again, I think a lot of times people associate it with death. Right? Meaning they only think of a estate planning like, “oh, if I die.”

Ryan Isaac:
That’s a good point.

Matt Mulcock:
Right?

Ryan Isaac:
Yeah.

Matt Mulcock:
No, it is actually also equal or more important to have a plan in place for incapacitation.

Ryan Isaac:
Yeah. Well, it’s more common.

Matt Mulcock:
Yeah. Like having a healthcare directive, having some type of healthcare, power of attorney. Whether that be your spouse or someone else if something were to happen to you, who do you want to designate to make decisions for you? And then what are your wishes, if something were to happen like that for care? You can designate it when you’re of sound mind prior to something like that happening. Hopefully it never does.

Ryan Isaac:
Totally man.

Matt Mulcock:
But you wanna have a plan in place.

Ryan Isaac:
And that’s where insurance, disability and life insurance come into play. The next question we’re gonna ask… Yeah. That we’re gonna talk about, has to do with this but…

Speaker Five:
Ladies and gentlemen, the voices of dentistry is beginning now. Please make your way to the main hall. [laughter] Voices of dentistry is beginning now. Thank you.

Ryan Isaac:
Hope y’all got that.

Matt Mulcock:
It’s like the loudest speaker ever. [laughter]

Ryan Isaac:
I’ve never…

Matt Mulcock:
We’re gonna cut this off and we’re gonna go in.

Ryan Isaac:
They made sure that no one missed that announcement.

Matt Mulcock:
Yeah. He is gonna do it again.

Ryan Isaac:
People in the hotel parking lot were like, “wait, where are we supposed to go?”

Matt Mulcock:
People on the top floor, like sweet level are like, “oh, it’s starting. I gotta get down there.”

Ryan Isaac:
Goodness. So yeah. That’s where insurance is used to implement an estate plan. And it’s not as big and scary as some people think. I also wanna help make the distinction that a lot of people mix up an estate plan with asset protection, which is kind of a little bit the same. But asset protection is where a lot of different trusts… Have you ever had a client do a big legit asset protection plan with an attorney?

Matt Mulcock:
Oh Yeah.

Ryan Isaac:
I swear. They walk away I swear with this flow chart of trust and entities.

Matt Mulcock:
Honestly, you need one.

Ryan Isaac:
It’s like a dozen entities in trust like it’s pretty complex. And so the act of having so many assets and having like an asset protection plan where all these different companies or trust own things. That’s a whole other thing and not necessary for everybody. And it is way more complex. So the basic estate plan is where’s my stuff gonna go, who should own it if I die or I’m incapacitated and it’s fairly simple and everyone, and you should do it. If you own something and you got some kids then you should do.

Matt Mulcock:
Other thing, if you own assets, if you have kids or loved ones that you want to give direction to if something would happen to you…

Ryan Isaac:
Dogs or lizards.

Matt Mulcock:
Dude honestly, that’s part of like plans a lot of time.

Ryan Isaac:
My daughter has a new gecko called Frankie that we got her for Christmas. I love Frankie dude.

Matt Mulcock:
So your daughter probably needs an estate plan.

Ryan Isaac:
And it’s gonna live for like 20 years they said.

Matt Mulcock:
You got your hands full dude.

Ryan Isaac:
I’ve got a lizard.

Matt Mulcock:
You got your hands full.

Ryan Isaac:
I’ve got a lizard till I’m 61. [laughter] Alright. I think that’s a good kind of introduction to what is an estate plan. And the only tough thing from our perspective with estate planning is legal work is state-specific. So it’s really tough to find a national provider to refer to. They kind of have come and gone, and it’s just tough for them to operate nationally. So the best advice we can give is network with people you know, other business owners, people in your similar financial situation, and find someone locally, an estate planning attorney locally.

Matt Mulcock:
That’s always a safe bet, right?

Ryan Isaac:
Yeah, it’s always a safe bet.

Matt Mulcock:
It’s gonna cost you a little bit more money, but…

Ryan Isaac:
Yeah.

Matt Mulcock:
It’s worth it.

Ryan Isaac:
There’s a few national providers that through technology can facilitate it, but it’s not always the best fit. So a few options, but that’s it. That’s estate planning. Anything else you wanna say about that?

Matt Mulcock:
No, it’s great.

Ryan Isaac:
Are you gonna… Voices of Dentistry is beginning now. Are you going in?

Matt Mulcock:
It’s beginning now.

Ryan Isaac:
Did you hear the announcement?

Matt Mulcock:
I’m gonna take off. You can finish this.

Ryan Isaac:
You heard the announcement, right?

Matt Mulcock:
I heard it. I heard it. I gotta get in there.

Ryan Isaac:
You didn’t miss it?

Matt Mulcock:
How do I not listen to that sultry deep voice?

Ryan Isaac:
It is a baritone voice.

Matt Mulcock:
It’s a very baritone…

Ryan Isaac:
I like it.

Matt Mulcock:
You have a deep sultry silky voice.

Ryan Isaac:
Depending on the time of day.

Speaker Five:
Ladies and gentlemen, the Voices of Dentistry is starting now.

Ryan Isaac:
Here he is.

Speaker Five:
Please make your way to the main ballroom and to your seats. Thank you.

Matt Mulcock:
If you didn’t catch that, it is starting now.

Ryan Isaac:
You guys, what time is this starting?

Matt Mulcock:
I think it’s now.

Ryan Isaac:
Is it now?

Matt Mulcock:
I think… Wait. Let me check. Yeah, it’s now. Yeah.

Ryan Isaac:
It is now. Okay. Next question is, what is a buy-sell agreement in a partnership? Do you get that a lot, Matt?

Matt Mulcock:
I wouldn’t say “a lot” but it definitely comes up from… Sometimes, time and again.

Ryan Isaac:
Yeah. It’s such an interesting… The more dentistry goes on and the more common group practices, associate models, multi-partnership models become… It is just an interesting one. It’s more and more necessary. See here, it’s really… It’s interesting when there’s like a single doc, single location practice, and something happens to that doctor, it’s kind of a scramble to take care of things. And it’s a different story when there’s associates or partners in the practice. But it doesn’t mean that if something still happens to you that it’s a clean break. There’s still things you need to do to make sure that if you were disabled or died or your partner was, that there’s a clean financial transition. I have at least one client that I can think of who lost a partner in a dental partnership, passed away, and there was a formal buy-sell agreement in place, and given the whole…

Speaker Five:
Ladies and gentlemen, this is the last call to take your seats.

Matt Mulcock:
This is unreal.

Speaker Five:
Voices of Dentistry is beginning now. Thank you.

Ryan Isaac:
You guys, I think this is… This reminds me of home, when we ask our kids to clean something and we just keep reminding.

Matt Mulcock:
It’s a, “Hey, just so you know, the bathroom is still dirty.”

Ryan Isaac:
“You didn’t do it right.” [laughter] “Do it now.”

Matt Mulcock:
So Voices of Dentistry…

Ryan Isaac:
Is starting now.

Matt Mulcock:
It’s starting now.

Ryan Isaac:
Was that a last call? I think they said this is the last…

Matt Mulcock:
Last call for alcohol, yeah.

Ryan Isaac:
See, as a parent though, I say, “This is the last time I’m gonna remind you,” and then I say it 10 more times.

Matt Mulcock:
Of course.

Ryan Isaac:
Actually, my wife does more than I do.

Matt Mulcock:
And you could tell, like every time you did it, like that last one was a little bit agitated. He was loud.

Ryan Isaac:
It was loud. It is agitation.

Matt Mulcock:
He was like, “Guys! It’s starting.”

Ryan Isaac:
Yeah, he’s not… Well, I’m glad you guys are here with us. So a buy-sell agreement. Okay. A buy-sell agreement is, let’s say there’s two partners. One of them passes away. The one who passes away needs to be bought out of their share of the practice. Partner A, partner B. Partner B dies. Partner A is gonna take over the practice and then move on from there, but Partner B or the estate of partner B, the family of partner B needs to be paid for their share of the practice. I actually had a client asked me recently, “Well, what if we just didn’t have one and if something happened, we just gave our share to them?” I’m like, “We could do that, but don’t.”

Matt Mulcock:
Yeah, don’t do that.

Ryan Isaac:
Get paid for your asset. Yeah.

Matt Mulcock:
Yeah.

Ryan Isaac:
And so what happens is if partner B dies, there is this… The buy-sell agreement is… That’s just a legal document and it’s funded with life insurance. So it’s just a life insurance policy you carry on each other. And you can just do a cheap, cheap term life insurance. It’s easy to do.

Matt Mulcock:
Where it gets a little tricky is if one partner is much older than the…

Ryan Isaac:
Yes.

Matt Mulcock:
Other partner. That can get a little tricky.

Ryan Isaac:
‘Cause the… Why? Why?

Matt Mulcock:
Because the risk of the older partner dying is much higher than the younger partner, so then the premiums are more expensive.

Ryan Isaac:
Partner B dies, there is just a life insurance policy in place that will buy… That’ll buy the practice out. That’s it. That’s all it is. So, Matt, you were saying, if someone’s older, someone’s younger, there’s like a premium difference, but you can work that out in the details. But that’s all it is. It’s just a buy-sell agreement. Should you have one? Yes. If you have a partnership, please have one.

Matt Mulcock:
Yes.

Ryan Isaac:
The same thing exists for disability. Although I will say, Matt, it’s… I’ve seen it less frequently, a disability buy-sell than a life insurance buy-sell.

0:16:45.9 MM: Yeah, I have too, and…

Ryan Isaac:
Why do you think that is? Or the thinking behind that? I think I could guess on why that is, other than it’s just maybe more complexity that people don’t wanna deal with it.

0:16:53.1 MM: It’s probably more complexity, more cost, is obviously there.

Ryan Isaac:
More cost, more insurance to buy.

Matt Mulcock:
I think it’s the same reason why chances are, you see someone with life insurance and that they don’t have disability insurance.

Ryan Isaac:
Yeah.

Matt Mulcock:
Probably the number one reason for that is that it costs more. And the risk is higher.

Ryan Isaac:
It costs more, and it’s harder to buy because it’s more fine print of like, “Well, we’ll pay you in this scenario. We’re not gonna pay in this scenario.”

Matt Mulcock:
Exactly.

Ryan Isaac:
But it’s the same situation. Partner B gets disabled and the practice is gonna receive some income. Here’s where I think the disability buy-sell might be able to be a little mitigated is because if there’s a disability and there are partners or associates, the practice continues and still has revenue. The extra revenue from an insurance policy would be nice.

Matt Mulcock:
Yeah.

Ryan Isaac:
But that’s also why people buy business overhead insurance, you know, per doctor. So…

Matt Mulcock:
Yeah, like disability for the practice.

Ryan Isaac:
Yeah, disability for the practice, so. But where there’s a death involved though, that’s… I mean, it’s clearly final. So there will be a transaction. And just from the case I was talking about from the client where I’ve seen this happen, all other things being horrible, the financial transaction was just really smooth, you know?

Matt Mulcock:
Yep, yep.

Ryan Isaac:
It was just really… There was money. It was liquidity. The family got bought out for the person who passed. For their share of the practice, they got bought out. They got their money. And then the partner, the surviving partner took their, the whole practice and then moved on.

Matt Mulcock:
Yeah.

Ryan Isaac:
You know, and it was like smooth, clean, legal, everyone got paid, everything was fair. It was all in writing and it was done and that was clean.

Matt Mulcock:
And like you said, it doesn’t limit the hardship or pain of…

Ryan Isaac:
No.

Matt Mulcock:
That situation, but it does make that financial… It’s like life insurance in general.

Ryan Isaac:
In general. Yeah.

Matt Mulcock:
It’s like, it’s not gonna limit the pain you feel when you lose a loved one, but it is gonna make a portion of that less stressful.

Ryan Isaac:
Yeah. Just not to think about that part.

Matt Mulcock:
Exactly. One thing we talked about a while back with buy-sells when you talked about divorce to start the year off [laughter] with a real fun topic.

Ryan Isaac:
We’re just being super optimistic talking about the divorce.

Matt Mulcock:
Super optimistic, getting the year kicked off on a fun note. But I mean, there’s buy-sells that have contingencies in it built in for divorce as well for partner.

Ryan Isaac:
Oh yeah.

Matt Mulcock:
So, I mean, all a buy-sell really is a contingency plan.

Ryan Isaac:
Something happens.

Matt Mulcock:
For like unforeseen things.

Ryan Isaac:
And insurance is the thing that funds it.

Matt Mulcock:
Yes.

Ryan Isaac:
But the buy sell is the actual document.

Matt Mulcock:
Yeah it’s a document that basically says, and it usually will live a lot of times…

Ryan Isaac:
Like if we were partners and you’re like “Hey, if you go bald I need to be compensated because we’ll lose listenership or followers.” And then I do.

Matt Mulcock:
Obviously and I’m getting paid.

Ryan Isaac:
And then I do, and then we’re like, you need to get paid for that.

Matt Mulcock:
Exactly, exactly.

Ryan Isaac:
Compensated for a situation.

Matt Mulcock:
If you move away to California, when I’m already…

Ryan Isaac:
If I move like three times in five years.

Matt Mulcock:
If you move three times in five years, there’s a limit. You broken that limit and I get paid out.

Ryan Isaac:
You get paid for it.

Matt Mulcock:
Exactly. So I’m rolling in it right now.

Ryan Isaac:
Where do people go to like draft up a buy-sell?

Matt Mulcock:
Attorney.

Ryan Isaac:
Just a local attorney too.

Matt Mulcock:
Yeah. And I was gonna say, it’s usually wrapped up into an operating agreement.

Ryan Isaac:
Yes.

Matt Mulcock:
So like, it’s usually a part of that document. If your attorney, which chances are your attorney knows what they’re doing. If you’re doing a partnership, they’re gonna wrap a buy-sell as a piece of your operating agreement.

Ryan Isaac:
Yeah. Which again, like huge reminder, we hear this all the time. Good friends, family members, long time associates are gonna form a partnership and they’re like, dude, this is so smooth. We’re just gonna like spit in a handshake and it’s fine.

Matt Mulcock:
Please don’t do that.

Ryan Isaac:
Just get an attorney, like get a third party, get an attorney involved, remove the friendship and the emotion and the family ties and just get an attorney draft it up, do not do a partnership without an attorney drafting up a partnership agreement. Just don’t, don’t, don’t do it.

Matt Mulcock:
Yeah. I don’t care if you’re best friends from high school. In fact…

Ryan Isaac:
‘Cause you might not be later.

Matt Mulcock:
I was gonna say…

Ryan Isaac:
Especially if you are…

Matt Mulcock:
Especially if you are best friends from high school.

Ryan Isaac:
Just don’t it.

Matt Mulcock:
Even more so have an attorney involved.

Ryan Isaac:
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Matt Mulcock:
I mean, Ryan, don’t you think it’s a bit much.

Ryan Isaac:
Yeah, it was probably a little bit much, but I think some of our listeners might find getting a consultation should be more like an emergency.

Matt Mulcock:
They probably should. I mean, we are saving financial lives.

Ryan Isaac:
Last question. What… And you feel that this question, so you can give us some context here. It’s about a recession, what’s a recession? When are we in it? How will I know? And what does it do to me? What does it even mean?

Matt Mulcock:
A recession is talking about the economic activity of the country.

Ryan Isaac:
Yeah.

Matt Mulcock:
Right.

Ryan Isaac:
It’s much more macro scale, way bigger scale.

Matt Mulcock:
Huge, exactly.

Ryan Isaac:
Incorporates things that might not even trickle down into your practice, your life, the stock market at all, maybe not.

Matt Mulcock:
Absolutely. Yeah. So the technical definition of a recession is two straight quarters of negative GDP growth.

Ryan Isaac:
Two straight quarters of negative.

Matt Mulcock:
Two straight quarters.

Ryan Isaac:
GDP growth.

Matt Mulcock:
So that is a definable, like, you can actually define that as…

Ryan Isaac:
Yeah that’s how.

Matt Mulcock:
You don’t just…

Ryan Isaac:
And it’s defined in arrears.

Matt Mulcock:
Yes.

Ryan Isaac:
Like we can guess, but what we really don’t know…

Matt Mulcock:
Recession, maybe.

Ryan Isaac:
Six months have to go by for us to really know if we’ve had two consecutive quarters of negative GDP growth.

Matt Mulcock:
Yep.

Ryan Isaac:
Then we’ll know.

Matt Mulcock:
Yep then you slap that label on it.

Ryan Isaac:
Okay. So can I just say this? Oh man, we might have to cut this, but I’m gonna say it anyway.

Matt Mulcock:
Do it.

Ryan Isaac:
You know, in this whole… We’re in COVID for two years. And like, by this point, you know, when you get sick and you’re like, do I have the flu or allergies or COVID or any number of like a million other things. And then you get tested and you’re like, okay it was COVID and then you’re like, alright.

Matt Mulcock:
I don’t care.

Ryan Isaac:
I’m still sick, I’m still staying home. So like, alright I guess, you know, it’s kinda like when you said that about the recession, you know, we wait like quarter one that’s three months and then month four, five and six and we’re like, okay date is out it’s recession.

Matt Mulcock:
Oh, we’re in a recession. Label that.

Ryan Isaac:
And then you’re like, “Alright, well.”

Matt Mulcock:
My life is still moving on.

Ryan Isaac:
It still is exactly what it was when I, right before I got the news.

Matt Mulcock:
Yep.

Ryan Isaac:
I was still sick in bed and fell kind of crappy and was gonna miss work anyway. And now I put a label on what I’m sick with flu cold allergy, like whatever. And recession’s kinda the same way, like maybe you know, maybe it’s with inflation or there’s interest rate things, or there’s like job loss problems or whatever it is, oil prices right. And then you put a label on it you’re like, well, it’s still the same thing right before I got the label.

Matt Mulcock:
But it sounds scarier.

Ryan Isaac:
But now there’s a label and now it’s like ominous. Right?

Matt Mulcock:
Exactly.

Ryan Isaac:
Was that too politically charged? I didn’t mean to like mock anything.

Matt Mulcock:
Maybe. No.

Ryan Isaac:
I’m just saying sometimes we put labels on things and it changes the nature of what already is and it shouldn’t.

Matt Mulcock:
Yeah.

Ryan Isaac:
You’re like, whoa, this is heavier now and you’re like, well maybe, maybe, maybe it is.

Matt Mulcock:
Yeah we like attribute a meaning to something because of the label.

Ryan Isaac:
Because the label that might actually signify that it’s a more dire situation, but it also might not at all.

Matt Mulcock:
Exactly.

Ryan Isaac:
And we kind of have to try to be neutral about it and just kind of just move on with what we have in front of us.

Matt Mulcock:
This kind of reminds me…

Ryan Isaac:
I deviated way too much but.

Matt Mulcock:
No, it’s okay I’m gonna continue this because a couple weeks ago…

Ryan Isaac:
Keep going deep in the analogy.

Matt Mulcock:
A couple weeks ago, my wife got COVID by the way. We labeled it.

Ryan Isaac:
Didn’t everybody in the last six weeks?

Matt Mulcock:
But before we knew for sure, it was a Friday, she was coming home from work and she’s like, she called me. She’s like, I’m so tired. Like I feel kinda crappy I think I might have COVID. She’s already had it, been vaccinated, all that. The next morning. So she goes to bed at like 8:30.

Ryan Isaac:
Oh yeah.

Matt Mulcock:
Wakes up at eight o’clock at the next day, she’s up forever, she wakes up and she goes, “well, the only times this has happened to me is when I’ve had COVID or I’ve been pregnant, so I’m one of the two.” And I look at her, I’m like, “Let’s hope it’s COVID.”

Ryan Isaac:
Yeah. Which one did you want it to be?

Matt Mulcock:
Covid 100%.

Ryan Isaac:
Which Label did you want?

Matt Mulcock:
And luckily I love my kids, but I’m not ready for another one yet so.

Ryan Isaac:
Hey, that’s, you know, that’s just a good example though, of like how a label, we weren’t even planning on the going here, but how a label can kind of just change how you view the circumstances, but it’s still important to try to back out a little bit and objectively view the circumstances for what they are or what they aren’t and deal with what the facts are right?

Matt Mulcock:
Exactly.

Ryan Isaac:
Okay. So back to recession.

Matt Mulcock:
So back to recession, the label of recession.

Matt Mulcock:
So we define that, so how does that differ from a correction in the market or a bear market right?

Ryan Isaac:
Yeah that’s a good question. Historically it’s kind of interesting data the majority of the time, last time I checked this, I think it was like 60% of the time, which still surprised me that was lower.

Matt Mulcock:
60% of the time it works every time.

Ryan Isaac:
Every time yeah what was that called? That’s called a Panther yeah.

Matt Mulcock:
Sex Panther.

Ryan Isaac:
Yeah. Brown burgundy San Diego.

Matt Mulcock:
That smells like pure gasoline.

Ryan Isaac:
Yeah. [laughter] So I think about 60% of the time when there was an economic recession again defined by what Matt said, “Two consecutive quarters of negative GDP growth.” Which can, GDP cannot grow or even have a negative growth rate for so many reasons.

Matt Mulcock:
Oh yeah.

Ryan Isaac:
That don’t actually1 affect you. And so about 60% of the time historically from my memory, but it’s really close to that. There was an associated market downturn with it. But what that means, see that, that was lower than I would’ve expected because when I hear recession again, it’s a label that like puts a feeling to a situation. Right. And it makes it seem worse like recession.

Matt Mulcock:
Yep.

Ryan Isaac:
Because when I hear the word of recession, what do you think about in your lifetime when you hear recession? Do you…

Matt Mulcock:
I think 2008.

Ryan Isaac:
Yeah, me too.

Matt Mulcock:
Yeah. The great recession.

Ryan Isaac:
The great one. I mean, how long did that last though? But see why, Like why was 2008… Was 2008 bad because GDP growth was low or was it bad because so many people lost their homes?

Matt Mulcock:
That’s, I mean, it was that. It was the how abrupt and how large…

Ryan Isaac:
Impactful. Large scale impact.

Matt Mulcock:
The drop was and how quickly it happened. It basically like the top blew off and everything just…

Ryan Isaac:
And it wasn’t just markets or banks. It was like the way we had all interacted with real estate and our loans like caught so many of us in a bad situation.

Matt Mulcock:
Yep.

Ryan Isaac:
And it wiped… It actually wiped out jobs and the impact was pretty bad.

Matt Mulcock:
Well net worth anAll Sketchesd homes…

Ryan Isaac:
Totally, values of everything.

Matt Mulcock:
Yeah.

Ryan Isaac:
So you could see how that recession correlated in our brains ’cause that was like something in our lifetime that was big, that correlated with something bad. So you hear the word recession you’re like bad, but if you flip it around you go all right. Like 40% of the time. I mean, it’s almost half of the time when there’s a recession that there’s not a correlated market drop, meaning markets actually improve during a recession.

Matt Mulcock:
Yep.

Ryan Isaac:
And it’s not the majority of time but it’s not a small chunk either. That surprised me that I, ’cause I would’ve thought, oh recession. Yeah. Market’s tanked during a recession.

Matt Mulcock:
Well, and it could also be reversed. Right. ‘Cause so like right now…

Ryan Isaac:
That’s what I’m saying. Yeah.

Matt Mulcock:
Well, yeah. So like we’re seeing the economy’s actually, the GDP is…

Ryan Isaac:
Yeah.

Matt Mulcock:
Is the opposite of a recession right now.

Ryan Isaac:
Yes.

Matt Mulcock:
As far as GDP growth and the predictions everyone’s making right now.

Ryan Isaac:
As of, yeah.

Matt Mulcock:
But the market as of the last week or so…

Ryan Isaac:
That’s doing good.

Matt Mulcock:
Is getting shorts.

Ryan Isaac:
That’s what I saying. Like those two mechanisms are two completely separate measurement sticks. I mean it’s like us in America measuring in inches and everyone else is doing millimeters and meters.

Matt Mulcock:
Yeah.

Ryan Isaac:
And the right way.

Matt Mulcock:
Obviously the right way.

Ryan Isaac:
We’re calling it soccer. They’re calling it football.

Matt Mulcock:
Yeah. Yeah. No.

Ryan Isaac:
What are we doing?

Matt Mulcock:
Football is life.

Ryan Isaac:
First of all, football is life.

Matt Mulcock:
Yeah. [chuckle] They don’t get it.

Ryan Isaac:
So… [laughter] So I think that’s number one point we wanna make is those are two different measurements. They don’t mean the same thing and they don’t always mean a scary thing. And there are plenty of instances where… You wouldn’t even feel a recession as a dentist. Maybe other…

Matt Mulcock:
A lot of times you wouldn’t.

Ryan Isaac:
You wouldn’t. As a dentist you wouldn’t. Other industries that doesn’t, that’s not always true but there will be a lot of times when there’s a recession you won’t even, unless someone told you that you wouldn’t even know. And then there will be times when the market is just like or when the economy’s doing really well. Like low unemployment and rates are healthy and inflation’s healthy and like GDPs cranking, and then the market’s tanking opposite of that. And then we all think that the economy’s bad. Well, like the economy is not the stock market and the stock market is not the economy.

Matt Mulcock:
Yep.

Ryan Isaac:
So they’re just two separate things. To me like broad scale giant economic. We’re not qualified to talk about macroeconomics. That’s like CFA level.

Matt Mulcock:
Speak for yourself. I’ve already given legal advice today.

Ryan Isaac:
That’s true. Do you wanna give any medical advice while we’re…

Matt Mulcock:
I’m thinking about it. Yeah. It’s our next, that’s our next show.

Ryan Isaac:
Give some medical advice. But broad scale macroeconomic kind of news and events. I wanna just say they’re not as like, it’s more interesting to just hear and learn about and stay informed about, but it doesn’t always impact you day to day because it’s so broad scale. Unless it’s something that is in your industry like there’s some kind of crazy thing that happened that impacted dental supplies or the dental industry specifically. But like you know, recession and macroeconomics are just different than your stocks in your 401k. To the person who’s asking like, are we in a recession? What does that mean? Does it affect me? I will just say there’s the definition, “It’s an opposite. It’s a completely separate mechanism than the stock market.” And does it affect you? It might not. We can be in a recession that’s really bad for your neighbor and it’s fine for you.

Matt Mulcock:
Yeah. The vantage point of where you stand is really important. It’s the same with anything. If it’s inflation even.

Ryan Isaac:
Yeah.

Matt Mulcock:
That inflation’s gonna impact one person far more than someone else.

Ryan Isaac:
There’s so many things that go on and you, we wouldn’t even know. We wouldn’t even feel like it’s a scary thing unless we heard the label.

Matt Mulcock:
Yep.

Ryan Isaac:
Which is why I brought that up. You know sometimes when we put labels on things it makes it seem worse than it really is.

Matt Mulcock:
Yep.

Ryan Isaac:
And recession totally feels like one of those things. It’s not that it can’t affect the dentist, it’s just, it might not.

Matt Mulcock:
Yeah.

Ryan Isaac:
And it’s totally separate than the stock market. Those are two different things. And even if we are in a recession and the market’s tanking and you still have 20 years until you need to touch your money, then the real question is who cares?

Matt Mulcock:
Right. And I know it’s easier said than done but it’s like, what… That’s what I always ask too is… Okay, you’re 35 years old. You’re 40 years old. You got 25, 30 years to retirement. What do you care?

Ryan Isaac:
And ignoring the fact that… Okay, well if stocks are cheaper and you still have 20 years to work…

Matt Mulcock:
Just keep buying.

Ryan Isaac:
Then, and you’ve got cash on hand then what do you think you should do with cheap stocks right now?

Matt Mulcock:
Yeah.

Ryan Isaac:
What do you think you should do? So, and I’m not trying to be mean about it. It’s just like, that’s a really common reaction. But the reality is like, even if it is a recession and a totally correlated market downturn, and you don’t need your money anytime soon, and you’ve built a good solid investment plan, then the question is, do you have any money to put in?

Matt Mulcock:
Yeah.

Ryan Isaac:
That’s the question.

Matt Mulcock:
And…

Ryan Isaac:
Not like what should I do? What should you do about it? You should put some more money in.

Matt Mulcock:
Keep Buying. Yeah. Put more money in your own sale.

Ryan Isaac:
This is how you get your returns. I mean, from a broad perspective, if we zoom out the market until it ends, until all the publicly traded companies in the whole world disappear one day, it goes up.

Matt Mulcock:
Yep.

Ryan Isaac:
Over time it goes up with little periods of taking a time out, going flat or dropping, and those little periods are… If you’re a saver, those are the times when you get more return, so what do you wanna do about it? If there is a recession, if the markets do, and when they go down, keep saving more.

Matt Mulcock:
Yeah.

Ryan Isaac:
Keep buying.

Matt Mulcock:
And by the way, it is a requirement to have those drops to have the growth because the risk and return relationship is only there if there’s actual risk.

Ryan Isaac:
Because that’s the risk.

Matt Mulcock:
That is the risk. It has to be there.

Ryan Isaac:
This isn’t to say it’s not interesting and you shouldn’t know about it, and you shouldn’t learn about it and that it can’t impact you, but just know that recessions and stock markets are two totally different measuring mechanisms, they don’t always correlate or go hand in hand. And sometimes if you didn’t know that the label was there, you might not even notice it anyway. I bet, who would even know the GDP is down?

Matt Mulcock:
Who even knows what GDP is that’s asking the question.

Ryan Isaac:
If you’re Ortho, two location, and you’re running 47% profitability and collecting $4 million a year, which would be my dream, right?

Matt Mulcock:
Yeah, we’ve already identified that. [chuckle]

Ryan Isaac:
Isaac Ortho.

Matt Mulcock:
Isaac Ortho.

Ryan Isaac:
Isaac Ortho, two location, and life is just humming along for you, would you notice that GDP is negative?

Matt Mulcock:
No.

Ryan Isaac:
When was the last time you looked at GDP Mr. Or Mrs. Dentist?

Matt Mulcock:
Dr. Isaac, when was the last…

Ryan Isaac:
Dr. Isaac.

Matt Mulcock:
When was the last time you cared about how GDP is doing?

Ryan Isaac:
I haven’t personally checked what GDP is until I’ve had to prep for an episode.

Matt Mulcock:
Yeah.

Ryan Isaac:
Look, if you need money in a short period of time, it shouldn’t be invested anyway, so you wouldn’t be worried about it, and if you don’t need money in a short period of time, then just keep saving and keep a… Look, if you wanna be stressed about any one thing in your life, if you’re… We only have limited time unless you wanna ignore family, friends and hobbies and life in general. You have such little time to be stressed about very few things. If you wanna stress about anything, stress about your practice. Are your people happy? Are you profitable? Do you review your PNL with somebody at least once a year? Are your margins good? And do you have a healthy savings rate? If you wanna worry about anything, worry about that stuff.

Matt Mulcock:
And because those are the things…

Ryan Isaac:
That’ll drive you.

Matt Mulcock:
Dare I say, that you can control and that actually matter.

Ryan Isaac:
And they matter and they drive everything. So now look, hopefully we don’t see a recession any time soon that affects all of our dear clients and listeners and friends and family in the industry.

Matt Mulcock:
Yeah, but we will.

Ryan Isaac:
We will.

Matt Mulcock:
At some point.

Ryan Isaac:
We will, but it’s also why they say… It’s not perfectly true, but why they say dentistry is recession proof because there’s not a lot of scenarios where a textbook recession will affect the day-to-day noticeable difference in a dentist life. It just usually doesn’t. Luckily.

Matt Mulcock:
We’ve also found two years later, dentists are also COVID proof.

Ryan Isaac:
It didn’t seem like that.

Matt Mulcock:
Not at first, March 2020 was the worst month of my entire career.

Ryan Isaac:
Oh, how did most people end 2021? Just like…

Matt Mulcock:
Doing okay.

Ryan Isaac:
Crushing.

Matt Mulcock:
Yes.

Ryan Isaac:
Crushing.

Matt Mulcock:
I think I’ve heard more times ever in my career over the last year is, “Man, I have more cash than I ever have, my practice is doing better than it’s ever done.”

Ryan Isaac:
Yeah.

Matt Mulcock:
Thanks, COVID.

Ryan Isaac:
Yeah, it’s complex issue. The reality of this is to… That’s all high level stuff, but if you wanna know, how are you positioned? Are you positioned to go through a recession? That’s a good question. Have you built an investment portfolio and an investment plan in general the right way that can go through market ups and downs, and economic ups and downs? Do you have somebody that every time you have to make a financial decision, big or small… Enough bad small decisions will still add up to big problems. Do you have someone in your life that you can call that is impartial, is not selling you something, that knows and that actually has the answers or knows where to find them, do you have the people to like…

Matt Mulcock:
It’s called Google.

Ryan Isaac:
Or Facebook groups.

Matt Mulcock:
Yeah. [laughter]

Ryan Isaac:
Do you have people in your life to check you on those decisions and be another pair of eyes or another pair of ears? Those are good questions to ask, and if the answer is a no or you need that, that’s why we, Dentist Advisors would love to chat with you.

Matt Mulcock:
Yes.

Ryan Isaac:
That’s why Matt would love to talk to you. Get Matt on the phone.

Matt Mulcock:
You don’t want me.

Ryan Isaac:
You might not get Matt on the phone.

Matt Mulcock:
You don’t want me.

Ryan Isaac:
So if you’ve got a question, go to Dentist Advisors discussion group, post a question, we’ll answer it right there, and then we’ll usually use it on our podcast. This is really helpful for everybody to hear, and if you wanna chat with us directly, go to dentistadvisors.com, and there’s a big green button that says, “Book free consultation.” Hard to miss.

Matt Mulcock:
We’re nice.

Ryan Isaac:
You can get there. And if you didn’t know, we were coming to you live from the VoD, Voices of Dentistry.

Matt Mulcock:
If you didn’t catch that part… [chuckle]

Ryan Isaac:
If you didn’t hear the other guy on the show with us today.

Matt Mulcock:
If you didn’t hear the other guy on the mic then…

Ryan Isaac:
The uninvited guest.

Matt Mulcock:
You fell asleep.

Ryan Isaac:
The guy who chimed in?

Matt Mulcock:
Yeah. [chuckle] Actually, they’ve heard a guy that chimed in, we got the speaker dude.

Ryan Isaac:
Uninvited announcer. It’s been an eventful weekend.

Matt Mulcock:
My guess is people fell asleep during our little part and then…

Ryan Isaac:
It might have happened. Woke up scared of…

0:36:13.9 MM: The loud speaker guy was like, “Oh, what’s going on?”

Ryan Isaac:
Jarred them away?

Matt Mulcock:
Yeah, exactly.

Ryan Isaac:
Mattie, thank you.

Matt Mulcock:
Yeah, thanks Ryan.

Ryan Isaac:
It’s been nice podcasting with you physically in person, sitting across the table, I’ve got my little Diet Coke somewhere and you’ve got your Sprite Light.

Matt Mulcock:
My Sprite Zero Sugar.

Ryan Isaac:
Sugar free.

Matt Mulcock:
Love it.

Ryan Isaac:
Thanks everyone for listening and we’ll catch you next time on another episode of the Dentist Money Show. Take care now. Bye-bye.

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