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What Dentists Want to Know — Listener Q&A #20 – Episode 296


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Investments are the focus for all three questions on this listener Q&A episode of the Dentist Money™ Show. Ryan and Matt illustrate why expertise is needed when it comes to managing your money, offering their advice on the most effective ways of accessing cash from investments during a down market, plus explaining the adjustments your portfolio needs prior to retirement—and why.

 


 

Podcast Transcript

Ryan Isaac:
Hey, everybody. Welcome back to another episode of the mighty Dentist Money Show, brought to you by Dentist Advisors, a fiduciary, no-commission, dental-only, comprehensive financial planner for dentists all over the country. Check us out at dentistadvisors.com. Today on the show Matt and I are talking about three investment questions that we get very frequently about investment accounts, retirement, and hiring an advisor. I hope you enjoy this episode. If it causes you to ask more questions about your situation, and you would like to ask them to us, then go to dentistadvisors.com, click on the book free consultation link, and schedule a chat with one of our friendly dental-specific advisors today, and talk about it, or go to the Facebook group, Dentist Advisors discussion group, on Facebook. Post a question, we’ll post an answer. Thank you for being here with us. Enjoy the show.

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

Ryan Isaac:
Welcome to the Dentist Money Show, where we help dentists make smart financial decisions and avoid the bad ones along the way. I am Ryan Isaac. I’m here with the Hollywood mountain, Mr. Matt Mulcock. What is up, Matty?

Matt Mulcock:
Yo, Ryan. You are Sir Ryan Isaac, thank you very much.

Ryan Isaac:
Sir.

Matt Mulcock:
Good to be here, as always.

Ryan Isaac:
Yeah. If we are Instagram friends, you will know me as Sir Ryan Isaac.

Matt Mulcock:
Sir.

Ryan Isaac:
If you are an old, old time podcast listener, longtime podcast listener, I should say, then you will know me as Sir Ryan Isaac.

Matt Mulcock:
It was like a test, basically. We’re testing your loyalty.

Ryan Isaac:
It is.

Matt Mulcock:
Do you know my nickname?

Ryan Isaac:
Yeah.

Matt Mulcock:
If you don’t, you’re dead to me.

Ryan Isaac:
We’re not that close.

Matt Mulcock:
You don’t know me very well.

Ryan Isaac:
Sir. Sir Ryan. Today on the old Dentist Money Show, we have some Q and A. It’s all investment Q and A.

Matt Mulcock:
The kind you like. It’s the kind that people want.

Ryan Isaac:
It’s what the people want. It’s the investment stuff. We’re going to cruise through some questions that we have been asked lately, and I always want to make this disclaimer. Any time we use a question, we do so anonymously, completely, and we try not to allude to anything specific. I always want to make the disclaimer that if you recently asked this question, you are not the only one who asked this question.

Matt Mulcock:
Yeah.

Ryan Isaac:
All right. We’ve got to start this. Matt, question number one, very common, what happens if the market crashes when I need to take money out of my accounts?

Matt Mulcock:
Ut-oh.

Ryan Isaac:
That’s a general question. There’s so much nuance to this one. That’s a very common question. Here’s the circumstances. Someone’s setting up their first investment account for the first time ever. They’ve been accumulating $200,000 or $300,000 in the business checking, and it’s getting excessive. They’re like, “All right. I don’t need to spend this on anything. There’s nothing coming up. I’ve got to invest this money.” They start to set up their first investment account. That’s one of the first things that goes their their minds. “What if I put $300,000 in this investment account, and then I just need it one day, and the market crashes right when I need it?”

Matt Mulcock:
Yeah.

Ryan Isaac:
What will happen? Or people think about that from horror stories about the stock market. You hear the stories like, “My uncle was going to retire in 2007, but then the market crashed. He couldn’t retire for five more years.” So, that’s the question. There’s so much context we can build around this. I’ll just leave it vague for a little bit though, Matt. What are the circumstances that you hear this question under? What comes to mind when you hear this question? Where does your brain go?

Matt Mulcock:
Yeah. No. I mean, totally valid question. This is one of the first things, some iteration of this question we hear all the time. Again, totally valid. This, I think, sums up the fear people have with investing. What happens if I lose all my money? What happens if I need to get this and, again, it’s down, or the market has crashed? So, I guess there’s a lot to this, but what I would say is this is why we talk about building an investment plan around your specific goals, your specific timeline, your need to take risk, things like that. That’s why that’s so critical. Right?

Matt Mulcock:
Because if someone is, let’s say, 60 years old, and they’re retiring in two years, and they’ve got $500,000 to invest, that they’re going to need it, or at least going to start pulling from this in, again, two or three years, I’m going to recommend that person, or we’re going to invest that money very differently than someone that’s 35 that got an emergency fund set up. They’ve got huge cash flows, and they’ve got a 30 year career ahead of them. That’s what this all comes down to. Timeframe, to me, to us, is the number one dictate. I almost said dictator. It’s the number one Fidel Castro.

Ryan Isaac:
It’s our favorite dictator of all the dictators in the world.

Matt Mulcock:
Yeah. It’s the Fidel Castro. Exactly. It’s the Fidel Castro of all factors. No. It is the number one factor we consider when it comes to how you should be investing your portfolio. So, I guess that’s a long-winded way of saying that if done correctly, you won’t necessarily have to worry, or you shouldn’t be worried, about, “If I need this money, and it’s down 40%.” My response to that is if done correctly, you wouldn’t have that issue. The money you need to access in the short-term wouldn’t be invested in a way that all of a sudden you’d see that account crash.

Ryan Isaac:
Yeah. I’ll bring up some scenarios where even in the best of plans, we could still get caught in a situation that we’re affected by a market downturn. Let’s go with your scenario. You’re talking about a longterm plan.

Matt Mulcock:
Yep.

Ryan Isaac:
Right? Let’s give an example. A dentist is 65, retiring, and let’s say we’ve got, I don’t know, there’s probably four to six different buckets of money. Primarily, we’ve got a practice sale, which is cash. It’s already been taxed. It’s after tax, cash money sitting there. So, we have one bucket. So, right off the bat, if you sell a practice, and on day number one of your retirement, when you’re sitting on your cash proceeds, the market crashes. Well, what’s the money you’re going to use first? You’re going to use the cash you just got from the practice. Right?

Matt Mulcock:
There you go.

Ryan Isaac:
That dentist might also have, let’s say, a profit sharing in a 401(k) plan. Well, the government doesn’t make you take money out of those until you’re in your 70s. They might be invested a little bit more aggressively, but we’re still not planning on having to touch those for a while. That’s a possibility. Most of our clients in this scenario will also have built significant after-tax assets in an after-tax brokerage account. Now, that is one of the accounts that might be accessed sooner than later after retirement starts, and you’re talking about if you’re working with somebody, and building a plan leading up to this point, we don’t have the same allocation at 64 and a half that we had at 40 years old. Right?

Matt Mulcock:
We shouldn’t. You shouldn’t.

Ryan Isaac:
Yeah. Maybe you do for the 401(k). Maybe the 401(k) is still as aggressive as it’s ever been, because you might still have 10 to 15 years by the time they access it.

Matt Mulcock:
Exactly, and you wouldn’t be touching that money. Yeah.

Ryan Isaac:
But maybe this person has a bucket of bonds and a couple of million bucks in an after-tax brokerage account that you slowly reduced from aggressive to moderately aggressive to moderate-conservative by the time they’re in their 60s. That’s the kind of planning that takes place in a perfect world, but this is what happens. I mean, you can do this. I mean, when you have an advisor who knows your situation contextually from a big picture situation, or a standpoint, when you start hitting that seven to five years before you’re thinking about being done, it’s a great time to start evaluating the different buckets. See, everyone always thinks about this in, “I’m going to retire, so I have to make all of my accounts, all at once, as conservative as possible.”

Matt Mulcock:
I was just going to say that.

Ryan Isaac:
What were you going to say about it?

Matt Mulcock:
I was just going to say that people look at this very black and white. So, like you just said, they look at it as, “I’m either invested or I’m not. If I’m invested, that means I’m invested in the entire … I’m invested in stocks and that’s it,” or they’re saying, “If I retire, I’m going all to cash. I’m not invested anymore.” It’s like I’m flipping this switch, and all of a sudden, I’m no longer invested, but that’s not how this works.

Ryan Isaac:
Yes.

Matt Mulcock:
So, to my earlier point, I’d actually say, yes, you would have exposure. You should have exposure. Let’s say the market had a 40% drop. Certain parts of your portfolio would most likely feel that. It just wouldn’t be money you would need in the short-term. You wouldn’t expose that money to that if you needed it in the short-term. You would, because you’re not just retiring and saying, “Great. Now I’m done investing.” Your investing career lasts forever, until you die.

Ryan Isaac:
Decades. Yeah.

Matt Mulcock:
Hopefully, well into your 80s and 90s.

Ryan Isaac:
One thing I want to say, and this is preparation for the inevitable cycles that markets go through, is you have to be prepared before you’re even investing. We’ve done quite a bit of content on this recently. We did an episode. It’s number 280. It’s called The Laws of Liquidity. That episode will spell out the priorities of having enough cash reserves in the business and personally before you even start thinking about investing. So, listen to 280 and follow that formula first before you even get to this point, because that alone will save you a lot of grief. Okay. Here’s the other scenario I want to point out. I don’t know. I was going to say most people don’t know about this, but I don’t know how you would, honestly, unless you did this for a job. I don’t think I did either.

Matt Mulcock:
Unless you knew the insider secrets that we know.

Ryan Isaac:
The insider secrets. Here we go. We’re about to reveal them.

Matt Mulcock:
Pro-tip. Here it comes. Insider secrets.

Ryan Isaac:
So, what I was going to say is that when people save money frequently over long periods of time and build up fairly sizeable accounts, what they don’t realize … I love explaining this to my clients, especially when my client has, maybe, a spouse or a partner that’s apprehensive about investing in markets, feels more comfortable sitting on huge chunks of cash rather than investing it, which is way more dangerous, in my mind. I love explaining this because here’s the nuance of it. Let’s say you’ve been saving in an account for years. You’ve got a brokerage account with, I don’t know, what’s a big number? It’s got $500,000 in there. It’s got one million, it’s got two million dollars in there.

Matt Mulcock:
Let’s go millions. Yeah. Millions.

Ryan Isaac:
Whatever. Yeah. Right. You’ve been saving money for a long time. Let’s just say over the last 100 years, there’s been a significant … You could call it a crash, in at least US markets, over the last century, about once every decade. That’s how it’s averaged out. It’s not perfectly like that, but it’s averaged out to about once a decade. Let’s say you’ve been saving for a long time, and we hit one of those points, and it coincides perfectly with right when you need some money for the dream cabin, or the dream beach house. Right? You’re going to pull out some money, and the market crashes. Well, here’s what people don’t realize. In an account that has been invested and saved into for long periods of time, every time … Most of our clients say monthly, sometimes multiple times per month. Every time you buy something in your portfolio, it’s like a share of a mutual fund, or an ETF, or a stock, or a bond. Right? It’s a share. In our trading terms, they call them lots. Right?

Matt Mulcock:
The good old lots.

Ryan Isaac:
It’s a lot. L-O-T.

Matt Mulcock:
At that point, you’re going to have lots of lots.

Ryan Isaac:
Lots of lots.

Matt Mulcock:
Lots of lots. Lots on lots on lots.

Ryan Isaac:
Lots on lots. Basically, you just have all these shares of all these funds purchased at different times throughout history, the course of your investing life. The older the shares, the more gains they’ll have built up in them. So, let’s say you’ve been saving for 10 years. It’s been 10 years since the last crash, and now we just hit one. Your account has a lot of money in it. Well, the shares you’ve been buying years ago, those have gains. Even if the market crashes significantly, it’s not going to wipe out all the gains of the previous shares that you purchased years ago. It’ll wipe out gains from the most recent shares. If it’s really significant, it could wipe out gains from the last couple of years.

Ryan Isaac:
That’s totally possible. But it’s not going to wipe out total gains. I mean, over long periods of time, accounts are going up much more than one crash will wipe out. Right? So, the nuance of this is even if you have a bucket of money, and you need money the day the market crashes, if you’ve been saving for a long time, which is why we’re constantly telling people, “Get started now. Get started now. Get started now.”

Matt Mulcock:
Yeah. Set the habit now.

Ryan Isaac:
Do it now. If you’ve been saving for a long time, we have so many options, as your advisors, to go into your accounts. I do this on a weekly basis when people need money. I’m like, “Okay. Let’s get you some money. We can take a loss. We can sell. We can try to take some losses, if there are any, and report that on taxes for a little bit of a tax benefit, or we might not want to lock in any losses, and we might want to go back to some older shares and sell those, and pay some taxes. Right? Or we might want to make sure the account stays perfectly balanced when we pull out money and pay higher taxes instead, or we might want to optimize for low taxes and leave it out of balance for a little bit.” Right?My point is there’s so much nuance to how you can get money out of an account, even when there’s market downturns.

Matt Mulcock:
Lots of options.

Ryan Isaac:
Tons of options. Now, here, I wanted to say this while I’m talking about this though. Yes, there are scenarios where someone starts, for the first time ever … They’ve got their first $50,000, $100,000, maybe, and they put it in the market, and a week later, it goes down 30%.

Matt Mulcock:
Yeah.

Ryan Isaac:
How many people started a practice two months before COVID?

Matt Mulcock:
Yeah.

Ryan Isaac:
There’s things we don’t … We can’t predict that stuff. We can’t see it coming. For those people, I would say I hope you followed episode 280 before putting your $100,000 in, and you have business liquidity, personal emergency funds, and any liquidity, any money you need for any upcoming projects before you put that money in your investment account. If you did, you’ll be okay.

Matt Mulcock:
It’s actually funny you say this, Ryan, because I’ve actually been saying this to people for a while now. This question comes up, and I know we’re not … This is a whole other topic.

Ryan Isaac:
We’re 17 minutes in, basically, to the first Q and A question.

Matt Mulcock:
This is how it goes. How many questions are we even hitting? I don’t even know.

Ryan Isaac:
I had three. [crosstalk 00:13:58]

Matt Mulcock:
Okay. We’re going to hit them. We’re going to get them all.

Ryan Isaac:
Okay. Let’s do it.

Matt Mulcock:
Just to that point, when someone comes to me and says, “All right, Matt. I’ve got my emergency fund in the practice set up. I’ve got my emergency fund personally set up. Big cash flows. I’ve got this extra $100,000 I’m going to put in all at once. Right?”

Ryan Isaac:
Yeah.

Matt Mulcock:
You could either put it in in chunks or put it all in at once. I tell people almost every time, “If you’re going to do this, you better do it with the mindset this is going to be down 30% next week.”

Ryan Isaac:
Yeah. Love it.

Matt Mulcock:
Not saying it will.

Ryan Isaac:
I always say that.

Matt Mulcock:
Go into that with that mindset. If you’re okay with that, invest it.

Ryan Isaac:
Yeah.

Matt Mulcock:
Hopefully, it doesn’t happen. Be prepared that it will, in your mind, and you’ll be a lot better off.

Ryan Isaac:
The sooner you start this, the more times you’ll watch your money get chopped down a little bit, frequently, and then come back up, and you’ll just develop callouses to that. It feels good. It honestly does.

Matt Mulcock:
Yeah. You’ll see it March 2020. You’ll be like, “Dang. It dropped 30% in two weeks.” Then guess what? It’s been up over 90% since then.

Ryan Isaac:
Yeah.

Matt Mulcock:
You’ll see that stuff and you’ll be like, “Ah, I don’t need the money for 30 years. Who cares?”

Ryan Isaac:
Thick skin. Thick skin. The moral of the story is what happens if I put in my money and it crashes, and I need it?

Matt Mulcock:
Don’t invest it if you need it.

Ryan Isaac:
If you know you need it, just follow the steps, episode 280, first. Make sure you’ve got liquidity, and then just know that if you’ve got an actual plan, longterm, that you’re reviewing frequently with a fiduciary advisor, then you will be prepared for all of these situations.

Matt Mulcock:
Yep.

Ryan Isaac:
You’ll be prepared. You’ll be fine. I’m not scared for you.

Matt Mulcock:
No.

Ryan Isaac:
I’m not worried about it. Okay? Question number two. We already hit this. The question is, what changes in my investment plan when I’m getting ready to retire?

Matt Mulcock:
Oh, yeah. This will be a quick one, because we already hit it, a little bit.

Ryan Isaac:
Already hit it. If we backed out even further and said, “What changes in a financial plan for someone who’s transitioning from working, saving years to retiring, spending years,” that’s probably a whole episode on … I think we’ve done one in the past, but we’ll probably do it again soon. Matt, what are some of the investment planning changes leading up to retirement, and into retirement, that are different than when you’re 30 and 40?

Matt Mulcock:
The first thing I’ll say on this is it’s so specific to you and your life. I know that’s a horrible answer, that classic, “It depends.” But generally speaking, as you get closer and closer, one thing that usually is happening is your need to take risk is coming down. Right? So, hopefully, you’ve done a good job saving. You’ve done a good job investing, building your practice, building those assets up. Your time horizon is shortening, and your need to take risk is coming down. Right? It’s getting lower and lower. So, with that, generally speaking, in most cases, your exposure to risk assets, like equities, would also lockstep with that need to take risk, would also come down.

Matt Mulcock:
So, we start shifting more to protect what we have versus grow what we need to get to retirement. That’s usually one of the big changes we’d have to make. What process goes into that? It’s extensive, obviously. Understanding what are your goals? What’s your vision for retirement? What’s the practice transition look like? Needs for liquidity, goals post-retirement, all that stuff.

Ryan Isaac:
Yeah. How far is the practice sale cash going to get you?

Matt Mulcock:
Yep. Yep.

Ryan Isaac:
Is that going to be two years of spending, or do we have 10?

Matt Mulcock:
Yeah. Well, and stuff like are you selling your house and downsizing to a van by the river?

Ryan Isaac:
Ooh.

Matt Mulcock:
Are you selling and moving to Southern California? Shots are being fired.

Ryan Isaac:
In which case, you’re probably not retiring.

Matt Mulcock:
Yeah. Maybe you’re not retiring. Or maybe you’re moving … I have had this. Maybe you’ve lived in Southern California your whole life, and you’re moving to the Midwest to be closer to family or something.

Ryan Isaac:
Yeah.

Matt Mulcock:
These things have to take … I guess the long answer we’re giving here is you have to take into account all these different factors, not just the investment piece. Specifically, too, in the investments, you’re going to get, most likely, less risky along the way, which means less exposure to equities, stocks.

Ryan Isaac:
But what’s crazy is maybe not less risky in all accounts.

Matt Mulcock:
Yeah. Exactly.

Ryan Isaac:
Yeah. It’s very nuanced. You’re talking about this and I’m just thinking about how spending might change when you do move, or are you still funding adult children’s lives into retirement?

Matt Mulcock:
Yep.

Ryan Isaac:
There’s so much nuance in it.

Matt Mulcock:
There’s a lot of eye rolling going on out there right now. “Yes. I am. I am funding my kid’s lives. He’s 30.”

Ryan Isaac:
Keep it going. Keep it going. If someone wants to fund my adult life, DM me.

Matt Mulcock:
Please. I’m up for adoption. I literally put something out on Craigslist. I’m up for adoption.

Ryan Isaac:
Are you going to keep the building your practice was in when you sell the practice? Are you going to get a stream of income from that? What are you going to do with social security? A lot has to do with your spending. What are your healthcare costs as you’re getting older? There’s just a whole host of things. I think that’s the main takeaway, man. But before you get to the point where you’re now done working … Some people are technically retired. I’ve got my air quotes up.

Matt Mulcock:
Yeah.

Ryan Isaac:
They’re done working, but they’re still going to go teach or something.

Matt Mulcock:
And still have an income.

Ryan Isaac:
Yeah. The crazy thing is if your needs … Let’s say you need $150,000 a year out of your accounts, all of your accounts total, post-retirement, but you’re earning $75,000 from teaching, or you’re going into the practice still once a week and making $100,000, that is an incredible difference on withdrawal rate and the projections

Matt Mulcock:
Huge.

Ryan Isaac:
Yeah. On the impact of that portfolio. It has so much more longevity and life if that’s the case. We just have to take all these into account, and we have to start thinking about them a good five plus years before you’re ready to be done. I’ve got quite a few clients on that cusp right now. What I’ve found interesting is you can only plan so much in the future though.

Matt Mulcock:
Yeah.

Ryan Isaac:
I’ve had a handful of clients who are on the border of selling to a DSO, three years out from retiring, and then they just said, “No.” They’re like, “Actually, I love this. I’m going to keep going seven more years.” I’m like, “Wow.” Or I’ve had people get inheritances five years before they retire, and it changes everything.

Matt Mulcock:
Oh, yeah. I’m dealing with that a little bit for multiple clients with that one.

Ryan Isaac:
The moral of the story is you have to … It just really pays off to have someone who knows you and who you mutually trust. They trust you, and you trust them to be working on this stuff years before you get to that point. It’s just going to be very, very beneficial. That was question number two. Is that good? Did we do it justice, Matt? Anything we need to add?

Matt Mulcock:
No. I think you just hit on it. It’s so much more nuanced than this simple … Again, I know people like to look at it as black and white or, “Okay. I’m retired. Switch off, switch on,” whatever. The last thing I’ll say on this, too, it coincides with both the first two questions. I think the reason why people got in trouble in ’08, ’09, and I’m hoping that people have learned from that at this point, the people out there that are nearing retirement, is that it’s not easy. You think it’s not easy to put money in and invest early on in your career because of the risk or the fears of you’re losing money.

Matt Mulcock:
The other side of this is when you’re 10 or 12 years into a bull market, and you’ve seen nothing but upside over the last decade plus, and now you’re getting near retirement, and you’re having an advisor tell you, with, like you said, not all of your accounts, but some of these accounts, “We might start turning this down a little bit and not exposing you to so much growth.”

Ryan Isaac:
That’s a good point.

Matt Mulcock:
That’s really hard. You have people being like, “Well, I don’t know. Ryan, Matt, I’ve seen my accounts go up 15% a year for the last 10, 12 years. Let’s just let it ride.”

Ryan Isaac:
Dude, yes.

Matt Mulcock:
Again, you’ve got this fear of missing out or this greed factor here that, again, having someone like an advisor or an accountant buddy that’s like, “No. Look, you’ve won the game. Here’s the whole plan we’ve laid out for you. We’ve got to start cranking this down a little bit in these aspects of your portfolio,” that, in and of itself, is really difficult and can get people in trouble on the other side of this.

Ryan Isaac:
Man, I’m glad you said that because I didn’t even think about that at all. Someone who won’t dial back the aggression they’re investing, when they probably should.

Matt Mulcock:
And I get it. Yeah.

Ryan Isaac:
That would be tough. It would be tough to be in the middle of just giant 10 year run up and then start to be like, “We need to make this thing more conservative.”

Matt Mulcock:
Yeah. We talk about this all the time internally. Getting rich and staying rich, or I should say getting wealthy and staying wealthy are two very different things that require two different mindsets and skillsets.

Ryan Isaac:
Yeah.

Matt Mulcock:
And disciplines. It’s very difficult, again, to make that mindset shift of, “All right. I’m here. Now what?”

Ryan Isaac:
It’s so true.

Matt Mulcock:
You hear horror stories of people that get wealthy or get rich and then they lose it all.

Ryan Isaac:
We’ve been talking about this, too. This is probably a good time to remind people, if you’re new.

Matt Mulcock:
Welcome. We love you.

Ryan Isaac:
Or if you are a longtime listener … Welcome, if you are. Dentist Advisors works with people right out of school, as associates. We work with people all throughout their careers. We work with people in retirement, as well. There’s three decades plus of living post-work.

Matt Mulcock:
We hope.

Ryan Isaac:
That still requires a lot of help, and guidance, and accountability, too. The accountability doesn’t go away. I mean, it’s probably more crucial than ever because your net worth is as big as it will ever be, and you have no more income. 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 home page, and talk to one of our friendly advisors today. We’re doing number three?

Matt Mulcock:
Yeah. We’re doing this, man. We’re doing this.

Ryan Isaac:
We’re on number three. Yeah.

Matt Mulcock:
We’re doing it. We’re committed.

Ryan Isaac:
All right. Number three. Okay. Number three. We haven’t gone through three questions on this podcast for probably a year.

Matt Mulcock:
I know. I feel good about this.

Ryan Isaac:
I’m proud of us. I’m really proud of us.

Matt Mulcock:
I’m very proud of us. Blue ribbon for us.

Ryan Isaac:
Blue ribbon. The ice cream?

Matt Mulcock:
Gold star.

Ryan Isaac:
Okay.

Matt Mulcock:
No.

Ryan Isaac:
Is that ice cream?

Matt Mulcock:
A blue ribbon, I feel like you get blue ribbons in school.

Ryan Isaac:
That’s Pabst.

Matt Mulcock:
Yeah. That’s Pabst Blue Ribbon.

Ryan Isaac:
PBR.

Matt Mulcock:
That’s true. PBR. Yeah. Not a fan of that either. It’s not great.

Ryan Isaac:
I was just curious where the blue ribbon context was coming from. We won.

Matt Mulcock:
You know the participation trophy? Blue ribbon.

Ryan Isaac:
We got it.

Matt Mulcock:
Everyone gets a ribbon.

Ryan Isaac:
Okay. Okay.

Matt Mulcock:
That’s how I feel, what I was going with.

Ryan Isaac:
Okay. Good. We get a ribbon.

Matt Mulcock:
Yeah.

Ryan Isaac:
Question number three. I’m going to ask this to you, Matt. I’m going to play a dentist right now. I’m not your client. I might want to hire you.

Matt Mulcock:
Ooh, are we going to do a LARP? Live action role play.

Ryan Isaac:
LARP. We’re LARPing right now.

Matt Mulcock:
We’re going to LARP.

Ryan Isaac:
I’m not your client but I might want to be. I’m on the phone with you, and I just say this to you.

Matt Mulcock:
I’d say, “Call Ryan. You don’t want me. You want Ryan.”

Ryan Isaac:
I say, “Matt, look, if I built the exact same portfolio as you do for your client, but I just did this on my own in my own brokerage account, what is the difference, whether you manage it or I manage it?”

Matt Mulcock:
I’d say, “Listen, doc. Let’s talk about this.” No.

Ryan Isaac:
“Let’s get serious for a minute, son.”

Matt Mulcock:
I call all my clients doc.

Ryan Isaac:
Doc. Yeah.

Matt Mulcock:
I do not. I promise.

Ryan Isaac:
That just reminds me of the latest episode of Ted Lasso when the sport psychologist shows up.

Matt Mulcock:
I haven’t seen it yet.

Ryan Isaac:
Oh, he keeps calling her doc and she’s like, “Doctor.” He’ll be like, “How are you doing this morning, doc-tor?” It’s so good.

Matt Mulcock:
Such a good show.

Ryan Isaac:
Anyway. Go ahead. You can call them doc.

Matt Mulcock:
Yeah. So, I would say, “First of all, yeah, you could totally do that. That is one aspect, that is one job to be, is the front end work of knowing the logistics, the tactics. What funds do I use? What positions do I put my money into? What asset allocation should I put in place?” All that stuff, we don’t ever pretend like that’s our differentiator. Right?

Ryan Isaac:
Yeah. Right.

Matt Mulcock:
I think the difference would be what happens after that. Right?

Ryan Isaac:
Mm-hmm (affirmative).

Matt Mulcock:
In my opinion, the real value of having someone is everything that comes after, the things that you just highlighted. Right? The things we’ve been highlighting throughout this whole discussion.

Ryan Isaac:
Yeah.

Matt Mulcock:
It’s not the front end stuff. Right? I think that stuff can be learned. You could go online right now and find, I mean, hours and hours of things to learn around how to build a portfolio.

Ryan Isaac:
We put that content out all the time.

Matt Mulcock:
Yeah. Just go to dentistadvisors.com and look up our stuff.

Ryan Isaac:
Email me for a screenshot of the portfolio I would put you in, if you were my client, and I’ll show it to you. I don’t know if that’s legal, actually.

Matt Mulcock:
Yeah. Don’t do that.

Ryan Isaac:
But I will.

Matt Mulcock:
Guess what?

Ryan Isaac:
I’ll do it anyway.

Matt Mulcock:
I’ve had those conversations with people before, where they’re like, “Hey, can you just share with me the portfolios you guys put together? Here’s my situation.” I’ll say, “Here’s an example. I’m not giving you advice here. This is an example of a portfolio we would use.” Again, that’s not the value. That’s the commodity aspect of this. The real value is what you get after the accountability, the, “Hey, this just changed in my life. What do I do,” looking at things from a different angle that maybe you’re not thinking about. That’s the true value that comes from working with someone like us.

Ryan Isaac:
That’s the difference. Right? This question was a little unfair, because I just fielded this question two days ago.

Matt Mulcock:
Yeah

Ryan Isaac:
So, it’s fresh on my mind and I threw it to you like a little hot potato, a little hot potato.

Matt Mulcock:
We do that all the time. Yeah. I just caught it and threw it right back.

Ryan Isaac:
That’s how the nature of the discussion was. Same response. There is one giant assumption that has to be made first, and the assumption is that you go do exactly what we would do. I mean, this is our full-time job. So, the assumption is that you go and build an account, and you invest it, and you allocate it, and you keep it balanced and re-balanced.

Matt Mulcock:
And you keep investing in it.

Ryan Isaac:
Yeah.

Matt Mulcock:
Rain or shine.

Ryan Isaac:
The assumption is that you do all of the technical things exactly the same. Okay?

Matt Mulcock:
I guess I was making that assumption. You’re right. There’s a lot of assumptions there, that you’re even doing that kind of stuff on a regular basis.

Ryan Isaac:
I mean, how many people do you meet that are like, “Yeah. I have a low-cost, diversified portfolio.” Then there’s four S&P 500 funds in there. You’re like, “Well, this isn’t diversified.”

Matt Mulcock:
Yeah. Not at all.

Ryan Isaac:
We’re always starting off with a problem. I’ll give you an example. Over the years, I’ve done this exact same thing with people who have just really … They just wanted to see it. “What portfolio would you use?” I’ll be like, “Here’s mine.” Same as a lot of our clients, so here’s mine.

Matt Mulcock:
We eat our own portfolios. I mean, our own cooking.

Ryan Isaac:
Yeah. Eat our own cooking. I’ll show them, and I can think of a handful examples where I’ve done this with people. They weren’t clients. They were friends or just people in the industry or whatever. Some are dentists. Years later, we had a conversation about the portfolio, after I told them exactly what to go do, for free, on your own. Just go do it. Years later, that portfolio is a mutant.

Matt Mulcock:
Yes. It’s a mess.

Ryan Isaac:
It is a mutant because over five years, not even that long, there are 10 other random stocks and some IPOs.

Matt Mulcock:
Yeah. Of course.

Ryan Isaac:
One of the mutual funds is way out of balance, and the other one needs to be … I mean, it’s a mutant.

Matt Mulcock:
You start chasing performances. You start chasing meme stocks.

Ryan Isaac:
It’s a mutant, man. It grew arms and legs where it shouldn’t have arms, and legs, and eyeballs. I’m just sitting there, and I have no insight to anyone else’s actual investment behavior. It’s just me. I’m just thinking about myself. I’m probably going, “I’ll stick to something.”

Matt Mulcock:
Yeah.

Ryan Isaac:
“I know people are crazy, but I’m not crazy. I’m a busy dentist. I have a practice. I make my money. I invest it. I don’t think about it. I’m not a day trader.”

Matt Mulcock:
That might be true.

Ryan Isaac:
It’s probably true.

Matt Mulcock:
Yeah.

Ryan Isaac:
But see, on the other side of the table, we have insight to watch hundreds and hundreds and hundreds of people make decisions in their investment accounts, and I will just promise you that even the most rational, savvy, intelligent, level-headed, unemotional, smart person, multiple times per year, has these times where they second guess, and they doubt, and they question, and they get hyped up, or freaked out, or greedy, and they make moves that they shouldn’t be making. They buy stuff or sell stuff they shouldn’t be buying or selling.

Matt Mulcock:
They think they’re making money moves, but they’re not.

Ryan Isaac:
Yeah. It’s not money moves.

Matt Mulcock:
It’s not money moves.

Ryan Isaac:
It’s not money moves.

Matt Mulcock:
It’s not making money Minaj moves. No.

Ryan Isaac:
It’s not. So, I think that’s just the hard thing because it’s hard to not have that context, but having seen it so many times for so many years, even the smartest, calmest, cool, collected person out there, they will just be so …

Matt Mulcock:
You’re going to freak out at some point.

Ryan Isaac:
There’s so many times in your life where you’re going to have an opportunity to mess it up.

Matt Mulcock:
Yep.

Ryan Isaac:
It’s just purely human instinct. It’s what humans do. So, that’s the difference. That’s the conversation I had with this person the other day. “Yeah. If we assume that you did, technically, everything right, which I think is a giant assumption … Let’s just assume you do. For the next 50 years of your life, are you going to stick to it, where it actually pans out for you?”

Matt Mulcock:
Well, and here’s the scary … sorry. [crosstalk 00:30:36] Here’s the scary thing about that, Ryan. When you really think about it, progress happens in incremental steps over time.

Ryan Isaac:
Yeah.

Matt Mulcock:
Destruction can happen overnight, can happen in an instant.

Ryan Isaac:
Yes.

Matt Mulcock:
One bad decision can lead to destruction. Right?

Ryan Isaac:
Yep. Yeah.

Matt Mulcock:
Just to that point, you might be this level-headed, “I’ve been doing this for even a couple years. That’s never going to happen to me,” the scary thing about this … This is why at the very intro of our show, you say, “Help dentists make good decisions and avoid the bad ones.” It’s really avoiding the bad ones that’s the most important part because, again, one bad decision or a couple over the course of a 30 year career can lead to destruction. Right? Maybe that’s too harsh of a word, but I want to really make that point clear. You will be destroyed. No.

Ryan Isaac:
Yeah. It’s totally true.

Matt Mulcock:
I just think that’s an important thing to understand. Progress takes time. It usually happens in these incremental steps. Very rarely, very rarely, are people making wealth off of home runs. They’re making it off of singles and doubles.

Ryan Isaac:
Yeah. If you’re listening to this, and that’s a question you’ve had on your mind, “What if I just go build the portfolios you would do anyway,” I think that’s the point we want to make, as dentist advisors. We are not competing for your business, if that’s the phrase to use here.

Matt Mulcock:
Sure.

Ryan Isaac:
Based on we will get higher returns than you. I think, objectively, historically, and from studies, I think that’s going to be true.

Matt Mulcock:
Yeah.

Ryan Isaac:
But it’s going to have a lot more to do with consistency than it is tactic, really. We’re building market-based, low-cost, globally-diversified portfolios, rebalanced frequently with high savings rates. But we will do our best to make sure you stick to them for decades, and that’s how you get your returns.

Matt Mulcock:
Yeah. I think to sum up that last one, the last question that you asked, of a doctor comes to us and asks that question, to sum that up, to me, this isn’t an information gap. This is a behavior gap. Right?

Ryan Isaac:
Yeah. That’s all it is.

Matt Mulcock:
That’s all this is over 30 years. Again, you can learn … You’ve mentioned this so many times. Why are so many people unhealthy in this country? It’s not a lack of information.

Ryan Isaac:
No. It’s behavior.

Matt Mulcock:
It’s an inability to behave correctly over time.

Ryan Isaac:
I want to be clear that any major study on this subject of investment behavior will show that working with someone to give you accountability will result in higher returns. That’s what happens.

Matt Mulcock:
Honestly, most of that has, like you said, nothing to do with tactics or strategy.

Ryan Isaac:
It’s not tactics. No. Behavior.

Matt Mulcock:
I mean, there is some part of that. Right? We certainly do things tactically that we don’t highlight tons.

Ryan Isaac:
Big time. Yeah.

Matt Mulcock:
We don’t want to bore people. There are things that we do tactically, or strategy-wise. We have a whole investment team that we’re using.

Ryan Isaac:
Yeah.

Matt Mulcock:
But that’s not the main differentiator here.

Ryan Isaac:
It’s not the main differentiator. Yeah.

Matt Mulcock:
It’s the behavior part of it.

Ryan Isaac:
Well, I guess what we’re saying, too, is all we’re trying to help someone do is capture the absolutely wonderful longterm returns of the stock market, the world’s stock market. That’s all we’re trying to help you do. The world’s stock market has amazing returns for the little amount of time and energy you have to put into it, and how outsource-able it is.

Matt Mulcock:
Yeah. That’s why we love it.

Ryan Isaac:
We’re just trying to help you capture that. But if behavior isn’t good, then you’re not going to capture the full weight of a stock market’s return, because behavior will get in the way.

Matt Mulcock:
Sorry. Last thing. We just keep rolling on this but we’re going to do it.

Ryan Isaac:
I know. I like it.

Matt Mulcock:
We’re in it. We’re wrapping it up.

Ryan Isaac:
Feeling it.

Matt Mulcock:
I just wanted to emphasize this because I am hearing this a little bit more lately. What you just said is exactly right. It’s not to be the benchmark or some arbitrary number. This might sound like a duh, but it needs to be repeated and said over, and over, and over again. The whole point of this is to help you reach your goals. Right? I hear this a lot from people, where it’s like, “Oh, well, if I go with you, will I beat the S&P? Will I beat this benchmark?” No. I mean, I don’t know. Maybe you will.

Ryan Isaac:
Maybe.

Matt Mulcock:
You might.

Ryan Isaac:
Maybe. Maybe not.

Matt Mulcock:
But that’s not the goal here. The goal is to help you reach your goal. So, for example, let’s say you get 30 years down the road, and you have fallen short of your vision and your goal for your life, retirement-wise, but you beat the S&P by three points a year. Who cares?

Ryan Isaac:
Who cares?

Matt Mulcock:
Reverse that. Let’s say you got to the end. You’ve reached your goals. You’re living stress-free. You’re vacationing.

Ryan Isaac:
Yeah. Did it all.

Matt Mulcock:
You did it all. You reached your goals.

Ryan Isaac:
You didn’t beat it.

Matt Mulcock:
You underperformed the S&P by two or three percent a year.

Ryan Isaac:
Yeah.

Matt Mulcock:
Who cares?

Ryan Isaac:
Maybe on purpose.

Matt Mulcock:
Maybe on purpose. Exactly.

Ryan Isaac:
Maybe you underperformed on purpose because we purposely didn’t take as much risk as it would take to match the S&P.

Matt Mulcock:
Exactly. It’s not about the benchmark, this arbitrary metric.

Ryan Isaac:
It’s so nuanced.

Matt Mulcock:
It’s about reaching your goals. Yep.

Ryan Isaac:
Well, I’m glad you bring that up because there’s just a lot of misinformation and a lack of education. People are just really conditioned to be like, “Can you beat this thing? Is that the measure of progress and results?”

Matt Mulcock:
My answer is I don’t know. Maybe.

Ryan Isaac:
That’s a good point. I don’t know.

Matt Mulcock:
Is it Ryan in a foot race?

Ryan Isaac:
Maybe we don’t want to beat it.

Matt Mulcock:
No. I can’t beat him in that. No.

Ryan Isaac:
Yeah. You could.

Matt Mulcock:
I don’t think so.

Ryan Isaac:
Yeah. So, yeah. That’s such a good point, man. That’s not the goal. Your goals are the goals. That’s what we’re going for. So, thanks, everyone, for tuning in and being here. Again, if you’re new, Matt said this earlier, welcome, if you are new, if you just joined.

Matt Mulcock:
I think I said welcome, and we love you. I did say that.

Ryan Isaac:
Welcome, and we love you. It’s true.

Matt Mulcock:
Yep.

Ryan Isaac:
If you’re not new, we still welcome you and love you.

Matt Mulcock:
Welcome, and we love you. Yeah.

Ryan Isaac:
It’s all the same. If you want to chat with us, post a question in the Dentist Advisors discussion group on Facebook. We’ll post an answer. Or go to dentistadvisors.com, click on the book free consultation link, and have a chat with one of our advisors. Maybe you’ll chat with Matt, and it’ll be a happy, happy day for you.

Matt Mulcock:
No, man. No.

Ryan Isaac:
Matt …

Matt Mulcock:
You want Ryan.

Ryan Isaac:
Thanks for being here, everybody. Thanks, Matt, for joining us.

Matt Mulcock:
Thanks, Ryan.

Ryan Isaac:
Catch you next time. Bye bye.

 

Investing

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