The Dental Safety Net: Proactive Planning for Financial Security

Announcer:
Hello everyone. Welcome to the Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry, finances, and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.

Casey Hiers:
Hello and welcome. This is Casey Hyers at the Millionaire Dentist Podcast in studio with co-host Jared Bridgman.

Jarrod Bridgman:
Casey, it's lovely to see you today. How was your weekend? Did you have a good time doing whatever the hell you do?

Casey Hiers:
It was a great weekend.

Casey Hiers:
Yeah, daughters went to a Purdue dance team dance camp for two hours, so my wife and I got to stroll through-

Jarrod Bridgman:
Memory Lane.

Casey Hiers:
Purdue University's campus, hand inhand. It was a lovely day for that. It was actually-

Jarrod Bridgman:
Were you afraid she was going to run off with one of the local college boys, so you held onto to her hand?

Casey Hiers:
No. No, Jared, not at all, but now it's cathartic. It's nostalgic. I will say wherever you have history, there is value to going back and just kind of soaking it up and reflecting. I was not expecting some of those thoughts. It was very nice. Thanks for asking. What kind of birds on your shirt by the way?

Jarrod Bridgman:
Blue ones.

Casey Hiers:
Like a pelican?

Jarrod Bridgman:
I don't know. This is the one shirt I bought when I was forced to go out on the golf course with you guys.

Casey Hiers:
Great shirt. Love your shirts.

Jarrod Bridgman:
Thank you.

Casey Hiers:
Fashion icon.

Jarrod Bridgman:
Fashionista.

Casey Hiers:
Forced to go on a golf course, the cross Jared bears. We also have with us in studio, a very special repeat guest, Kevin Roten.

Jarrod Bridgman:
He's a superstar at this point.

Kevin Rhoton:
I don't know about that, but how's it going?

Casey Hiers:
CPA, MBA in Finance.

Kevin Rhoton:
Yeah.

Casey Hiers:
Letters.

Jarrod Bridgman:
Kevin, speaking of all your letters, you recently mentioned to me that your son is getting married this weekend.

Kevin Rhoton:
Yes.

Jarrod Bridgman:
That's exciting. Did my invitation get lost in the mail?

Kevin Rhoton:
Oh, man. And it's too late now.

Jarrod Bridgman:
Dang.

Kevin Rhoton:
Sorry. All the seats are filled.

Jarrod Bridgman:
Oh, they are?

Kevin Rhoton:
Yes.

Casey Hiers:
You know what's funny? If he didn't have that one, he'd be with you and I at another wedding that we're going to. I wonder if he told his son, I need you to get married on this date. I don't want to be with Jared and Casey-

Jarrod Bridgman:
Stuck in between us.

Casey Hiers:
... at a wedding.

Jarrod Bridgman:
That'd be miserable.

Casey Hiers:
They'll summon me on the dance floor.

Kevin Rhoton:
I can neither confirm nor deny such allegations.

Casey Hiers:
I didn't know it's wedding season in October, but let's do it.

Kevin Rhoton:
Yes, it is a thing now.

Jarrod Bridgman:
Yeah.

Casey Hiers:
Your oldest boy getting married?

Kevin Rhoton:
Yes, sir.

Casey Hiers:
Are you prepared for that?

Kevin Rhoton:
Oh, yeah.

Jarrod Bridgman:
And well, that's the exciting part about that is you had all of the month of September to prepare for this wedding. I think it was national preparedness month.

Kevin Rhoton:
It was, and it's actually something that I think Casey and I like to discuss a little bit is preparedness, but yeah, September was national preparedness month nationally.

Jarrod Bridgman:
So do you guys, because I know you guys have something you want to talk about today in terms of being prepared and preparedness and you're in your practice. Do you and Casey get together in your bunkers and kind of talk about this beforehand?

Casey Hiers:
Man, did we wish we had bunkers.

Kevin Rhoton:
Yeah. Yeah, yeah. Yeah. No, we dabble I guess. I worked on my water and food preps for, that was my focus in September. Yeah. Just in case. I mean, we're not expecting anything major but national... A lot of things, natural disasters.

Jarrod Bridgman:
Right. Well, kind of going off of that, I mean this is the first thing we kind of want to talk about is one of the things that's most likely... It's out of your control the most, which would be being prepared for the unexpected, for national... So you got me on it too. Natural disasters.

Kevin Rhoton:
Yeah. Using that analogy, looking at for practice owners, just being prepared for unexpected things to come up. Just looking at what happens if a key staff member leaves or you face a health crisis, collections dip, things like that. It's important to being prepared for that. Building reserves, line of credits, setting up contingencies, making sure you have adequate disability insurance.

Casey Hiers:
Just those first handful, I can think of examples of clients here that have had some of those things, some more serious than others pop up and you joked about a bunker, but our president calls, hey, we're an insurance policy for practice owners to be fabulously wealthy and not screw it up. But our clients that have had some of these things go through, were kind of like that bunker where they're like, oh, no, was not expecting this health issue or some of the other examples, and we can be like a bunker.

Jarrod Bridgman:
Right. As you said, some of those issues can really just like a natural disaster pop up out of nowhere or you may have had a two-week notice and all of a sudden it's like it's passed through, something's been signed and now here we are.

Kevin Rhoton:
And kind of going on with that is looking at unexpected IRS notices. A lot of times practice owners will receive notices from the IRS or the State Department of Revenue inquiring into something that they've done in the past. That's unexpected and need to be prepared for responding to that.

Jarrod Bridgman:
And if you kept you or your accountant at the time or whoever had kept poor records, you may not even be able to find it. It's been a couple years.

Kevin Rhoton:
Not have anything, and it's important to have reconciled accurate financials and data to back up what you presented on the tax returns, financials, things like that.

Casey Hiers:
I mean, if you don't have a whole home generator when the power goes out, it's incredible all of a sudden how valuable batteries, flashlights, candles, things like that are things you might not think about in the CPA world. Having your QuickBooks updated, have your profit and loss statement, balance sheets, having those things pristine and ready is that really nice feeling of turning on a flashlight in an unexpected blackout? I'm not the CPA in the room, but that's a great analogy. Having those financials ready to go has to be an empowering feeling versus so many practice owners who were vetting potentially they don't have good data.

Kevin Rhoton:
Yeah. Exactly.

Jarrod Bridgman:
It's like Casey, during your presentation that you do, you have a really funny kind of a meme slide with Chris Pratt from Parks and Rec where he says, you have it written on there. I don't know how much money is my bank account and I'm too afraid to look. I mean, a lot of practice owners I think can feel that way where it's gone on so long, this poor record-keeping, this poor updating that they are afraid to even look because then they'll find the problems of find issues that they would just rather stick their head in the sand about.

Casey Hiers:
I'm going to go place five crowns. I don't want open this can of worms. And Kevin, that's what you do is you open up the can of worms and see what's there, and a lot of times it's messy and you're not prepared for, God forbid, some sort of IRS communication.

Kevin Rhoton:
And the peace of mind that you have when you get a notice from the IRS that wants back up to a number. I mean, I can just go straight to the financials and say, I know exactly what that number is, what consists of that, and be able to explain it to them and go on. A lot of times, like I said, if you don't-

Casey Hiers:
Kevin goes game on IRS. If you're not prepared, then that's a terrible feeling.

Kevin Rhoton:
Yeah. I can tell you exactly where that number comes from.

Jarrod Bridgman:
Building off of that, let's say this year your practice has really started to grow. You've got more patients in, you're making more money than you maybe ever had before, at least the last year, a couple of years. Is there a way to potentially prepare yourself for, I don't know if I want to say unexpected growth, but upcoming growth or-

Kevin Rhoton:
Getting into that long-term preparedness. We talked a little bit about that short-term, unexpected disasters or things that come up, but for a good thing, long-term preparedness is with that growth, with that extra income, able to bolster your preparedness, bolster your stocking up in the idea of retirement planning, retirement contributions. A lot of times practice owners don't start right away or don't start when they have that growth.

Jarrod Bridgman:
Would you say that preparing for growth too could be looking at your quarterly tax estimates? That way you're not getting hammered at the end of the tax time with a large unexpected bill. Would that kind of feed into that idea too, if you prepare yourself for the growth and how much more taxes you're actually going to have to pay?

Casey Hiers:
Yeah. Don't try to sound smarter than Kevin.

Jarrod Bridgman:
I've been here long enough, I just memorized what you guys say and regurgitate it.

Kevin Rhoton:
No, yeah. I mean that's right. I'm trying to think how to go through that.

Casey Hiers:
One of the things we talk about with transitions is if you're not planning for that at least nine or 10 years prior, then you're behind the eight-ball and then Kevin, you just mentioned, if you've got some growth, if you drop in insurance and collections are up, profitability up, whatever that is. Well, if that money's just sitting there, it's vulnerable to attack. Let's just call it what it is. Where if you have a good strategy, what are some strategies that potentially if you're, let's say, things are going well and you're growing, you're growing your practice and you're growing collection and profitability.

Kevin Rhoton:
Yeah, it's important to start retirement planning, whether it's 401k, profit sharing, getting those maximized and doing it now, starting it up, automating it and maximizing what you're putting into it.

Casey Hiers:
I actually talk to, when I travel people, I listen to the podcast and they go one-on-one a conversation of course, but I've been saving 40 or 50 maxing this, maxing that, and people have really the misconception that's as good as it can go, and we get into that. The conversation of, again, if you're collecting 900, the one three, well, you should probably be saving closer to 90 to 125, and it's like a big surprise getting caught with no preparedness.
It's like, wait, what? I should be doing this? And yes, and to your point, start early, but then don't just max out those things. What are other vehicles, and I was just in a conversation this morning with investing and different stock that here are up 35% because our team is out there and I know I'm in the investing world now. We'll get back to accounting, Kevin.

Kevin Rhoton:
No, you're good.

Casey Hiers:
But having your team prepared for different sectors that might be ready to explode different sectors in the market to get out of.

Jarrod Bridgman:
Or foreseeing potentially the trend of maybe we're heading towards a recession or things like that to safeguard things as well.

Casey Hiers:
Yeah, yeah. No, I think there's value with what you said, Kevin, with the retirement.

Jarrod Bridgman:
Kevin, I kind of was thinking too when you were mentioning about preparing for the unexpected and making sure your books and everything is clean and pristine and up to date, and how that could tie into a transition as well, because if your books are terrible and things like that, you're less likely maybe to have an associate or somebody even be interested in purchasing from you.

Kevin Rhoton:
Oh, yeah. We have talks all the time with practice owners and it's not ones that are just ready to retire right away. It's practice owners right now, let's look ahead at when that transition, when that practice sale or whatever you're looking at, we need to prepare now.

Jarrod Bridgman:
To make it not only... It's kind of like curb appeal, not only making your practice more appealing to the buyer, but it's also going to potentially and hopefully raise the amount of money you might be able to sell it for.

Casey Hiers:
Absolutely. Yeah. Yeah.

Kevin Rhoton:
Well, the practice that is on the inside that counts and that's means the numbers.

Jarrod Bridgman:
It's just like women.

Kevin Rhoton:
And they don't just look at this year's financials or What are you doing right now? They're looking at years and years worth of financial data to do that valuation.

Casey Hiers:
You want to be ready for that valuation because otherwise you're going to... It's your baby and you're going to be sad when it comes back and go, it's only worth this.

Jarrod Bridgman:
It's like my kids now like. Oh, they're only worth what now? What? Huh? My baby. Kevin, in terms of building off the preparing for the unexpected, all those kinds of things. When it comes to being prepared maybe for financial security now and financial security in the future, I could imagine maybe some kind of thought of emergency funds could play into that as well, having that backup cash?

Kevin Rhoton:
Yep. I mentioned earlier just about making sure you have adequate amounts of cash saved away. We do mention having lines of credit, not just to spend money or to lend... Not just to borrow money on, but just to have just in case something happens.

Jarrod Bridgman:
Do you suggest burying your money out in the yard, by cash?

Kevin Rhoton:
No, no. We definitely have the planning team. The investment team has many different savings vehicles solutions for that, but also just with preparing for that security, you mentioned the tax estimates, and that's where this really comes in. Just we have a specialized, I don't know if you'd say proprietary, but a specialized estimate process that we go through to make sure our clients are adequately paid in throughout the year for their taxes, but not too much where they're just giving... We always say giving Uncle Sam an unneeded loan, interest-free loan.

Jarrod Bridgman:
Let them hold onto your money for no reason.

Kevin Rhoton:
Right.

Casey Hiers:
To preparedness and taxes. I was talking to a practice owner and 2024 filed late, all those things, but he was saying that for 2024. He goes, yeah, I had that conversation in April of 25, and that should have happened in November of 24, and I laughed. I caught myself laughing and I go, if you think that's good, I go, April's unacceptable. November is bare ass minimum. I'm like, this needs to be monthly and quarterly, and if you would've known this information midway through the year, you had options. When it comes to November, you're very limited besides going and buying an expensive coat rack called dental equipment if you're not trained on it, but I found that fascinating that some practice owners find that a November conversation year of is ideal, and if you want to be prepared and have the opportunity to take action, you need to do that earlier in the year.

Kevin Rhoton:
At least first quarter of the year.

Jarrod Bridgman:
And then kind of keep on with that throughout.

Kevin Rhoton:
Right. Every quarter we prepare... We go in and start over again on doing a projection based on a lot of data.

Casey Hiers:
And the emergency funds, because you mentioned it, right? The line of credit, business line of credit is a nice safety net, right? Ask the banks for money when you don't need it. That's the best time to ask for it, but the idea is you never touch it. It's there as a safety net. We don't use it for riverboat gambling or anything like that, but then also just with... This is more on the planning side of things, but practice account balances, having a custom number that each and every one of our clients needs to be at, because most of the time it's either significantly lower than it needs to be, which causes a lot of stress. Or some listeners might be like, ha-ha, they've got five, $600,000 sitting there. That's too much of an emergency fund most of the time, and you've got to kind of thread that needle.

Jarrod Bridgman:
Kevin, with all of these things we kind of talked about, let's keep this analogy going and kind of maybe wrap all these things we talked about together. Is there maybe, I'm trying to think of during natural disasters, I'll hand out preparedness kits and things like that. We've got flares and bandages and all that kind of stuff. Is there some kind of kit that we-

Casey Hiers:
Jared, in your case, if you had a flare gun, you would need a bandage immediately after because you'd be really excited.

Jarrod Bridgman:
Yes, I'd right away shoot right off. Yes, I'd be that one guy on the raft who shut it off as soon we got on there and be like, well, I guess we're floating to die now.

Casey Hiers:
That wasn't nice of me. I'm sorry.

Jarrod Bridgman:
But yeah, Kevin, is there some kind of, I don't know, kit that a practice owner should be able to throw together?

Kevin Rhoton:
I don't know necessarily about a flare, but water, flashlights, bandages, things like that. I mean, that analogy.

Jarrod Bridgman:
Small bottle tequila.

Kevin Rhoton:
You guys, throwing me off. Should have things like the updated and accurate financial statements on a monthly basis, your tax projections and a retirement plan. That's kind of the disaster kit. Having those things ready.

Jarrod Bridgman:
In my mind, being prepared, especially if it's unexpected or natural disaster, those kinds of things, is that you're doing your best to minimize the damage. Sometimes there's going to be some kind of damage that's just out of your control, but you can minimize quite a bit of it.

Kevin Rhoton:
Yeah. A phrase I've heard, it's not if, but when it happens, and just making sure you're prepared to minimize that damage.

Jarrod Bridgman:
In some areas might be more than others. Keeping that analogy, if you're out on the coasts, it could be hurricane season or if you're on the West Coast, you've got earthquakes and all kinds of things, so having systems in places and things and together and in mind can at least be like, you know what? We're going to take a hit because of X, but we've got those reserves. We've got that line of credit. We've got stuff that can at least keep everything chugging along.

Casey Hiers:
Well, and not to make a lighthearted podcast kind of a downer, but I mean, we have examples of clients who, hurricanes, floods, death, serious illness. It's real. It happens, and again, when you're prepared and you have a bunker, proverbial bunker, we have been told over and over again, I don't know that we could have gotten through this had you guys not had this part of our lives covered for us in such a good way. Kevin, you're pretty humble, but if your accounting screwed up, it's open season for vulnerability, like you said, not if, but when, and that's just a bad, bad day.

Kevin Rhoton:
And we have a lot of practice owners coming to us. I'm sure every week you see them, Casey, of they wait until the storm is on the horizon before they're preparing. They're late in their-

Jarrod Bridgman:
Or even when the eye of the storm is above them.

Casey Hiers:
Yeah. Yeah. Well, and this will sound mean, but it's incredible how many, maybe ill-timed or poor decisions practice owners make, how much money they will spend on things that don't get them much, and yet some of the most basic important things. That's got to be your foundation and the importance of getting that right. It's not fun and sexy sometimes to have pristine accounting and a plan and chipping away at overhead. That's not as fun as a shiny new piece of equipment or placing a killer crown, but my goodness, it's not if, but when, and ultimately having that insurance policy pays you back in spades.

Kevin Rhoton:
For sure. I mean, it's not about being paranoid. It's being confident and resilient and not panicking when something happens, figuring out, we'll just figure it out when it comes up.

Jarrod Bridgman:
Well, the nice thing is too, that lets you still have the calmness of your mind to be able to focus and work with your patients too and keep that income coming.

Casey Hiers:
What a pleasure to have the father of the groom with us during wedding week.

Jarrod Bridgman:
Yes.

Casey Hiers:
It's still in theory here. I can't wait until it sets in.

Jarrod Bridgman:
Yeah.I can't wait until I show up later.

Kevin Rhoton:
Oh, boy.

Casey Hiers:
If there ever was a wedding crash, it's right here at the office.

Jarrod Bridgman:
I'm going to paint my tux on my body.

Casey Hiers:
Jared Bridgeman.

Kevin Rhoton:
Oh, no.

Jarrod Bridgman:
Kevin, thank you so much for stopping by. I always appreciate when you come in and you just hammer us with this amazing knowledge and your expertise. Casey, as you know, we've got all kinds of events coming up now. We're getting closer to the end of the year, but we did just announce, and registrations will be going available soon for both Boca Raton in the Naples and Florida area, and then you and I and some of our team have been working on our big plans for all of next year, so we're going to be hitting a ton of places, a ton of cities, so make sure to keep on track with us on fourquadrantsadvisory.com, our Events tab. You can also sign up to just get some newsletters and we'll let you know, Hey, we're in your area. Hey, we're coming to town or other things. Yeah, I had something going there too, but that's all right. Casey, any last words for our listeners while you're here?

Casey Hiers:
Nope.

Jarrod Bridgman:
Nope. We got it covered. Kevin, again, thank you so much and we'll see you next time.

Kevin Rhoton:
Thank you.

Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information, and thank you to you, the listener, for tuning in. The Millionaire Dentist Podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to FourQuadrantsAdvisory.com and see why year after year they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.