Podcast (Dental)

Build Wealth with a Financial Plan Despite a Volatile Market

June 8, 2022

No matter what’s going on with the stock market or economy, it’s important for people to follow an established financial plan. When investing long term, markets will always fluctuate, so when you set goals, develop a plan and follow it through. It will help you grow your wealth despite volatility in the market.

In this episode of The Art of Dental Finance and Management podcast, Art meets with Daren Pladson, Principal and Senior Wealth Advisor at Eide Bailly. Daren and Art discuss how global issues are affecting the financial markets, including:

  • Inflation
  • Rising interest rates
  • Supply chain disruption
  • War in Ukraine


Art and Daren outline how dentists should choose their ideal financial advisor, how to participate in the planning process and what building an investment portfolio involves.

Reach out to Art if you have any questions regarding dental finance and management for your dental practice. More information about the Eide Bailly dental team can be found at www.eidebailly.com/dentist.

Being more strategic in all aspects of your dental practice will lead to increased profitability.


Daren Pladson, CIMA
Principal, Senior Wealth Advisor
Eide Bailly

Show Notes and Resources:

Disclaimer: Financial Advisor offers Investment Advisory Services through Eide Bailly Advisors, LLC, a Registered Investment Advisor. Securities offered through United Planners Financial Services, Member of FINRA and SIPC. Eide Bailly Financial Services, LLC is the holding company for Eide Bailly Advisors, LLC. and Eide Bailly Agency, LLC, which is wholly owned and operated under Eide Bailly LLP. Insurance products are offered or issued under Eide Bailly Agency, LLC. Eide Bailly Advisors, LLC employees can also be licensed as insurance agents/producers of Eide Bailly Agency, LLC. Eide Bailly Financial Services and its subsidiaries are not affiliated with United Planners. Not all products and services are available in all states.

This presentation is given with the understanding that the information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal, accounting or other professional advice. It is not intended to be responsive to any individual situation or concerns. Viewers are urged to not act upon the information contained in the presentation without first consulting an attorney, accountant or other professional regarding implications to your specific factual situation. The information should not be relied upon as investment advice or a solicitation.

Statements of facts are from sources considered reliable, but no representation or warranty is made as to their completeness or accuracy. The opinions presented in this presentation are subject to change without notice and no representation is made concerning actual future performance of the markets or economy.

The Transcript

Art Wiederman, CPA: Hello everyone and welcome to another edition of The Art of Dental, Finance and Management with Art Wiederman, CPA. It's great to have you on the podcast. Thank you. To the thousands of people that listen to us. Every single week I get emails. I was at the California Dental Association Convention a couple of weeks ago and had a lot of folks come by, say, We listen to podcasts. Thanks for all you've done. And again, we really, really are proud of the work that we're doing. The CDA convention. I was so happy, so, so happy to see thousands of people at the convention. It was kind of like old times and see get to see all my old friends. And that was so wonderful to see. So hopefully we're getting back to some sort of normalcy after the last two years of our lives.

And so with that said, that today is going to be a really, really good conversation. You might have noticed that the investment markets are down a little bit this year. In fact, we're going to be talking about the investment markets today with Daren Pladson, who's a principal here at Eide Bailly and a senior wealth advisor. And just give you a frame of reference. This year through May 20th, the Dow Jones Industrial Average is down 13.97%. The Nasdaq is down 27.42%. The S&P is down 18.14%. In fact, the Dow has been down for eight straight weeks between mid-March and May 20th, which is the largest losing streak it's had since April of 1932. Now, should we all panic and go, you know, hold our heads in a in a bowl of water? No. And that's what we're going to talk about today is what's going on in the financial markets. What do you need to know and what long term should you be doing? So we'll get to Daren in a moment.

And first, I want to share with you that please go onto the website of our wonderful marketing partner, Decisions in Dentistry magazine www.DecisionsinDentistry.com the best clinical content of any dental magazine in the country. They have a great website with great articles 140 continuing education courses for a very, very reasonable price. We are a part of the Academy of Dental CPAs. In fact, I am a dental division director at the CPA firm of Eide Bailly. I am located in Tustin, California. My guest today, Daren, is located in our in our mothership office in Fargo, North Dakota. So I'm again, we work with about a thousand dentists in our firm, 300 in our office in Tustin. And we just had our Academy of Dental CPAs meeting up in Napa the first time in two and a half years that we were able to get together. And it was just amazing to see all my friends and talk about what was going on in dentistry and had some great speakers and, you know, just some wonderful stuff.

And then to go to the CDA convention, I got to present at the CDA. That was really fun to a group of young dentists who are buying practices. And by the way, if any of you are going to be in Orlando, Florida, for the National AGD Meeting, Academy of General Dentistry meeting on July 28th, I will be speaking. You will see me dressed up by dress, up pretty well, my family tells me. And so please come by the talk. We're talking about metrics of a dental practice and also financial planning. Come by, say hi, say you're listening to the podcast. I'd love to. I'd love to see you. So anyway, also our academy, a general Academy of Dental CPAs is www.ADCPA.org.

All right. Well, let me get to my friend and my guest, Daren Pladson. And Daren is a principal and senior wealth advisor at Eide Bailly. He joined the firm in 2007. He works with our clients. I'll let him tell you a little about his history. And again, we're going to talk about the markets today. We're going to talk about what's going on. I mean, we got all kinds of stuff. We're talking about inflation, we're talking about interest rates, we're talking about supply chain. We're talking about foreign markets. We have a war going on in the Ukraine. All of these things affect the financial markets. So with that said Daren Pladson welcome to the Art of Dental Finance and Management.

Daren Pladson: Thanks, Art. Great to be here. I really appreciate this.

Art Wiederman, CPA: So you're a golfer, I hear.

Daren Pladson: I try to hit the ball around, you know, after just watching the PGA championship, I wouldn't even qualify myself as a golfer. But, you know, sometimes when somebody pulls a double bogey on the laps all, then I guess, you know, I would probably love to have a double bogey on that last fall. Look pretty.

Art Wiederman, CPA: Yeah. There are days I wish to have double bogey on any hole, but now we could spend the whole time talking about golf. But before we get started, folks, I do need to read a disclaimer, if that is okay. Well, you don't have a choice. I have to read the disclaimer. So here goes. IB Financial Services offers investment advisory services through Eide Bailly Advisors LLC. An SEC Registered Investment Advisor Securities are offered through United Planners, Financial Services, Member of FINRA and SIPC. Eide Bailly Financial Services LLC is the holding company of Eide Bailly Advisors LLC and EB Agency. LLC is wholly owned and operated under Eide Bailly LLP. IB Financial Services and its subsidiaries are not affiliated with United Planners. This presentation is provided for information purposes only and should not be construed as individual investment advice, legal or accounting advice. No representation is made today concerning the actual future performance of the market or economy. With that said, folks and you know, the bottom line of today's presentation is we're going to be, you know, if you are looking for specific stocks or mutual funds or bonds to invest in, that will not be happening on this conversation today with Daren. But we're going to get be a lot of really good things to think about. So, Daren, let's get started. Let's kind of talk about what give us your 35,000 foot view of investments. Where are we right now? The current economic there's a lot of stuff going on. Give us a 35,000 foot view of what's going on.

Daren Pladson: Well, yeah, I mean, obviously, a lot of things going on right now. And you touched a little bit on Ukraine. Obviously, the conflict over there is pulling at this market. You know, the uncertainty with maybe natural gas or any type of commodity. You know, Ukraine's a big ag country. So that that potentially we'll talk about inflation in a minute, but that'll put pressure on maybe some of the food world along with Russia and, you know, their energy that they distribute throughout the world. So that that's one piece, you know, I think the China-Taiwan or China and potential Taiwan issue could be really interesting. And also with COVID hitting China again and then obviously we talk about inflation in the Fed and all these other things, we've got a pile on effect kind of going on right now. When I take a step back and I've been in this business for over 20 years and I've kind of seen it, No. One, and we definitely saw something in in oh seven and oh eight with these bubbles. I'm not really sensing that this is a bubble. I think this feels like an accumulation of news that's piling on. And at the end of the day, people need to diversify their portfolio proper allocation. I talk to my clients all the time about that, and what that means typically wins out. Now we have short term pain and you kind of touched on it. Short term pain from a long term effect can be okay because it's giving you opportunity to buy into the markets. The problem that a lot of people have is their confidence level is so low because they're coming off a you know, you read the numbers getting beat up by 15 to 25% probably in their portfolio. It doesn't feel good right now. So my 30 foot 35,000 foot vision is, hey, it's a lot of the same that hurts. There's short term pain right now, but long term, we're going to be okay.

Art Wiederman, CPA: And Daren, a couple of things that I want to remind people. I obviously want your comments on this. At the end of the day, markets are based on the profits of companies, right? I mean, if you have pennies, if companies make money, theoretically, their stock prices should go up. And if companies don't do as well, they should go down. I mean, you know, and the stuff we've got going on, a lot of it is, is emotion like, okay, so today right now, again, this podcast is going to is going to get published about two weeks from now. But today, which is what, May 23rd, the markets are up. And why are they up? Because I was reading this morning because there's issues with China and tariffs this morning. Right. I mean, there's stuff going on. And then because of the fact that that has going on, it had the market go up. So markets go up for lots of reasons. But isn't it true the fundamentals are really the value of stocks and add the earnings of companies?

Daren Pladson: Yeah, you know, it's a really good point. We could probably go back. Matter of fact, I was listening to Jim Kramer probably three weeks ago and he was reading a headline from the USA Today. Now, the headline he was reading was actually from 2007. Or 2005 or something like that. My point is he pulled an old newspaper and the headline sounded identical. And that's kind of the point here. We jump on news every day and we call it noise a lot of times in our business. And what, you know, what difference does one day make? But going back to valuations. Yeah. I mean, usually it's, you know, a price to earnings and whether we have a whole business valuation group here at Eide Bailly and they've got a formula, whether it's based off of IBITA or whatever. Sometimes it's cash flow, sometimes it's just revenue or total income that's generated. So there's always some sort of relative valuation. But yes, generally speaking, it's the more earnings you have or the better your earnings and the better your forecast. It should push the stock higher and we're seeing some of that maybe not happening right now as well.

Art Wiederman, CPA: Now, the markets did really well last year. Right. Talk a little bit about that.

Daren Pladson: Yeah, S&P, I'll use rough numbers. S&P 500 is up about 26%. NASDAQ was up north of 20, 22%. Dow Jones Industrial Average up about 18%. The FANG stocks, Facebook, Amazon, Apple, Netflix, Google. Um as you hear a lot about they were the driver. Matter of fact I think the top ten stocks and top ten largest stocks companies not by price but by market cap market valuation drove for the most part the returns in a lot of the in the NASDAQ and the S&P 500. What is interesting and we'll talk a little bit about this as you look at the rest of the market, because those five or six or eight or ten stocks have actually been the biggest underperformers year to date. And it'll maybe tell you a little bit about where to lean in your portfolio if you're a trader. And again, I'm not saying you should be, but there are some under evaluations in the market right now, and it might be in the smaller cap world. Some names you haven't even really heard of. So, so anyway. Yeah, a long winded answer, but yes, if companies have good earnings, in theory, valuations should go up.

Art Wiederman, CPA: Before we get into some of the because I want to we're going to talk specifically about inflation and interest rates and supply chain. But I've always been of the opinion that, you know, we all love the market to go up. Everybody's happy when the markets go up, everybody's happy when they go up. But it's not really healthy, is it, for markets to just go up? I mean, we've had a bull market for it was about seven, eight years now.

Daren Pladson: Right? Yeah. Oh, yeah. Go ahead.

Art Wiederman, CPA: Sure. And so now we get to a point where the markets are going to adjust and everything. And I again, I talked to lots of people like you do in the investment world, you know, but basically, you know, it's actually healthy. There needs to be a pullback at some point, doesn't there?

Daren Pladson: Yeah. You know, you look at, you know, we'll talk about PE ratios and all that is price divided by earnings, you know, pretty, pretty easy math. And if earnings the E goes up in relation to PE should go up you know similarly. Right doesn't always happen but very simplistically and if you. If you look at historically what has gone on, you know, there are times that we go through these natural pullbacks and that's what we're seeing right now. And again, right now, from a valuation standpoint, we were at something north of 17 and a half, 18 as a PE ratio. Today we're under 16 and a half, which is about our 25 year average. So we're coming down to normalcy. Again, these pullbacks, they don't feel good, but they're just a normal part of a market, you know? And if you're a young investor, it's a great time, like I said earlier, to think about putting money into this market.

Art Wiederman, CPA: And remember that there are you know, there's billions, maybe trillions of dollars that maybe are now sitting on the sidelines. And smart people like Daren are looking at this as saying, you know, we're down 15, 20, 25% in some of these markets. Now's an opportunity if you're investing in the long term. And again, folks, if you're someone who's trying to time this market or you're trying to get the highs, you know, you'd never invest, try, invest at the lowest point or sell at the highest point. You're just not going to be able to do it. There's just way too many variables. But so, so and again, we're not going again, very, very clear, folks. We are not giving any recommendations. But are there any sectors of the market that are just interesting that just kind of you want to talk about?

Daren Pladson: You know, I think from a valuation, again, I'm going to throw this word out there quite a bit, but from a valuation and think of this. If you're if you're an investor, like a guy named Warren Buffett, hopefully everybody's heard of him. I've learned. Yeah. He is a deep value investor. I think the biggest tech name he owns is a company called Apple. Right. And we could make the argument that Apple might be a utility. Okay. But if you think of from a valuation standpoint, you want to look at undervalued. So if you look at a sector that has a lower than normal or a lower than average PE, health care could be one right now. I believe the PE the forward PE is lower than its 25 year average utilities kind of boring areas but those are the ones that they might have the best value going forward. And again, I'm not giving advice, I'm just saying kind of unique sectors right now where people might want to look. You know, right now, tech seems still a little overvalued. You know, consumer discretionary seems a little bit overvalued. So anyway, without giving a lot of advice. But look, just look relative to history or historical averages and that'll give you a kind of a good guideline.

Art Wiederman, CPA: All right. Let's get into some of the some of the meat of this. Daren, let's start. I mean, obviously, inflation has been 1%, 0%, 2% for as long as I can remember. And now inflation is running in eight and an annualized rate, I believe the last number I saw was 8.4, 8.5%. You know, markets don't like inflation because inflation raises the costs, which cuts into corporate earnings, which cuts the values of stocks. But to talk about that, what is inflation? What is this inflation that's been going on? You know, I love when they say on the national news, the average price of gas is $4.30. There's this place that I live in called California where it's $6.40. Maybe they got their four and their six mixed up. But how does what's happening with inflation, how does that affect the markets?

Daren Pladson: Yeah, you know, it's top and top from center right with everybody right now. I'll give you a couple stats here. 50 year headlines, CPI average is 4%. Okay. The trailing 50 years March we posted a 3.6 April came down a little bit to 8.2. There are there are different parts to inflation. So let me let me continue on this and I'll get to the different parts. So essentially, it hurts every American, right? And it hurts every corporation as well. So when you tie inflation, say, to the stock market and you hit on it where companies have to adjust for increasing costs as well from a supply chain standpoint and fuel, which is, you know, you think of every company, there's a fuel cost and whatever, pretty much every company what they're doing. And that's just one part of inflation and how it's measured. So it's the long term effects and the it ends up costing us as consumers more money now. And I won't get into the consumer too much because the consumer seems to be extremely wealthy still. But what I will say about inflation, there's the way that the Fed measures it. There's actually six areas I'll jump through in real quick. Energy. New and used vehicles are food. There's something called other which. Kind of like HomeGoods, home decor, stuff like that. And then you get into restaurants, hotels, and then shelter. There's a word that's getting thrown out there about transitory. And what does that mean? And that means how permanent will it stick or not? And transitory means it wouldn't be necessarily permanent. So energy as an example and we you know, I live in North Dakota and you mentioned, you know, $6.40. I pay $4.09. So energy is per gallon of gas is definitely a transitory where the prices of fuel gasoline especially can go up and down. Right. And we've seen it over the last couple of years where it was very low. And now we're feeling it new and used vehicles very transitory are could be we're starting to see like used vehicle inventory start starting to go up and it could be because of this whole inflation in other areas starting to maybe ease the used vehicle market. Food at home, same thing. I would say this is going to be a little bit more permanent, especially with what's going on in the Ukraine right now. But either way, I think the point being, as inflation's here, the Fed and we'll talk about the Fed here in a bit. Yeah. Um, you know their job they really have to mandates. One is unemployment and one is to control unemployment and two is to control inflation. And they've probably been behind the curve a little bit. So hopefully we see this continue to come down and kind of go from there. But either way, it's affecting every American.

Art Wiederman, CPA: Yeah. And so let's get to interest rates because remember, folks, and I'm going to let Daren can explain what the Fed funds rate means. And you've heard that there are interest rate increases. We've had, I think, to this year, there's probably going to be a couple more. You know, my big joke was that, you know, the PC well. Who controls interest rates? Well, there was a guy named Alan Greenspan and he carries a briefcase and the briefcase has got a bunch of buttons. And that's how he controls. I mean, that was my big joke. But it is the Fed that sets the policy and all this kind of stuff. And interest rates have been very, very low for a long time. And now suddenly a home mortgage is 5%. So talk about what the Fed does. What does it mean? How do interest rates affect all of us?

Daren Pladson: Yeah. So the Federal Reserve is run by a guy named Jay Powell, not Alan Greenspan anymore.

Art Wiederman, CPA: That was that was, you know, that that that was long ago. I know that. It's long.

Daren Pladson: Gone. Yeah. And what the Fed does is they control what's called the Fed funds. Fed funds rate, which is just overnight lending, really, between banks to banks, bank to bank. Okay. And so if Bank X need funds because they have a big borrowing project, a construction project, they'll borrow from their local bank down the road hypothetically for a certain rate that the Fed basically tells them the current Fed funds rate is. Now they do a range. It's 0.75 to 1%. There's a lot of talk that the Fed will increase another 50, possibly 75 basis points come June. Okay. And then there's additional tax as the year goes on July, they won't have a meeting and then August, September kind of to be continued. And the reason they would do that is going back to inflation is trying to curb inflation and really trying to bring inflation down. Now. I think what's really interesting about this is it will hurt another area that will hurt potential business. Right. Because if you look at what a lot of businesses have, they'll have floating lines of credit or floating rates. Any type of floating rate is instantly going to go up. The good news is your money market, personal money market and CD rates will also go up. Usually what happens to our short term fixed income vehicles will follow what the Fed is doing. So anything from a three month maturity out to a year and a half or two months will typically move the same direction as far as yields are concerned, up closer to what the Fed is doing. When you get out to like the five eight, you're out a 30 year treasuries. My belief is you get more of a supply demand push and pull, which this gets into a yield curve which I won't bore you with, but you know it. That could maybe reach some havoc going forward as well. But the end of the day, the Fed always remember this. The Fed is increasing rates because they believe the economy and companies are on solid ground. And that's really at the gist of this. That and they probably think thinking they're probably thinking, hey, if we get a really bad recession, we need a lot of room to be able to lower rates as well. But that is the gist of it.

Art Wiederman, CPA: We also have to remember that people have been on the sidelines on spending money for the better part of two years. And there are people that have accumulated money. And I'm even reading that people are spending money and starting to put money on credit cards again because, you know, people are going to live their lives. They've been kind of shackled for two years. And that's good news for the economy. I want to talk about the supply chain and then I want to get into kind of some discussion with you, Daren, about how a dentist ages 30, 40, 50, 60 should be thinking about, you know, they're investing and structuring portfolios on a high level. But talk a little bit about the supply chain issues. I mean, that's a I mean, when did you ever think that Amazon was going to show a loss? Well, you think about Amazon. And again, we're not giving advice here, but Amazon has, you know, supply chains. They got to get their goods to sell to the public. And how many of you every single day we see two, three, four or five Amazon trucks riding around. Those are big trucks and gas guzzlers. And gas prices have gone up. So, you know. So supply talk about supply chain a little bit.

Daren Pladson: Yeah. Well, I think, you know, quite frankly, you know, this I think it all ties back to inflation as well. You know, I mean, we've been talking about supply chain issues probably for, you know, 12 months. Right. And then and it's coming out of COVID. Let's say hypothetically, if we ever really have. And then now we're back. You know, over in China, they've got another outbreak and they shut down certain big cities, you know. So at the end of the day, I think, you know, we've become so reliant on certain parts of the world, China being probably the biggest one as far as importers of their goods that, you know, it hurts. And therefore, it's one more kind of piece to excuse me one more piece of this puzzle of inflation kind of hitting us right now. So, you know, it's unfortunate, you know, and then then I think this even flows into in our own country, we have a worker shortage, you know, where unemployment is 3.8%, whether you're in California or New York or anywhere in between. And these cargos are coming in. It's hard to find drivers and hard to get that out on the road and or the rail or wherever it's gone. So, yeah, we've still got that.

Art Wiederman, CPA: Hurdle and the debt and the dentist number one challenge, we all know this is finding employees and folks. The CPA firm's number one challenge is finding good employees. It's not just you, it's everybody now. So I want to take a take a second there and talk a little bit about what you do for your clients. And if somebody has a question about the markets or anything regarding investing, how they can get a hold of you.

Daren Pladson: Sure. So our group, we're actually spread throughout the country. I'm in like outside. I'm in Fargo, North Dakota. I'll throw my phone number out there. It's 7014768767. And my email is the Platts and that's deployed so in at Eide Bailly dot com and that's EDP. I can definitely get you in line with the right person. I think the key part that we do and we really focus on is financial planning, and it's how we start every relationship with any new prospect or client. And we believe we can't give any advice until we have a good financial plan and a good, good idea of what our clients have and what their risk tolerance is. And we got to get to know our client at a really, really deep level. So we think we're we think we know we're pretty good at it, and that's where we start. And then from that point, the way we invest is a little different. We are factor driven investors, um, and it's really academic driven and we've build portfolios based off of factors and all a factor is one for you too much with this art, it's a source of premium. And again, you could just about imagine back to academics, people that have done one Nobel Prizes and we we really focus on their history and how they what they believe. And it's turned into our philosophy and our beliefs as well. So kind of boring, but yet we're trying to really put the kind of the advantage to our investors. We're not home run hitters. We're going to you know, if I can use a baseball analogy, we're going to we're going to make sure you're aligned with your goals.

Art Wiederman, CPA: Yeah, exactly. So I want to get I want to spend the rest of our time together, Daren, talking about kind of different places where a dentist might be. Let's start off with a doctor. Doctor, you know, most dentists graduate dental school somewhere in the area of 25 to 28 years old. Obviously, there are dentists who go to school later in life. But most folks, they go you know, they leave college and they go to dental school. Maybe they go and do a general practice residency, maybe they go to a specialty. But somewhere that's called 25 to 30 years old, they graduate and they get started. So what advice do you have for somebody just starting out? I mean, as far as investing, again, we're not giving specific investment advice. We're just saying structure wise, I've got maybe let's say I have a dentist who's got ten or $20,000 and they want to start investing. They've saved some money. They're real proud of themselves. What do you tell somebody like that?

Daren Pladson: Or you're going to hear the same? A lot of the same. Just so I don't know for you. That's fine, though. So first and foremost, find a financial advisor that you want to work with that understands financial planning, because that will, I think, drive a lot of your decision making. We know historically a lot of those people come out with a lot of debt, right? So that's where, you know, whether it's debt management or starting to invest or anything like that. I think it's so important to really start with a plan. How am I going to pay this debt off? You know, the next step will be buying a practice right at some point. And that's going to cost more money. And that's where you work with guys like you are that can help them cash flow and all that good stuff and figure out. All the true cost. But from an investing standpoint, I think, you know, the key is, you know, there's a lot of talk about pay yourself first. Okay. Well, that can mean you start a retirement plan and you fully if you can max that out along with paying servicing your current student loans and other debts definitely do that. That's the basic for the younger group that's there. You always want to start. But again, first and foremost, got to plan. You got to make some sort of plan and set some sort of goals.

Art Wiederman, CPA: Your apps. Your apps. I could not agree more and I understand that. So yeah, that completely. Folks, if you have and I don't care if you do it with Daren or if you do it with some other company, you need to find a competent advisor. Okay. You doctors have a plan for your patients. You look into their mouth, they come in for an initial exam and you say, okay, here's where you're at today. Here's where we want to get you. We want to get your gums healthy. We want to get you straight, you know, maybe straighten your teeth, do some orthodontics or Invisalign or something like that. We want to maybe you need some implants. You're going to lay out a plan for your patients. Well, someone like Daren or anybody else who does what Daren does is going to lay out a plan. And, you know, you until you have a roadmap of where you're going, you know, you're going nowhere. And so let's talk about a long term retirement. You know, my doctors maybe now we're getting into their forties. I understand we got to have the plan. But from a long term investment standpoint, you know, are we looking at when you invest money for people, do you rebalance their portfolios? How often do you make changes? How do you if I'm a client, I come to you and I say, hey, I like what I'm hearing. And I get you know, I've got a quarter of $1,000,000 in my retirement plan and I understand we're going to lay out a plan, but how do you manage that money? How do you decide how to make changes? You don't just put it in one place and leave it there for 20 years. Right?

Daren Pladson: Right. Yeah. And you know, one thing I want to go back to about the investing part for the 30 to 45 year olds, they have time and the ability to take on more risk. Okay. So I just want to clarify that. So as an example, again, depending on your financial plan, probably a good idea, excuse me for the younger people to take on more stock exposure when you get into your 45 to 60 age type gap. Same thing we're going to still plan because now maybe it's college education, planning, bigger homes, but the saving for retirement and all those will fit into the financial plan as well. But saving for retirement now, now is probably a point where your student loans are paid off. You might have some other debts that are out there, but you know that your income is good and healthy. Right. And so that is where you can start looking at cash balance plans. Whatever it is that. But the same thing where, you know, you still have a lot of time and you still can be probably heavily in the stock market, you know, despite the last five months now that we're going into this terrible market long term, the S&P 500 averages about a 10% rate of return. Doesn't mean you want to be all there, but you still want to you want to diversify between stocks and bonds, obviously.

Art Wiederman, CPA: So. And again, I want to be clear and Daren, let's make this, because I think this is an important point people are seeing. The markets are getting hit right now. They've done we talked about, you know, 15 to 25% in most of the indices. And and we don't want people to panic right there. And if you're investing and it's retirement money that's long term, that's ten, 20, 30 years and these markets are going to go up and they are going to go down. And if you don't if you watch it every day and you see the Dow goes down to the a couple of days ago, back last week, we were down 11 100 point. If you can't handle that, maybe you should be investing in the market. I don't know. Talk about kind of how people should be looking on a long term basis.

Daren Pladson: Yeah. You know, and I say this, I talk to my clients all the time. We're going to give you an allocation 60, 40, 80, 20. I think that's the most important part to invest in the tools that are in it, the investments, those are really secondary because I think everybody's got a risk tolerance that we have to have to figure out. And if a client, especially now, I ask my clients, are you sleeping okay? And if you're not sleeping okay, we need to make changes because that that's really I mean, you get back to your mental health and all this other stuff and, you know, people are they're drug down right now, not just because of the stock market coming out of COVID. Inflation's driving them up a wall. But at the end of the day, your money that you're saving your allocations, the key. And as you get older and you get closer to retirement, then we tweak it down. Once we know you have enough money, we don't need to take big risks anymore. Now, here's another disclaimer I'll throw out there.

Art Wiederman, CPA: Please do.

Daren Pladson: Art. We threw out early on what the stock market has done this year. But a lot of people don't know is how bad the bond market has been this year.

Art Wiederman, CPA: Okay, talk about that.

Daren Pladson: Yeah, aggregate bond market, I think it was actually through Friday is down nine and a half percent. So we don't we haven't even really had a safe haven this year. The only thing that has really made us money is the commodity world and the commodity world. The trailing ten year return has been little or nothing, you know. So but this goes back to what I talked about way early on. Diversify your holdings. You know, we want stocks, we want bonds, we need commodities, we need some cash. So you need to really be diversified. And it I think that's the hardest part for us as financial advisors talking to our clients. And in that 60, 40 and 2008, we were a little protected, quite frankly, because of our bond portion in our portfolio. Stock market was still down 35, 40%, but at least we got something for our fixed income portfolio. Same thing when COVID hit, the bond market actually performed. Okay, we're not getting that right now that I think that's the hardest part of this market right now. We're just not getting any protection from the bond market.

Art Wiederman, CPA: Well, and what a good financial advisor is going to do is they're going to be doing a lot of reading and a lot of research. And basically, you know, on a long term basis, if you're looking for I need a 20% return this year because I want to buy this house. That's not really what most financial advisors are about. You know, just it's so important. And I want to drill this home, too. Everybody listening today is Daren's absolutely right. You got to have a plan not just for your investments, but what type of insurance do you have? How are you going to put your kids through college? Having an estate plan? And, you know, retirement plans are important because, again, you guys work really hard and what you do is very physically demanding. My biggest physical demands is the fact that I have arthritis in my fingers because I've been typing for 45 years. You guys have back and neck and shoulder. And this is a real issue that you have to deal with as a dentist. And you want to get to the point that when you're, you know, 50, 55, 60 years old, that you don't have $100,000 in the bank. And that's where a good financial plan is going to help you out. And please just promise me, from listening to this podcast today and again, it be with Daren or anybody else you work with. Put our financial plan together, monitor it. How often, Daren, do you like to have your clients revisit their financial plans?

Daren Pladson: You know, we do for sure once a year. A lot of times it can be up to four times a year. A lot of it depends on the. Client and what they have going on in their life and if there's any big changes. And that's a you know, I'll lead myself into the old my own kind of lay up here. But yeah, if you have any big life changes, you definitely want to run them, run them by your financial advisor and, and just keep them in the loop. You want to prevent any major catastrophe and you talk to your CPA and your financial advisor. And if there's any big changes on the horizon, you definitely want to reach out to people.

Art Wiederman, CPA: And folks. I also want you to remember that start saving early that I have Daren. I have this thing that I talk about in my lectures and, you know, it's called Arch Golden Rules. Okay? One of them is get into the habit of saving money. Credit card debt is the devil, folks. I don't even have to ask Daren his opinion about that. I mean, I've told you on this podcast before 20, 25 years, I have set up my personal situation where I have a I don't think I have more than 10,000 or 15,000 or limit on my credit cards. And I pay they automatically pay off. They automatically take the money on the 20th of the month and they pay it off because I don't want to deal with credit card debt. You don't want to deal with credit card debt. If you've got to put stuff on credit cards, you're living beyond your means. And it means you need a financial plan. And it might also be the insurer afraid to go to a financial planner because they're going to tell you what you don't want to hear. But I guarantee you, if you do something like this and plan in all areas of your financial life, you will absolutely be thankful for it when the time comes that you do want to retire. And that's just so, so important. Hey, Daren, I want to jump back to something else. And stocks we here value stock growth stock. Can you explain, you know, for our listeners, what is the difference and how do you evaluate value in growth stocks?

Daren Pladson: Yeah. So, you know, think of value and there's a lot of different definitions of value. I mean, at one time I think when I first started in the business, it was kind of the old staples, right? It would be a3m and maybe a Walmart and stuff like IBM. Those are all considered a value now. Now a value a true value in the world of factors is really something that's underpriced relative to something else or undervalued relatively relative to say growth. So, you know, growth companies would be, you know, something that they have a larger potential to outperform, but they also have a larger potential to fail as well. Value would be just truly you know, if I if I just told you, Art, that the average PE and the S&P 500 for the largest 500 companies was 16.5. And I've got this bucket that we're trading at 13 and it could be Apple and it could be three M and it could be, oh, Xcel Energy or some power company. Those would be undervalued relative to, say, Amazon or Netflix or something else with the higher P we that's how we look at value. That's a warren value. Warren value or Warren Buffett looks at value and again, he's looking at p e ratios, price to cash flow. He's we're all looking at different factors, not just PE price, the sales even. I mean, so there's different factors you can look at and it'll kind of kick out what the true value and it can move you can move from a growth company to a value and vice versa. So yeah.

Art Wiederman, CPA: And I'm not suggesting that, you know, I don't know what the market's going to do. We're certainly not going to predict them. But the good news is at some point, the supply chain situation is going to work itself out. At some point, the baby formula situation is going to work itself out. At some point. We're hopeful that what the Fed and the you know, the economic advisors are doing in Washington, they know there's inflation, there's political pressure, because you know that there's political pressure to have a good economy, because if you are in office and your economy is not good, that's not good for you. Get reelected. So they all know all of this. And they're looking at all of this and stuff. And so these markets go up and they go down. And there have been wars and there have been inflation. And so, again, I think, Daren, the real point here is don't panic, right?

Daren Pladson: Yeah, for sure. And it you know, I I'm sounding like a broken record here. But one do get a financial plan going if you don't are ready to meet with your financial advisor planner and three yeah definitely don't panic I mean our job right now. We as financial advisers, I joke with the people that I work with all the time. We're essentially counselors right now. We're on the phone, we're holding hands, making sure people don't make terrible mistakes right now because that that happens all the time. And you've got to stay in your seat. And you just again, if you like your allocation going up, you got to like it on the way down. And that means your 60, 40 or your eight and your 9010 or 50 50 wherever you're at. You just have to understand that and look back at your overall rate of return over the last five years. You're still up. Right. And that's a good thing, a short term pain. It's here. And but yeah, you got to stay in your seat.

Art Wiederman, CPA: So let's talk for a second about I mean, there's different types of financial advisers out there. And again, folks, I want to be clear, I've said this many times on this program. Everybody who provides a service, whether you're buying something at Target or you're buying CPA services from Eide Bailly or you're investing there and everybody gets paid. People get paid in different ways. So what are the different types of financial advisors that are out there now? You are a you guys get paid based on a percentage of money under management. Is that generally how it works?

Daren Pladson: Yeah, we're actually called the hybrid and all that. All that means is we have Commissionable products, which is a very, very, very small percent of our business, but then the majority, as it were, in our a registered investment advisor. And that means we are fee, fee for service. So we charge actually under assets under management, which is very, very common in the world today. At the big warehouse is the Merrill Lynch's UBS. They do a fair amount of that majority of their businesses that way. And even the independents, it seems like that is kind of a trend that's taken place for sure over the last ten years. Matter of fact, it's it puts us as a fiduciary. So we are now we have to do what's in our in the best interest of our clients at all times under the aura world, which I'm hoping every advisor is doing that, whether they're commission or not. But anyway, it that's how we do it. And it tell you what, between the SCC and FINRA and the deal, well, it seems like over the last ten years there's more and more publications coming out stating that is the best because it's full disclosure. People know I pay 1% on my assets or whatever it is, or one and a half percent, whatever, somebody charged. So that's how we're set up.

Art Wiederman, CPA: Know and I'll tell you another thing, Daren, that I look at with people. So as a tax advisor, I can give you know, we always say, you know, there's black, there's white and there's gray, right? White. We can take a position on a tax return all day long. BLACK We do not go down that road because that's illegal. GRAY We talk about now with an investment advisor, a couple of things I want to point out. Number one, if you hire an investment advisor and the first month or two, your money goes down, you don't change investment advisors. How long should you be given as an investment advisor to? I mean, how long do you think a client should give you? I mean, markets go up, markets go down. It takes time to get investments in. What do you tell people?

Daren Pladson: Well, I'm probably not going to give you the right answer, but I think you're forever right. I mean, I think, you know, it's kind of like your CPA. If you've if you've got a good relationship with your CPA and you trust them. Right. Tell me tell me why you would change. Right. Other than maybe cost or you made a batter or something like that. I'd say the same thing with a financial advisor, too. I mean, if you trust your financial advisor and you're making good inroads, the markets are going to do what the markets are going to do. We are completely out of control. My hope is that financial advisors putting you in prudent investments, low cost, that, you know, we're they are forecasting a rate of return. And even though the last five months have been negative, it's definitely not a reason to change finance. Financial advisors, if you're not talking to them and or they're not calling you or returning your calls, you know, just simple things in life that, okay, they don't really want your business or they don't care for your business then. So, you know, I wouldn't say just change after five months. No, definitely not.

Art Wiederman, CPA: No, no. You've got to give someone a chance. And at the at the end of the day, are you getting good advice? Do they care about you or are they looking at what your goals are? Not just, okay. Well, our company has these three recommended investments and that's what we put everybody into. And then, you know, I get people who come, dentists who come to me and you guys say, oh, well, my, my buddy invested in this company and they do futures and options and he's done really, really well. And I go, Oh, no, please don't tell me. I don't want to hear that. But it's again, it's really based on your in a dare and it's based on the individual or the husband and wife's goals, family's goals. I mean, you know, if I got three kids getting ready to go to Stanford, I'm going to be in a different position than if all my kids are going into the service or community college or what have you. And if I'm in my, you know, family's home, that they're I'm not leaving and I'm not going to be building or buying a new I mean, it's all based on what you got going on in your life, doesn't it?

Daren Pladson: Yeah, for sure. I mean it, it goes back to financial planning all.

Art Wiederman, CPA: Those, it all come back to this. Sorry guys. It's all coming back to us.

Daren Pladson: Yeah. And if we had a plan for three kids at Stanford, we get, we got, we put that in the plan. Right. And we can forecast the costs and all that good stuff. So, um, yeah, it, it, it and that's a great thing about a financial plan, right? Everybody's life is changing all the time. Sometimes fast, sometimes not as fast. And that's where, again, this goes back to you need to talk to your financial advisor about the changes that are going on in your life and they'll help you through it.

Art Wiederman, CPA: Can you give our listeners any kind of advice, as you know, a lot of our dentists I mean, it's funny, some of them are just really into this stuff. They manage their own money. They're reading Morningstar, they're reading publications, they watch Jim Cramer. Jim Cramer's very entertaining and, you know, stuff like that. And they're really trying to educate. But a lot of our clients, I mean, over the years, I get different people send me it's funny, they send me 12 investment statements for each account and they're in envelopes that are totally unopened. It means that they've never looked at it and they don't want to look it. They're scared to look at it. They don't understand it. People tend to stay away from things that they don't understand. So is there anything that you can give our listeners maybe some tools, some things? If you want to start learning about investing and what you're doing, anything they can read that you like, any TV shows or things that you like.

Daren Pladson: Well, um. If you're going to here's my philosophy on investing to be a successful, we'll say do it yourselfer or even a professional investor. One, you set out rules. And two is you never break your rules. And I joke again with the group that I work with that, you know, there are all different ways to invest and we believe ours is the best. But I know that there's, you know, hundreds others and they all work 60 to 65% of the time. That's my unaudited. But the guys to get to be in that 60 to 65% of the time don't break the rules. So rule number one, set your rules. Rule number two, don't ever break them. And that gets back to whether you're trading commodities or options or you're a deep value investor. Set your rules. That's if you're a do it yourself, a do it yourself. Or obviously like what to read, read Forbes, read Kiplinger's if you really want to spend your time doing that. Everybody on this call a dental dentist, a doctor of dentistry or more. You probably don't have the time. Right. And that's where you hire somebody to hopefully do your financial get your financial plan lined up and all that. I will say that. It's really, really. I should say this. It's not hard to build a portfolio. It's hard when we have five months of this and you don't have anybody to lean on. And this is when you're doing it, you're on your own. By the way, that's where people will make terrible mistakes if they don't have a financial adviser or they bought Tesla at 1200 bucks after the stock split and it's at 650 today, they make a bad decision. And so anyway, kind of kind of getting long winded on that. But, you know, I think the other thing, too, I'll say I have CNBC on every day right now. It's muted. The one thing I can tell you that I'm really good at, I can sift through because they're going to have one bear and one bull, you know, every half hour, right in the next half hour, they'll have one bear and one bull. I can sift through. I think very I'm very good at it, who I want to listen to and who I don't want to listen to, because there's a lot of again, I call it noise out there and they're all given their opinions. And some, you know, everybody's right eventually. Right? The bears are right eventually and the bulls are right eventually, too. So just be careful. You know, be careful what you're listening to. That's if you're a do it yourself or.

Art Wiederman, CPA: But are there some questions that clients should ask their players? I mean, should always question why? Why are we invested this way? And I think that's a good thing to ask, isn't it, Daren? I mean.

Daren Pladson: Sure.

Art Wiederman, CPA: You know, you nobody's going to hear more about your I mean, your financial advisor, if you have a good one's going to care a lot about your money, but you have to care too. And it's really important about that to do that. And I think that we've made the whole point of today and we're going to put a bow on this here in a second about why it's important to have a plan and why it's important, you know, to watch what's going on and read. And you're right, don't believe everybody who is you know, you could watch ten people on CNBC, like you say, and five of them are going to say we're going into a bear market. I guess the definition of bear market is a 20% reduction in the major indices. Right. And but you got other people that say, well, here's a great opportunity to invest because the it's down. So just, you know, like your patients do with you. They trust you to make sure that you're going to take the best care of their teeth and their oral health. It's the same with a financial advisor. I think we hit all the food groups here, Daren. Any, any, anything. What are you let's finish this off by saying, you know, what are you telling your clients right now? It's May of 2022. We got all the stuff that's been going on that we've talked about the last hour. But when you when you meet with your client, what are you tell what are you saying to them for the most part about where this thing is going? We're not asking for a specific, okay, what should I invest in? But what are you telling your clients right now?

Daren Pladson: You know, the first thing we do, we pull up their financial plan and we've already we've already looked at it. Right. But when we go into a meeting and if something major has happened, we probably haven't done a good job of financial planning because we can hold on to a 20% pullback. Right. Um, so one is we're going to walk through the financial plan and we're going to show them we're still going to succeed. Right. And here's why. We're forecasting this as a rate of return. That that is the first thing I think, um, I think that's what everybody on this call should always ask their, their advisor. Are we, are we still okay. Right. We know this is a short term ah we think this is a short term pullback. Um, secondly, I think, you know, from an investment standpoint, I've said this a number of times and, and I'll really try to clarify it here. To me it's about your allocation. Um, I can, I can show you X, Y, Z, ABC, l I'm in all these different funds that look very, very similar, and they will be very, very similar. And they're all going to give you probably within a very if they're all large-cap growth, let's say, type mutual funds or exchange traded funds, they're all going to give you a very similar return. I would never chase a return. I think that is one of the the things clients make terrible decisions with is they'll chase again, they'll hear from their buddy or they'll pull up. Forbes And that's, you know, one of the downfalls. It's already history by the time it hits the press. But anyway, my point being is, you know, go through your go through your plan. The other thing I would ask, you know, make sure you understand your fees and how you're paying and how much you're paying, because that could be maybe a deterrent in returns, too. So, um, so yeah, that, I think I'm talking about that with my clients. I'm also asking them if they're sleeping. Okay. I, quite frankly, I do think we are like one or two trigger points away from this market turning really, really quick. And that could be surprised with inflation. It could be you know, our earnings have been great, quite frankly. I think it was 70, 71% of the S&P companies that have reported exceeded. So, you know, I'm still as bad as this. This has been I'm still sitting. You're gone. We got to be close to capitulation here. And I again, I'm not a market timer. I just I know that I've seen these before. I sense that it's going to turn one of these days. Maybe today, but. But who knows? So kind of a again.

Art Wiederman, CPA: A lot of day it what it really comes down to is markets are valued based on the earnings of companies. We understand we have all this other stuff floating on our heads. But the fundamentals of earnings price earnings ratio, it's what companies earn. Companies that make money will be valued better than companies that don't make money as a general rule. So these are the things that you lean on your financial advisor there. This has been great. I mean, this is just wonderful. I mean, just helping our doctors because, you know, there are some of them are out there and it just kind of never, never land, meaning not that they don't know what to do. They don't know who to turn to. So this information is really helpful one more time. Give out your contact information. And if you'd be so kind as I take the program to just kind of stay with me, but give out your contact information, help people get a hold of you if they have a question about, you know, anything regarding the world of financial planning or investments.

Daren Pladson: Sure. Thanks to this has been great. So Daren Pladson. So in my email is dpladson@eidebailly.com and my phone number if you want to call 701.476.8767.

Art Wiederman, CPA: That great. Daren. So like I say, hang out with me for a second. Thank you so much, Daren Pladson and Principal and Senior Wealth Advisor at Eide Bailly. A lot of really great information and you know, this is going to come out in early June. So if the markets do something like radically different, please don't hold us personally responsible, if you know what I mean.

Again, folks, take a please take a look at our marketing partner Decisions in Dentistry magazine www.DecisionsinDentistry.com wonderful clinical content and 140 great CE courses that you can buy for a very, very reasonable price if you're looking for a dental specific CPA. We at Eide Bailly work with a thousand dentists and in my office in Southern California where, you know, about 300 and growing, we've had a lot of wonderful, wonderful doctors who've called us and we've helped a lot of people. We've also gotten over 100 doctors over $4 million in the employee retention tax credit. If you haven't looked into that, give me a call and talk about that.

And again, our Academy Dental CPAs www.ADP.org, 25 CPA firms across the country that represent over 10,000 dentists. It's kind of crazy. Well, I learned a lot. I learned when I talk to great people like Daren. Every single time I do this podcast, it's kind of like an encyclopedia of financial planning. But folks, the bottom line is, we take this out today is pay attention, make a plan. You have to make a plan. If you just kind of go through your life and spend money and then the kids go to college and then you're going to buy a new house and then you're going to move and maybe you buy insurance. And it's not a coordinated plan. You're not going to get to where you want to be and you're not going to meet your goals. You really need to do that.

So with that said, I'm very excited about the future podcasts we have coming up. We got a lot of great topics. Please continue to listen. Please continue to tell your friends about the podcast. Write us a review, hopefully a good one. And with that said, my name is Art Wiederman. I'm a dental division director at the CPA firm of Eide Bailly. And on behalf of my podcast, The Art of Dental Finance and Management. That's it for today. And we'll see you next time.