Financial Planning for Optometrists: Part Two (Guest Appearance on The Four Eyes Optometry Podcast)

This episode plays Part 2 of  Evon's recent guest appearance on the Four Eyes Optometry Podcast. Evon joins Lainey Bokhaut, CPA in Canada, as a guest to talk about foundational financial decisions optometrists need to make - especially as they transition from school to practice.

We dive into the basics of different business entities for practices and independent contractors, the importance of disability and other types of insurance, what professionals should be involved in your life and when you should start working with them, and so much more!

Huge thanks to Dr. Amrit Bilkhu and Dr. Deepon Kar for havings us on. Their podcast is absolutely worth a subscribe, and check out Part 1!

Have questions on anything discussed or want to have topics or questions featured on the show? Send Evon an email at podcast@optometrywealth.com.

Check out www.optometrywealth.com to get to know more about Evon, his financial planning firm Optometry Wealth Advisors, and how he helps optometrists nationwide. From there, you can schedule a short Intro call to share what's on your mind and learn how Evon helps ODs master their cash flow and debt, build their net worth, and plan purposefully around their money and their practices. 

Resources mentioned on this episode:

• Four Eyes Optometry Podcast
• Four Eyes Podcast Ep. 74: Financial Planning with Evon Mendrin and Lainey Bokhaut Part One
• YoungOD Connect

The Optometry Money Podcast is dedicated to helping optometrists make better decisions around their money, careers, and practices. The show is hosted by Evon Mendrin, CFP®, CSLP®, owner of Optometry Wealth Advisors, a financial planning firm just for optometrists nationwide.

The Optometry Money Podcast is dedicated to helping optometrists make better decisions around their money, careers, and practices. The show is hosted by Evon Mendrin, CFP®, CSLP®, owner of Optometry Wealth Advisors, a financial planning firm just for optometrists nationwide.

Transcript

0:04

Hey, everybody. Welcome back to The Optometry Money Podcast, where we're helping ODs all over the country, make better and better decisions around their money, their careers, and their practices. I am your host, Evon Mendrin, Certified Financial Planner(TM) practitioner and owner of Optometry Wealth Advisors, an independent financial planning firm, just for optometrist nationwide. And today's episode is part two of my guest appearance on the Four Eyes Optometry Podcast. And I joined Laney Bokhaut, a CPA from Canada, as a guest on their show to talk about when to use business entities and how they work, how they're taxed. Uh, the importance of disability and other insurance coverages, we talk about what professionals should be in your corner and when it makes sense to start working with them, when does it make sense to start assembling your professional team? And so much more. And really big, thanks to Dr. Kar and Dr. Bilku for having us on. It was a ton of fun. And if you aren't subscribed to the Four Eyes Podcast, it's absolutely worth the follow. And this is part two of two. So check out part one as well, which I'll throw a link to in the show notes. If you have any questions, please reach out to me at podcast@optometrywealth.Com. You can check out the show notes and all the other content and resources and episodes we've put together at the education hub at my website, which is www.OptometryWealth.Com. And of course, if you're interested in learning more about working with Optometry Wealth Advisors, you can schedule a no commitment introductory call, and we can talk about what's on your mind financially and how we help optometrists solve those same financial questions from all over the country. And without further ado here is part two of my guest appearance on the Four Eyes Optometry Podcast.

Amrit: 1:50

Hey guys, welcome back to the 4eyes podcast brought to you by Young OD Connect. Myself, Dr. Amrit Bilku and Deepon Kaur are your hosts, of course, and we are finally back from our long holiday podcast vacation. We can't wait to share the content that we've recorded in the past few months with you guys, but for now, get ready to listen to part two of our financial planning episode for new grad ODs. So in part one, we had Evan, we had Evon Mendrin and Lainey Bocott, both U. S. and Canadian Financial Advisors sharing their expertise on tax planning and investments. So now in Part 2, we're talking about professional corporations and when the best time would be for an OD to even have a professional corp, as well as the crucial importance of getting occupational disability insurance. And who else you need to recruit in order to have a team of professionals behind you when making financial and tax planning decisions. So if you haven't listened to part one yet, I highly recommend that you do that first and then get ready for this episode that's filled with more awesome financial education. Now we'll

Lainey: 3:07

switch gears a little bit and actually talk about incorporating. So can you guys talk about what it. What exactly means incorporating? What are the cons and benefits of it? And when should we consider it? In Canada, a corporation is considered a legal person. It is its own entity, it has legal rights, obligations, it has the right to earn income, it has the right to own property, it has the obligation to pay tax, to file tax returns, um, and be compliant with Canada Revenue Agency. So, if Deepon, you incorporate your practice, Your corporation is completely separate from you, but it would be owned by you and you'd likely be an employee of it as well. So you'd have two relationships to your corporation if you incorporated a practice. An investor relationship, in the same way that if you buy Apple shares, you are a shareholder of Apple. If you incorporate a, uh, uh, professional corporation and you buy shares for 10, you own shares of your medical corporation. You're an investor. And if you do work that helps the medical or the professional corporation produce income, then you can be paid as its employee because you're doing work on its behalf. So that's generally the relationship to a corporation that, uh, professionals have. Now in Canada, there's no malpractice coverage for professionals. You are always professional personally liable for malpractice with respect to your, uh, your income and your your practice circumstances and behaviors. So there's no liability coverage for your general practice, but if you do own a clinic and you employ people or you have a building that people are coming in and out of, there may be liability protection by virtue of being incorporated. But generally, if it's just for a practitioner that doesn't own a clinic, then in Canada, incorporation for professionals is really a tax deferral mechanism. And that's really the primary reason why we use, uh, corporations. In Canada, corporations pay tax at a much lower rate than individuals do. So if your corporation is the party that is earning income and paying for all of your practice related expenses, like your, uh, your professional dues and your travel expenses and whatever other expenses that you have to. Produce your practice income, whatever's left over after it pays for those expenses and pays a salary to the optometrist, that's what's taxed at corporate tax rates. So, of note, in Canada, corporations pay tax on net income. which is revenue minus expenses, of somewhere between 9 and around 12. 2%. So that's the small business tax rate in Canada. Income above that threshold is taxed at higher rates. But generally optometrists, if they're just practicing and not running a clinic, would still be well within the small business tax bracket. So that's a good thing. People pay tax at much higher rates. It's generally between 35 to 45 percent for optometrists. So if you're earning significantly more than you need to spend for your lifestyle, for your rent, your mortgage, your gas, groceries, whatever else, on an after tax basis, you'd be better off earning it in a corporation and paying yourself only what you need. Because if you extract only what you need to live on, you'll only pay tax on those funds at high rates. And whatever you leave in the corporation If your capital is taxed at the low rate, whatever's left over after you've paid that corporate level of tax in a corporation can be invested. And what you can invest in your corporation is dependent on the professional body of your province. But generally, you can invest in, uh, mutual funds, the stock market index. Uh, you can, in some. provinces invest in real estate. So, uh, you can use the tax deferred funds that you've accumulated in a corporation to start your retirement savings or kick start your, your cash savings, because instead of paying The difference in tax to Canada Revenue Agency and leaving it in their investment account, it's sitting in principle in your investment account in your corporation. So that's the primary purpose of a corporation in Canada. It's being able to defer tax on the money that you don't yet need. If you are aggressively repaying your debt, debt is a personal expense. So, let's say you want to spend all of your extra income that you don't need this year to pay for your mortgage and groceries and entertainment. You want to aggressively put that against your debt. If that was earned in a corporation, you'd have to take out everything you earn as a salary. To the extent that you have large costs of living, which is the case often for new to practice docs because you are paying down debt, you're at the age where you're probably having kids, and kids are expensive, or getting married, and weddings are expensive, um, or buying houses, you'll often need quite a bit of cash in the first several years of your practice anyways. So, I think for the average optometrist, incorporation immediately is generally not indicated.

Evon: 8:22

So in the U. S. you have two most common types of business entities. You have the corporation, which generally is, is pretty similar in a lot of ways to, uh, to Lainey, what you had talked about already. Um, and then you have a limited liability company and those are the two most common business entities you can, you can open up and form in the United States. Different states have different versions, uh, but those are the two most common. And the, the biggest benefit Right off the bat is really just liability protection. Um, it sounds like just like in Canada, in the US you don't get protection from the business entity for malpractice. So you're gonna have malpractice insurance to, to protect you from that, for your work as an optometrist. But, um, all the other business liability can be you, you can protect yourself by using these. Separate entities, uh, to, to keep all of that business activity as well as, as well as bankruptcy and debt, um, within that business. So that's, that's primarily the, the first and foremost the benefit of opening a and forming a, uh, operating a business as either a corporation or a limited liability company, the legal entity and, and the legal aspects of what entity you choose. And how that entity is taxed in the U. S. can be two separate things. So, for example, the corporation, the default way a corporation is taxed is kind of similar to what Lainey was explaining, but it's typically unfavorable for a business like an optometry practice. In the U. S., at this moment, corporations have a 21 percent flat tax rate. And then you're considered a part, you know, you're considered an employee of the, of the business, just like all the others. So you can pay yourself a salary, your salary's taxed at whatever your personal tax rates are. Uh, but then if you want to get any other income out of the business, you have to pay a dividend. And just like any publicly traded stock you can think of, those dividends are going to be taxable to you. So there's, there's two forms of taxation happening, two layers of taxation with a, a corporation and for an optometry practice that's sending out a lot of that cash to the, to the owner to put, to use, um, it, it's usually unfavorable. So what you're more likely to see is, is uh, is choosing to be taxed in in the other ways, which is. Generally, what we'd call in the U. S. like a pass through business entity, where all of the, the profit of the business, just like Lainey said, your, your income minus your business, deductible business expenses, all of your profit actually ends up on your personal tax return and is taxed at your personal tax rates. Uh, that tends to be most favorable. and that tends to be the route that most practice owners will find themselves in. And, and that looks different with an LLC as well. By default, it's one of those types of businesses that are taxed that way. But you can choose with an LLC to be taxed differently. In the U. S. it's, it's called choosing to be taxed as an S corporation and a corporation itself, this is getting complicated, uh, can also be choose to be taxed as an S corporation. So you have a business entity, primarily it's used for liability protection, but then comes the tax planning and deciding how that entity should be taxed. And those can be two separate things.

Lainey: 11:44

Evon, can I ask, so if you have a corp, if you have an individual that is not running a clinic and they don't have like any retail operations, so there's no sort of general business liability, they have no partners, they're just running their practice as an associate, would they have any reason to use one of these corporations and then take all of the income personally or is that really more so if you're in a

Evon: 12:08

clinic setting? No, if you own, it's more so if you're owning a clinic, I mean, that's really. The other caveat is kind of what you mentioned where optometrists may be a contractor to another practice, and so they're really self employed, like they are a little, a minor, you know, a little miniature business. That doesn't sound good.

Amrit: 12:31

We're just, just an associate. Very small scale business, right? We're just an independent contractor. Right,

Evon: 12:37

right. So, um, so from that perspective, then you would go like an LLC route. and choosing to be taxed differently just due to tax considerations. You're not really concerned about the liability at that point. You're going to have malpractice insurance. Um, all you're really, you're really looking at there is for tax considerations. But if you're just an employed associate, there's no reason for you really, unless you have a side business or something like that.

Lainey: 13:04

Everybody has a side hustle. That's what my mom said to me recently. She goes, everybody has a side hustle, lady. I guess the goal in like 5

Amrit: 13:13

10 years is for people to finally get out of their side hustles and just have Yes. One, one revenue stream, hustle. Like the good old days. Have a side hustle.

Lainey: 13:24

Yes.

Amrit: 13:26

Um, actually I was just gonna add on, add a question onto what you just said, Yvonne. So, um, if you are someone like a 10 99 contractor, because this is happened to some o some young ods that have other opportunities like social media collaborations or consulting and you know, they have another business, is there a certain. income level. First of all, is there a certain income level from the side hustles that they'll have to start claiming for taxes in general? And then is there a certain income level with the side business where you would recommend Maybe to become incorporated like a switch.

Evon: 14:07

Well, essentially right away, if they have any meaningful amount of income, it's gonna be considered tax, it's gonna be considered income for, for tax purposes. So, mm-Hmm. um, well, by law, I, I guess I should say by law you should be recognizing that income on your tax return, you can put whatever you want on your tax return. But by law, yeah. Uh, you, you should be recognizing that. So, so it's going to be ending up as income on the tax return. Really the decision then of whether to, uh, to open up an entity and for, for them, it's usually choosing to be taxed as an S corporation. Uh, the decision there is because as someone that's self employed, like a contractor, you're having to pay self employment taxes, which are. Social security taxes, Medicare taxes, in addition to your income taxes. And when you're employed in the U S you pay half of those and your employer pays the other half. Well, when you're self employed, you're, you're both of that, right? So you have to pay both sides of that. What happens when you choose to be taxed as an S corporation in that You have to pay yourself a wage that's reasonable for, for the work you're doing and, and in that wage, just like any other employment, you have to pay those employment taxes, social security and Medicare, but your profit above and beyond that wage is not subject to those taxes. So it's, it's when you have enough profit to exceed what is a reasonable wage and you start to see those. self employment tax savings. That's usually where, where you start to see that makes sense. And there's, there's some math. I mean, there's a certain amount of profit that you need in order to make the math work. Cause you, you add on additional costs cause you have to file another tax return. You have to have accounting and. Um, and payroll now. I mean, there's additional costs and headaches that come into that. So it has to make sense at a certain point, but it can, there's some thought though. And you know, when the way I see it, though, I'm unclear about if you're a, an independent contractor, like you, your, your work is the whole business. You don't have capital, you don't have employees, you don't have processes. So if you look at the definitions that the, our tax authority, the IRS would say, like, here's what you should consider as a reasonable salary. It's going to come down to what work are you doing in the business? And if your work as an optometrist is the entire business, It's it gets a little weird. Um, so, you know, just lean on your tax professional to tell you what is a reasonable salary because it gets a little weird for me, but I feel like you

Amrit: 16:50

guys should have just answered that for every question. Just call us and we'll let you guys know what

Evon: 16:56

to do. Call your professionals. Every, my answer to every question is it gets a little weird. Call your professionals. There's, there's your intro snip. Just put that on there. It's a little weird.

Lainey: 17:07

From like a standpoint of being self employed or incorporated for CPP and EI purposes, so CPP is Canada Pension Plan and EI is Employment Insurance, so if you become unemployed and you need insurance to pay you money until you become employed again, uh, that's what that is, and everybody has to pay in if they are an employee somewhere. If you're self employed, you have to pay in both portions of CPP, if you're incorporated and you take a salary. You still have to pay both portions. Your corporation will pay half because it's your employer and you pay the other half as part of your salary deductions. Uh, it's not a ton of earnings that you need to cap out before you've, you've vaxed out. It's really, some people don't believe that we're going to see any CPP, uh, as people contributing now as our population is aging and our country's in a deficit. Like, are we ever actually going to get that money? Uh, that's up for debate. So some people are. You know, pretty against paying into CPP, the way out of paying into those plans is if you pay yourself dividends from your corporation, but as self employed or incorporated, um, docs, if you're taking salary, you're going to have to pay into CPP

Evon: 18:13

and EI. In the U. S. there's, there's similar. So the threshold's much higher for, um, social security, which would be the, the pension, you know, our, our pension, national pension version. Uh, it's 160, 000 in, in this year and it's increased for inflation. So over the last year we, we saw it jump considerably. And then for medic, Medicare taxes, which is for the national medical plan, there's no income threshold. So that goes indefinitely. Similar concerns around the viability of social security and whether people want to pay into it or not. And there is an interesting, because if you look at the way our social security system is sort of planned, like it's built to keep people out of poverty and retirement, right? So it's not to, It's specifically built for higher earning, uh, doctors and optometrists. It's, it's not built to replace your full working income. So it, the way that it's built is it's going to cover more of your, of the lower parts of your income and a lot less of the higher parts. So there is a threshold to where it's much less effective to keep paying into it. But you have to think about what are you doing with those dollars that you're not paying into it? Are you then investing it and building up your assets towards retirement? Or are you spending those extra dollars? Because if you're not being proactive in taking those taxes saved and investing in building your own future retirement funds, well, then you're, you would be better off just paying into social security. I mean, you're, that's, that's just the reality of it, right? So You can optimize it and get really into the weeds and try to get like the very best dollar, dollar driven decision. But like, if, if you're just saving taxes and then spending it, then you're, you're ultimately wasting that opportunity.

Lainey: 20:02

Yeah. Is it okay if I pivot? Cause I think there's a really interesting thing to talk about that. I don't think we had, we had. Thought about or discussed in advance, but, Mm-Hmm. a really important thing that docs need to have is disability insurance. So, uh, Yvonne was just touching on, you know. What does social security exist for? And it's not us. I hope I'm using the exact conversion in Canada. Employment insurance is, you know, if you get laid off from your job, and you're actively looking to find new work, they will pay you from government funds, because you've paid into EI before as an employee, until you can find a new job. It's to bridge the gap. But it's unlikely that an optometrist is going to get laid off from their job and be applying to different clinics and getting, you know, a couple hundred dollars from the government. to uh, bridge the gap in that interim. That's really not super likely scenario. What's critical is that, you know, optometrists who are, you know, they're professionals, they have been in school for many, many years, they're going to continue to work in the same profession very likely for a long, a long time. It's very important to get own occupation disability insurance. And what this protects you from is if you can't work, it's likely because of a disability, whether that be a mental health leave, an injury, um, some sort of illness. That's often what takes. highly skilled and educated professionals away from their work. Own Occupation Disability Insurance can entitle you, you can pay in to be insured so that if you are unable to work in your specific occupation, you can be insured for up to about 75 percent of what you earn. So, in your first couple of years of practice, as you start to ramp up your billings earn more money until you kind of hit a plateau of, you know, billing as much as you can based on the time you're working. You want to keep increasing your disability insurance so that it is maxing out the amount of insurance that you can get should something happen. So if in year one you bill 100, 000 and your insurance that you've paid into covers you for 75 percent of 100, 000, and year two you bill 150, 000 but you don't increase your disability insurance, If something happens at that point, you're still only insured for up to 75 percent of a hundred thousand. So until you hit that plateau where you really, you've hit your stride and you're earning as much as you can, you want to make sure that annually or even semi annually you're reviewing your disability. policy, so that you can make sure that you're insured on your own occupation for as much as possible. Because if you don't have own occupation insurance, and you just have disability insurance, and deep on you say, something has happened, I can't see anymore, God forbid, and you can't do your optometry work.

Amrit: 22:53

I'm just gonna sue her optometrist. God forbid, I

Lainey: 22:56

was just thinking, I was like, what do optometrists do? They look through those little, glasses, the little face thing. If you can't do exactly what you've been trained to do, and you only have regular disability insurance, they'll say, okay, Depon, go get a job at Subway. You can still work, you just can't do what you do and were trained to do. Yeah. So we're not paying you disability insurance because you are capable of working. Of working. So you need to ensure that your policy is own occupation because you don't want to be covered for being able to work at a minimum wage job, you want to protect the income that you've worked for upwards of a decade to be able to produce, education wise. So, uh, that's a really important thing to be cognizant of early in practice as your earnings are ramping up. Um, and it's also important to get disability insurance. And life insurance, in my opinion, while you're young and healthy and can qualify. Because if you have pre existing conditions, they may disqualify you from that. And pre existing conditions could be anxiety. And if you've, you know, if you have a medical history of that, you might not be able to get insured for disability purposes for that specific type of ailment. So it's really important to cover yourself as soon as you can. And while you're young, You know, things like life insurance are generally inexpensive.

Amrit: 24:20

I was actually going to just comment on that because Deepon and I had that conversation about disability insurance, where I kind of pushed her to look into it because she does not have it yet, but we just talked about that

Lainey: 24:33

too. I know you singled me out, Lainey. You're like, Deepon, if you ever This is actually why

Evon: 24:38

we had this conversation, so we can get to this point and talk about this.

Amrit: 24:43

And, but, so first of all, for listeners. Yeah, you really should apply as early as possible too, um, because I am generally healthy. Okay, fine, maybe a little unhealthy, but my application

Lainey: 24:58

Pushes away the McDonald's bags.

Amrit: 25:02

No, seriously, I I, I do have a health condition, but um, the insurance company really dug into my medical history for the last five years. And my application took, uh, two years, two and a half years to be approved. Yeah, and, and my financial planner was shocked because he said that's probably the longest it's ever taken any of his clients to get approved. Oh my goodness. Yeah, so. That's nuts. But again, um, thankfully, God willing, um, you know, God's looking out for me, so I am covered now, but it's really, really good coverage. So I was, you know, sharing that with DeepOn too.

Evon: 25:42

I totally agree with Lainey, everything you said. Yeah. I mean, I don't know that I have much else to add to that. Like you in the U. S. get disability insurance and you, your ability to work, like if the economist would call it, the fancy term is like your human capital is your biggest asset, especially earlier in your career. It doesn't show up on your balance sheet, but you can calculate a value, a present value of. All of your income inflated into the future, like you can calculate the value of an asset you would need in order to provide that same income over your, over your working career. And it's substantial and likely over a minimum over a million. So like that's, that's huge. Your, your ability to work funds, everything. And especially if you own a practice, your ability to work. Is, is the thing that's going to provide value to that practice unless you start to grow the practice and add on associates and, and start to build a larger entity than yourself. So, um, that's risk management. I, I think is number one. It's fun to talk about investing in all this other stuff, but if you don't have these basic, uh, what I would call basic risk management things taken care of. disability insurance as soon as you have an income, and life insurance as soon as there is a need, or even earlier, as Lainey mentioned, because your term insurance is, term life insurance is pretty cheap in the U. S., and if you're healthy and young, and, uh, uh, you can very well have health issues that keep you from getting it down the road. So, uh, risk management, I think, is, is, should be top of mind.

Lainey: 27:13

Yeah, and just a comment on the life insurance component. Same issue. You're younger and healthier today than you're ever going to be again, hopefully. Um, qualify while you can. Life insurance is relatively inexpensive and I've seen horror stories. I've seen people, you know, people who are in their late 20s and early 30s develop conditions, you know, and some, that are more or less serious or something, you know, like gestational diabetes and now you can't get life insurance and now you've got a kid and you're terrified because you still got 300, 000 of debt and a kid and you're not insured. So that's pretty scary. So My general thought is that it makes sense to apply for and get approved for as much life insurance as you think you'll need at the max, max need of your life. So if you have no kids today and no house and no spouse, um, you might not need 3 million of life insurance, but you might anticipate buying a million dollar house and you want to have three kids and you know, you want to live in the fancy neighborhood and those costs are going to come in the near future. If you think the max you'll probably need is three million dollars, nail that down now, while you can, because insurance is to cover you for the things that you cannot afford to not have coverage over. And the intention of investing, and whether it's in your professional corp, or in your TFSAs, or your non registered accounts, whatever it is, is to not just fund your retirement, but to be your savings for life, for if anything happens. And if you use term life insurance, you hold the cards about how long you're insured. If you get non cancellable insurance, you get to decide every year, if they've approved you, even if a condition develops, you are in control about if you want to continue to be insured. And you continue to pay the life insurance. If, in 20 years, you have saved up enough money in your corporation, or in your investment account, such that now, God forbid you die, something happens, Your family is still going to be taken care of because you have enough in your investments to pay off your debts and continue to pay the mortgage and in, you know, aggregate with your spouse's income if they have income, continue to facilitate your family's costs, you might not need that insurance anymore. And that's when you stop paying in and you cancel. So the goal is to be insured from a pure insurance standpoint, not from an investment standpoint. Some people use insurance for investment purposes. Purely for insurance, you want to be insured for what you can't afford not to be and only as long as you need to be. And once you're self insured, you've got your own money saved up, then you can cancel your insurance. So that's my thought on the process. Even if you don't need it today, get your spot in line and protect your right to get insured. Yeah. Yeah,

Evon: 30:01

I agree. And that's why term insurance tends to work really well for most family planning needs, um, is that it's that, that point in your career where, where the risk is the highest, there's an actual need for your income and your spouse's income, right? Once you are financially independent, it's, it's totally optional at that point. Um, you no longer have that large financial risk. And, yeah. On the other hand, term insurance policies here in the U. S., you can often have the ability to convert parts of it, parts of that death benefit or, or entirely into permanent type insurance if you do get a health condition down the road. So there's some flexibility to turn some of it into a permanent type policy if you need without having to go through all that medical underwriting. So it gives you some flexibility there. If a condition develops, but, um, otherwise the term insurance is typically, uh, going to give you the, the largest amount of insurance for the biggest bang for the buck and can probably is going to more easily allow you to get the coverage that you need.

Amrit: 31:05

Yeah, no, I'm really glad we talked about disability insurance because it is a really important topic for new grad ods and it's important for deep on she needs to get on it

Lainey: 31:19

you know, just sense it in the air. It is like, I will get it after our, this conversation, in our other conversation we had, but I think it's like. When you graduate, you have all these other fees to pay and that's what you think. You're like, I'm healthy. I'm fine. Like what's going to happen? And I have all this other debt to pay. And then it's just. it's going to be too late. Like once something happens and then you're like, Oh crap, like what now? What, you know? So, um, yes, no. So all,

Evon: 31:48

all, all listeners in us in Canada, send emails to Depon.

Lainey: 31:53

Guilter. Just, yeah, just let her know. I'm going to do it. I've already made her hate

Amrit: 31:57

mail. Why didn't you get it?

Lainey: 32:01

No, but it's true. You guys already convinced me I'll, I'll be doing it. You

Amrit: 32:05

know what, what, what really surprises me about, um, just occupational disability was I was very surprised that mental health coverage is included. And that's what I was talking with Deepon about, you know, two days ago when we talked about it, because we, we've seen that, you know, where people can take disability. part time or full time disability because of mental health issues. And, you know, that, yes, that can be your own personal mental health issues from having depression, anxiety, bipolar disorder, anything like that, but losing a family member, losing a spouse, going through something traumatic like a car accident or um, some, you know, huge injury that just really shakes you up too. That, that situation has just caused mental health issues that you never would have thought I think that's why it's a huge plus. Is that

Evon: 32:58

covered over the whole time you have the policy? Interesting. The U. S. it's limited to two years, unfortunately. I would

Amrit: 33:07

assume that I think as long as, um, periodically you are still proven to have those mental health challenges or illnesses. Interesting. Wow. then you can continue to claim coverage for as long as you have something.

Lainey: 33:23

I mean, one, we have all time burnout rates right now for healthcare professionals. It's extraordinary. So if you can be covered for, you know, worst case scenario and event of that happening, that makes sense to do. Um, I think in the long run, we are all going to see our disability rates go up significantly because of healthcare coverage. And it's absolutely a good thing that Societally and in healthcare, we are recognizing the medical implication of mental health. But on an economic standpoint solely, we will see the costs of that reflected in our premiums, especially as the years go on and people are experiencing more burnout and taking more mental health leave. Um, I'm not sure if I mentioned this before, but if you have existing conditions of depression, anxiety, things like that, or you've had an episode, or you've had to, um, be on some sort of mental health medication, uh, it often precludes you from getting coverage in that area in your disability insurance. So if you take an SSRI, you might get disability coverage, but they might not cover you for You know, let's say you take SSRI for depression, they may not cover you for depression related issues because why would they if they know they're going to have to cover significantly more costs? Like, this is not a not for profit. This is a for profit industry. Insurance is a gamble, and it's really macabre, but they are gambling on, you know, for disability, they're gambling on the fact that you don't become disabled, or on life insurance, they're gambling that you don't die, they're making a bet on your life, and so are you, um, it's fair

Evon: 35:03

game, so. The statistics are in their favor, so it's more. It's more of an educated statistical bet on their part than it is a guy's. I'm

Lainey: 35:12

going to be 150

Amrit: 35:13

before I die, just to prove them

Lainey: 35:15

wrong. Yeah, no, the house always wins, but you ultimately, you can't take the chance of the loss, right? Yeah, very true. Yeah, true.

Amrit: 35:24

Let's wrap up this two hour discussion because

Evon: 35:29

it's, it's a good thing we left that, that really dire, uh, sad, depressing topic toward the end. Like we hooked everyone in at the beginning. And

Lainey: 35:38

then we talked about critical illness. And

Evon: 35:40

then we got to critical illness and death and rising costs. So let's wrap that up. Well, we

Amrit: 35:43

talked about the fun stuff, right? We talked about saving, retirement plans, like. What are you going to do if you last that long? And then, oh, if you

Lainey: 35:51

don't, what are you going to do when you die? So much to look forward to. You're like, oh, your savings. And then, oh, but don't forget, you know, if you get diagnosed with some illness or some terminal illness.

Amrit: 36:05

Hey, but you know what? That's motivation because if you saved up all that money for retirement and you have that disability insurance helping you to keep the bills, you know, paid and keep your home and keep your family fed, you got all that retirement money right there to enjoy whatever you can do left. So hell yeah. Like why not? I think. I think that's like the perfect combination, right? Um, if, if anything were to happen, so no, it's really, it's great advice and I'm loving everything on this. Episode right now, because I do have my own accountant. I have a financial planner and, and an advisor. So, you know, everything you guys are saying is awesome and really important to know. Um, so let's end off this panel discussion with, um, a really important point, you know. What relationships should we establish, um, you know, with different professionals when we do graduate from optometry school? Who is on your professional team, um, and who's helping us, you know, navigate finances? Who would we rely on?

Lainey: 37:13

So, there's several professionals that you're going to need. Uh, and there's several professionals you may want to have. Financial advice is paramount. Getting an accountant is a no brainer. Um, when you move into practice, uh, it's time to fire your mom or your dad, whoever's been doing your taxes for, you know, your whole life. Things become a bit more complicated when you have professional income. And tax planning opportunities, uh, are above and beyond just tax preparation. When you hand your tax slips to your accountant and say here's my, you know, here's my income, here are my expenses, that's not tax planning, that's tax preparation. But you need to do tax planning in advance. So, you know, we talked about the first home savings account, you can't just get that deduction if you didn't make that contribution in advance. And if you didn't know about that, you can't retroactively, uh, get that opportunity. So having an accountant who can advise you on different strategies and keep you apprised of different opportunities and ensure that you're filing in the most efficient ways and taking efficient tax positions is also, in my opinion, you know, a non negotiable. You're going to need somebody to provide you with insurance, um, That's critical, and, uh, you're likely to need lawyers, so depending on what you're doing, whether if you're establishing a clinic, you might need corporate lawyers, you, uh, may have real estate needs, uh, I think it's really critical to understand, uh, your obligations with respect to family law, because Um, I, I'm not sure, Evan, maybe, or, sorry, Evon, maybe you can tell me what this is like in the States, but in Canada, you are common law after a certain period of time of cohabiting with someone, whether or not you are married or engaged, you're basically considered partners. That's what common law means in Canada. So, obligations are Virtually the same in many provinces as what they would be if you were married. So as high income earners, uh, if you're earning more than your spouse, your obligation to them, even if you're not married, could be really significant. Things like spousal support, child support, division of assets if you separate. Common law is really interesting because often people don't even know that it applies to them. So that's another type of, um, professional you might want to engage as a family lawyer, just to understand your obligations if they do exist. Uh, Evon, any other advisors that I neglected to mention? No,

Evon: 39:43

I mean, you're, you're spot on here. I think you've got the list of financial advisor and in the U. S. I would suggest first looking for someone that we would call like a fee only financial advisor. So. Someone that you're just paying them directly for their advice. There's no, um, commissioned product sales or anything on the other side of that. Um, so a financial advisor, someone you, you'd want to look at, um, engaging with a tax professional in the U. S. You have a CPA along with an EA, Enrolled Agent. Um, an attorney at some point as well makes sense from an estate planning situation. a business entity planning, um, real estate, if real estate's involved, whether it's looking at a lease contracts or, um, how to hold, what type of entity to hold a real estate. Uh, so at some point an attorney would make sense as well. And I, I don't think you need to assemble like the Avengers as soon as you graduate, right? Like you don't need to have the full team. Also a, um, an insurance broker, like you said, and, and that's, There's different brokers that can work with different types of insurance, but absolutely a good insurance broker agent that you can trust. So like you can work with people as soon as needs come up, I think pretty early. Um, Pretty early on, as soon as you have an income, you're probably going to want someone to at least prepare your taxes. The financial decisions, as we talked about, are vast as soon as you graduate, you know, even if it's just student loans. So, you know, a tax professional and financial advisor, I think, are among the earliest, but at some point you, as needs come up, you're going to want to engage an attorney as well. You're going to have insurance needs. So, um, so as, as needs come up, you know, start to start to get these, these professionals in your life. And, um, most ideally you have professionals that are working together, openly communicating for, for your benefit. So especially your advisor and your tax professional, you know, hopefully you'll have a team that's working behind the scenes and openly communicating on your behalf. Uh, and I think anytime you have a business entity in your life, that's automatic. You need to be. You need to be talking with professionals here. You've, you've moved beyond where it's worth spending your time to figure out too much stuff.

Lainey: 41:50

Yeah, couldn't agree more. Uh, and a couple other comments. Uh, one thing I think is a really critical question to ask when you're engaging any professional is how they get paid. So it's important, you know, Evon, you, you brought up fee only. It's very common in Canada. There's different types of advisors and oftentimes people are paid on an assets under management basis for financial, um, products that, you know, it's just important to understand how the professionals that you're engaging are getting paid, what they charge, uh, how they track what they're charging. If they're charging for time, um, if they're charging for. Like if they get paid commissions on products or not, uh, and this will help you to evaluate the information that you're getting. Uh, it's also important to understand what the qualifications of the advisors that you're hiring are. Uh, some are really simple, like a CPA is a CPA, uh, MD is an MD, an optometrist is an optometrist. There are no, you know, differentiating qualifications because you have to have that designation or that degree to call yourself that. Um, in different industries, there are different types of designations, so it's important to understand the educational background that the advisors in your team have. And it's also important to understand what their duty is to you. So not all people that you hire as advisors are going to be fiduciaries and a fiduciary is someone with a legal obligation to tell you what's in your best interest. Uh, and that doesn't mean you don't need those advisors and they might be The best advisor you'll ever have in your life, but it is important to understand who's a fiduciary, who's not, and especially for those who are not, you want to make sure that they're individuals that you really trust and, and trust their judgment and trust their, their decision making and their advice. I think that's critical across

Evon: 43:38

the board. Critical across the board. Couldn't agree more. No, that was

Lainey: 43:41

very I think that was my favorite word from this podcast, fiduciary. I really liked it. No, but my favorite word is, my favorite word is fungible. That's like a dollar is fungible from another dollar. They're indistinguishable. Like it's, you know. It's a 10. We thought your

Amrit: 43:58

favorite word was taxes.

Lainey: 44:01

No, we just said it so many times, I'm like, oh man, if we were drinking to just the word taxes. But fiduciary has that nice little ring to it. What's really important is that your advisors explain things to you in a way that is understandable and makes things simple. Nobody's impressed by an advisor who uses jargon like fiduciary and uh, whatever else they can come up with to act smart. They want somebody who can represent them and explain things to them like they're a six year old. If you can explain something really simply, it means you understand it very well. So if your advisors can't explain Explain things to you in a way that make you feel comfortable and empowered to make decisions and, and your advisors should not be making decisions on your behalf. They should be explaining your options and helping you to come up with a decision. If they can't do that, you need to get different advisors. Yep,

Amrit: 44:49

100%. And that's why we're really happy that we brought you guys on because deep one, and I didn't understand any of this beforehand. Yeah. But

Evon: 44:58

you're still, you're still struggling now that we had the conversation, but when we

Lainey: 45:03

listen to it again, well, me and Amrit need to take a deep breath here because it was just, there was a lot, but it was a lot

Amrit: 45:10

of information, but it makes sense. But it makes sense. I mean, you guys really did break it down. And I love that about this panel. I'm really glad that both of you had the time to come on the Four Eyes podcast and explain that because I think this conversation is really going to help a lot of our listeners. A lot of them are still students, and then a lot of them are, you know, new grad ODs, young ODs. that really don't know what the heck is going on now in their lives and they don't know what to do with their income. And yeah, when they hear just the surface level advice, it's very overwhelming because they're like, well, I know that there's options now, but what option is best for me? I think we're all scared to make a financial decision because we're scared. We're going to miss out on something else, so we're making the wrong decision. Or

Lainey: 46:02

it's simply as like not even understanding it and just not wanting to be like, oh, I'm just not understanding. I'm

Amrit: 46:08

just not going to do anything now. Yeah, I'm just going to hold all my money in one bank account because I don't know what, what else to do with it. Yeah. So yeah. Thank you again, guys, for coming on. Um, I will share your personal contact information in the episode description for anyone who wants to contact Evon from the U S or Lainey from Canada. Um, I'm sure they're going to absolutely love. talking to you guys and giving you guys consults if you need them. And yeah, email us too. If you guys have any other questions about the financial topics and episodes, we can always invite you guys on more, um, if, if our listeners want to learn more and I'm sure they do. So yeah, thank you again for coming

Lainey: 46:50

on. Thank you so much for having us. It was a lot of fun.