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Dentists Who Invest

Podcast Episode

Dr James: 0:41

Fans of the Dennis who Invest podcast. If you feel like there was one particular episode in the back catalog in the anthology of Dennis who Invest podcast episodes that really, really, really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome.

Vinay: 1:18

Welcome to the Dennis who Invest podcast.

Dr James: 1:23

Welcome back everyone for another episode of Dennis who Invest podcast. This is podcast number four, if my memory does not deceive me, on the theme of finance, on the continued theme of finance of Manitou Pécure. A very special guest today. His name, his name is Vienné Rathod. You may or may not have heard of him. He runs financial services for us dentists based around the questions of insurance, mortgages, income protection, things of that nature, a lot of things that a lot of us, by our own admission, are not that clued up on. Vienné has experience in the dental industry because he was formerly a dental student. We’ll delve into a little bit more of that later. That makes him uniquely placed to discuss with us dentists how we can optimize these financial instruments to get them to work better for us. That’s why I thought it would be really nice to have him on the show. We thought it further ado. Here we go, dr Vienné. Oh, beg your pardon, is that the sign. Force of habit. Beg your pardon, Everyone else we’ve had dentists on previously.

Vinay: 2:26

We’ll get the wife on one day. She’s the Dr Rathod.

Dr James: 2:29

Then there’ll be no steps of the tongue Fair enough. We have Mr Vienné Rathod. How are you today, sir?

Vinay: 2:36

Yeah, good buddy. How are you doing?

Dr James: 2:37

I’m smashing Tremendous met. I’m absolutely thrilled.

Vinay: 2:39

It’s a beautiful, beautiful Sunday afternoon, isn’t it?

Dr James: 2:42

Which has cheered me up. I’ve just been walking the park and I’ve had a cup of tea. We’re all fired up and caffeine, we’re ready to go. I think it’s going to be a good one, my friend. Anyway, as I say, we’ve just given Vienné a little bit of an introduction, but I’m curious to hear a little bit more, because that’s what I know. I’m sure there’s a lot more to the story than that. Vienné, I just wanted to know about your journey into finance, your history as a dental student which I’ve just touched upon a minute ago and what led you to start via our financial solutions, and just what is your journey so far. I’m just curious to hear.

Vinay: 3:13

All right. I mean, I started the business about 11 years ago, although I had a different name back then infinite financial solutions. The problem is, no one can spell that word correctly. I can never go.

Dr James: 3:28

Infernite.

Vinay: 3:33

That’s right, but a lot of people spell it with an A-T-E at the end, so it was not a great name, Because I say it infinite purposely because of the spelling at the end makes it more obvious. But before in the UK people say infinite, don’t they? An infinite sounds possibly like a.

Dr James: 3:57

It would surprise you, wouldn’t it? I would be surprised. Okay, fair enough. Maybe that’s just.

Vinay: 4:03

Yeah. So I switched over to just rebranded after a few years, but I started that by 11 years ago after I’d worked for another mortgage broker a couple of mortgage brokers for a while. After the recession, I set my own business up shortly after the recession. It wasn’t the best time to set a business up, but it was an even worse time to be an employee at a business that relied on the financial sector. So I thought if I’m going to have a crappy job, I’d rather at least do it for myself and try and build something than to have a crappy role working for someone else struggling through. So I set my own business up. It was a hell of a struggle at that time, and so I had a bright idea of going back to university. I knew a few can see this had a few dental clients. At that point. My company was mainly specialising in advice for doctors, but the dental. I had a few dental clients and a couple of dentist friends and I thought there’s three things medicine, dentistry and law that I wanted to consider. Medicine not at my age I mean, I’m 37 now, would have graduated a year and a half ago, and being a junior doctor in your late 30s, early 40s is going to be physically destroying. So I thought no law is almost impossible to break into at such a late age. I’d love to be a barrister, but it’s difficult enough to get into that sector of law, even if you’ve done it at the right time. You’ve been to a great private school and all of the other things. So anyway, dentistry was a great career option because it has a great salary, guaranteed starting salary at the end of it that’s higher than any other graduate post that would have been late 30s. I wouldn’t have had a long life of my career ahead of me. So I thought something that I can jump straight in after graduating rather than just starting on your 20 grand graduate wage and working your way up. But I kept my business going in the evening, so it was working in the evenings and between lectures and so forth, because I’d met my now wife. She wasn’t my wife then and I didn’t want to spend my savings, take loans out and rely on my partner to pay my way through. So we’ll give that a second.

Dr James: 6:27

Oh yes, so I’m right next to a window wheel. The number of police cars that go past this bloody window, let me tell you it’s really strange. It’s like seems disproportionate to any normal street. I don’t know why.

Vinay: 6:39

I said well, I am next to the hospital. Check out some of your neighbors. You might have a breaking bad set up next door.

Dr James: 6:47

That would explain it. That would answer a lot of questions, yeah.

Vinay: 6:50

Yeah, I was saying so. Yeah, so I was just working around uni. But when you’re 30 years old and you’re a dental student, everyone asks you what did you do before? And so I just tell them I’m still doing it. I give financial advice to doctors and dentists. It’s a bit by bit, people would remember and it’s when they needed something that come to me and say, oh, can you help me out doing this? And then, as I did it for more and more people dentists they would recommend me to more and more people. I suppose it was a bit of a novelty factor as well that this guy does and he also studies dentistry. So that’s how I sort of gained my reputation. As such is just purely because people kept recommending me to other people. I wasn’t really trying to gain any business as such because my priority was studying. But after about two and a half years at dental school I was a King’s. I just got so busy and I really had to make a choice, because at that point I’d have needed to be in clinic Monday to Friday, full days, whereas the previous couple of years, if anyone at King’s knows or the lecture is a lecture captured you don’t really have to go into uni very often because everything’s recorded. So I was able to work in between and that’s why I decided to stick with the finance route and just try and develop and push that. And that was what four years ago? No, I think. Probably Since then, the RT, my wife. She’s been a dentist for about 11 years now. But I trained her up, she got a qualification.

Dr James: 8:36

She’s been with me for I think two and a half years now.

Vinay: 8:42

Yeah, that’s right. So after I got her trained up and she got qualified, she joined the business and she’s doing fantastic. So for any dentist out there, my wife was a typical dentist who said things like I don’t understand finance, I don’t understand numbers and so forth. Ironically, you get those maths problems that people share on Facebook, the really complex problems that are supposed to trip you up. She’d always get them quicker than I would. She’d always tell herself I can’t do numbers. So it was more to do with the fact that she’d never tried. It’s just something different. She concentrated on Dentistry all of her adult life teenage life to get towards it and she turned her hand to it and she’s doing fantastic herself and we’re just growing the business We’ve taken on. Six months ago we took on one member of admin staff after a year and a half search for someone Getting staff for the dental practice owners out there will probably be able to relate. It’s probably the most frustrating thing reliable staff. And we’ve got the second one starting in two weeks now. So we’ve got Touchwood a decent, solid admin team in place and that’s it. The business is just growing organically through word of mouth. We don’t really advertise anywhere. I sponsored the odd friend of mine here or there if they’re doing an event, to offer support More for support than sponsorship really. And here we are.

Dr James: 10:19

Brilliant, wow, two things Spirit of being an entrepreneur because you manage to keep it going in your spare time. And another thing that I take home message for that, or something I find interesting is the doors that open to you when you do things that you don’t actually necessarily think are related, and then by chance these things grow out of completely unexpected avenues. That’s why I love to hear stories like that, and maybe that’s something that’s happened to me over the last few months a little bit, to all the people I’ve met. I’ve easily doubled the number of people that I was. I always had good friends. I always had, I would say, many close friends, but now I’ve got even more and it’s a wonderful thing and it’s something that I just never would have thought that would have come about through all this. So, yeah, it’s another story along those lines, I guess, and I just think it’s putting yourself out there really is a wonderful thing, and all the great things can grow for it, and you’ve been fortunate in that you’ve benefited from that too, by the signs of it. So wonderful, yeah, great story.

Vinay: 11:17

Yeah, it’s always keeping your eyes open as well, because you never know when the right opportunity is going to come alive, really from the, from the place that you’re expecting it to.

Dr James: 11:28

So, yeah, so true, awesome. Well, we’ve both been beneficiaries of that in a sense, so good stuff. Good stuff Right, cool, anyway. So we’ve heard a little bit about Vinay. We know a little bit about his business, a little bit about him, a little bit about where he came from. I wanted to the main reason I wanted to get Vinay on this show was to flesh out mortgages and to flesh out insurance a little bit and then also to flesh out payment protection. I have to admit I am, I’m the sort of person that if no one made me have car insurance, I wouldn’t have car insurance. You know one of those people? I just don’t really. I would maybe just rather keep the capital and then pay for it myself and have a cushion in that sense. That’s not to say I’m right, that’s not to say anybody who has insurance is wrong. That’s just me, and maybe that’s by my own admission. I haven’t really ever been directly sold the benefits of either having payment or income protection or having insurance and maybe there’s a few things I’m missing on that front and mortgages as well. That is something I know a little bit about. But I think a lot of dentists out there, maybe they’re not as informed as they could be and this is why, as I say, I just really wanted to get you slammed on the matter, so we’re going to get on to the meat and potatoes. Now we’re going to talk a little bit about mortgages, if that’s okay with you. From my knowledge of mortgages, I know that there are interest only mortgages and repayment mortgages. What is the difference? Because no one’s ever explained it to me. Are those the only two types?

Vinay: 13:03

first of all, yes, and the middle ground, which you can have a combination of the two to any ratio that you want. They’re known as palm mortgages, but yeah, it’s one or the other. To simply answer the question, an interest only mortgage you never pay the capital down, you pay only the interest. So the theory being is the money that you’re not paying in capital because the payment would be lower, you’re doing something else with, to then invest it elsewhere to grow. So eventually the value of that will pay the mortgage off.

Dr James: 13:43

I am familiar with people who they get a mortgage and then they invest that mortgage in the stock market and then they use the difference, the capital generator.

Vinay: 13:51

That’s one method. Yeah, yeah. Well, some people may have a large amount of assets and be happy that they’ve got way more than they need for retirement, so part of that will be liquidated to clear the mortgage when they retire.

Dr James: 14:10

If I’ve just grasped that correctly, then what you’re saying is that people can borrow x, y and z figure towards their house 500 grand, 600 grand, whatever that is and they only have to pay a proportion of the interest back every month rather than contributing towards that 600 grand. Is that correct?

Vinay: 14:30

Yeah, on an interest-only mortgage you don’t pay any of the capital loan back. You only pay the interest on it per month, and that’s it.

Dr James: 14:38

To me, that’s crazy, because what you’re relying on doing is taking that spare capital and investing it in something that is guaranteed to give you your money back, and the trouble with that is not everyone who does that will maybe not have the know-how to do it necessarily, would you say? That’s true.

Vinay: 14:57

The problem is, it’s not just the know-how, it’s the motivation and time. I don’t encourage interest-only mortgages on residential properties by to let’s a different conversation but on your home, and this is why it’s quite difficult to get an interest-only mortgage on your home. A lot of people fell foul of this in years gone by, when things were not regulated so carefully and there was a time that you didn’t need any qualification or authorization to sell mortgages. You just needed a job that allowed you to let you sell them and that’s it. So there was very gung-ho methods there. Some of the older listeners may remember and know what an endowment is. The younger ones won’t. You won’t hear of them now, but 20, 30 years, 40 years ago, people used to go to a mortgage advisor at the bank and the guy at the bank would say alright, you want to borrow, dr Martin, you want to borrow 200 grand on a capital repayment basis over 25 years. And making these figures up, by the way, they don’t match up, I’m sure, mathematically, but that will cost you £1,000 a month, for example. And I’ll say but what we recommend you do is pay for £300 a month, which is what the interest on it is. Take an interest-only mortgage and if you put that £700 a month into an endowment policy, then in 25 years you’ll get a lump sum which will pay off your mortgage and you’ll have a tax-free cash element of 50 grand. You’ll end up 50-100 grand better off with the way that the market is performing. The problem is that they used some very generous percentages on the projections and millions of people were then found later on. This was a scandal the endowment misselling scandal where people were then allowed to claim compensation. They were getting, you know, they had three or four years left on their mortgage. They’re in their 60s and they were getting a letter saying that your endowment is going to be £75,000 short of paying your mortgage off. And these people didn’t know what to do. And that’s why the government, the FCA, made it really, really difficult to get an interest-only mortgage. Previously again, there were times where you could do something called a self-cert where if you wanted a mortgage and you couldn’t actually afford it or you didn’t have the income evidence to show you could afford it, you just signed a piece of paper to say I promise I can afford it and they’d let you have however much you need, but because you couldn’t afford the payments, you know, if you wanted to take a £2m mortgage out, you can’t afford the payments. So you might say, all right, well, I’ll take an interest-only mortgage. So you were getting people who were just scraping into houses they couldn’t actually afford because they could afford to pay the interest on them. But then they got to later in life and they had not put the money away to pay that debt off because they didn’t have it.

Dr James: 18:02

It sounds like madness.

Vinay: 18:04

Yeah. So that’s why things are far, far more stringent now and you need to have a large deposit to get an interest-only mortgage now and the loans of value. So the percentage of the property. So when I say large deposit, I mean both in a percentage and in a monetary term. There’s no point in having a 40% deposit if that only adds up to 70 grand, because the principal being is the bank is assuming you’re a cock up, you don’t pay anything into an investment and in 25, 30 years time you’re left with exactly the same amount going as you borrowed in the first place. If you put down a 400 grand deposit, the idea being that you can sell your house and you’ll be able to buy something with that 400 grand. It might not be whatever is bigger as you were living in at the time, but it’s enough to buy a home to live out your retirement in. So they’re not leaving anyone who’s in a position where they’re going to be out on the streets. And I personally don’t encourage interest-only mortgages because you get some people who might have a lot of equity in their house, but the fact is they still need to be disciplined enough. If you’re paying £1,000 less a month on your mortgage because you choose an interest-only option, you need to put that £1,000 somewhere in an investment, and that needs to be a good investment. If you make a bad investment, let’s say, let’s use cryptocurrency as an example. Let’s say, they put it all into altcoins.

Dr James: 19:39

Yeah, please don’t do that, Anyone is listening.

Vinay: 19:43

This is the thing is do you have no control over what that person puts their money in? I mean, look, you’re all dentists. How many times have you read a post that a dentist has put up about dentistry and you think, did you just say what you just said? You’re supposed to be a dentist and you’ve just said that it happens in every profession. It doesn’t matter what profession doctors, dentists, accountants, pilots everyone will make a comment that’s just stupid and you can’t understand why they’ve thought that. And that’s related to what they’re doing for a living. How confident can you be? They’ll never do something stupid with their life investments.

Dr James: 20:24

Now, if they’re life investments, if they’re not necessarily knowledgeable, I get you.

Vinay: 20:28

Yeah, because if their life investments was their retirement fund, that would give them around the world cruise and they lose that, but they’ve still got their house. That’s fine. They’ve got their house, they’ve retired, they’ve got a house that’s paid for. They can take an equity release loan. This is a different type of mortgage where if you’re old and you don’t need to leave money to anyone or you don’t want to leave money to anyone or you can’t you can pull down the equity in your house on the basis that the mortgage lender takes your house when you die and they keep your house, that’s it. You don’t pay anything back on your mortgage. They give you a load of money and they say happy retirement. And when you die, whether that’s in two years or 15 years, we’ll take your house and that’s fine. You know, worst case scenario you’ve still got a house, you’ve been able to retire. Your kids might be peeved because you’re not leaving them any money because you spent it all but you’ve not been out on the streets at the age of 70. Yeah, right, but if you’re in a position where the money that’s supposed to have paid your house off is part of that life savings, then you’re stuffed. Yeah, there’s always the temptation that you can’t quite get that commercial loan, that you need to refurb or set up your squat. So what do you do? I’ve got $150,000 to $200,000 in my Isis. Let me use that, and then the business goes to pot. And then you’ve lost your savings for your mortgage. Your house isn’t paid for anymore Anything, and that’s why the banks have made it so difficult to get an interest in your mortgage. The FCA have dictated this, and you need a lot of equity, a large deposit, so that if you cock it all up, you’re not out on the streets. The other thing is dentists are not rich with time. Dental history, especially if you’re doing it five days a week, is very demanding. I’ve never practiced dentistry, but I’m married to someone who has. Nim was a dentist five days a week for many years. The amount of CPD that is needed, how tiring it can be. And then you’ve got to encourage yourself to spend hours every day learning about trading or investing. You can’t just and don’t get me wrong, there are dentists who are going to be listening to this, who are phenomenally learning about investing. A lot of them considerably more than me, I’m sure, and some of them probably will invest their money better than an IFA would be able to advise them, but they’re the minority. The dentists who can invest as well as a professional are as rare as the investment professionals who could understand medical terminology. An investment banker on Wall Street could be the best investment banker in the world, highly intelligent. It doesn’t mean that if they decided they wanted to be a doctor or a dentist, they could do it. You can be really skilled in one area but not be able to turn that to something else. And this is the thing about dentist doctors is you’ve got to remember that this is a totally different type of thought process to you’ve been used to. It’s a considerably more volatile thing, things that are affected by things you have literally no control over, and an immense volume of knowledge. My two and a half years at dental school taught me how little I’ll actually ever know about biology and medicine and so forth. Even doctors with five years of a medical degree and years of specialist training at first to admit that we only know this much, that there is no about medicine and anatomy and so forth. You guys are in a job that takes a lot of your time, so it’s one thing investing your spare money after you’ve paid for your home and you’ve paid for all of your utilities and put a little bit aside in your rainy day fund, then you’ve got money left. Worst thing that happens is, if you lose that, you don’t get to upgrade your car or go on holiday. You’re not going to be out of your home, you’re not going to be out on the streets when you’re 60, 65, and that’s the key.

Dr James: 24:54

Hearing you say that it just sounds like an insane amount of liability to put yourself up for. The stakes are so high.

Vinay: 25:02

There are people who do it successfully, like I say. There are people out there who invest so smartly, like I say, some people who will do far better than a professional will be able to advise them to do. They are the few and far between. Most people want to invest their surplus money, not the money that they should be paying for their home. That’s why I’m really reluctant to suggest that an interest only mortgage is on the home is a good idea.

Dr James: 25:37

Real quick guys. I put together a special report for Dentist entitled the Seven Costs and Potentially Disasters Mistakes the Dentist may whenever it comes to their finances. Most of the time, dentist are going through these issues and they don’t even necessarily realize that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwdenisoonvestcom forward slash podcast report or, alternatively, you can download it using the link in the description. This report details these seven most common issues. However, most importantly, it also shows you how to fix them Really, looking forward to hearing your thoughts. I think what I’m taking from that is the key take home message. I’m taking from that is if you’re going to invest, please, please, please, do it responsibly. And this is the idea of the ethos of the group, and I think hearing that, hearing you talk about that, has made me well. It just makes me think that that is a huge amount of liability to take on yourself on something that you’re not necessarily that knowledgeable on. So, quite right, as Vinay says, if you’re going to invest some of your spare money, it’s always a good idea to have maybe, you know, a certain portion in cash and the money that you have left over, that is just superfluous extra money. Very great position to be in. Really, that’s the only money that you’re looking about. You’re looking, you’re thinking about investing, and at that point that’s where education comes in, and really there’s no such thing as reading too many books on the matter, and if you’re the sort of person who doesn’t feel comfortable doing that, then maybe an IFA is better for you. Have I summed that up?

Vinay: 27:23

Yeah definitely. You know, if you, if you feel like it’s overwhelming, you know there’s nothing wrong with not Investing and trading. Well, you can, you can save and invest in things that are very low risk, but then you can get advice from an IFA and there’s always that whole. But you can do it yourself without paying. But if you can’t do it yourself, as well you know, then there’s no one to hear.

Dr James: 27:55

It fits everyone, and we want to be fair and balanced on this, so that’s great. I’m glad to hear that We’ve got sidetracked a little bit.

Vinay: 28:03

Yeah, we did.

Dr James: 28:06

I’m going to keep that all in because I think that was really good to hear. We’ve got sidetracked a little bit, that more. That question began on the topic of mortgages and then we kind of meandered, but I think it’s all very useful information. I’m going to keep that in. The original question was just to compare interest only mortgages to repayment mortgages. So you’ve given us an idea of what they are. It’s where you don’t pay off your the quantity of money that you’ve borrowed, you just pay the interest on it merely and then at some point in the future you’re expected to pay that. Am I right in saying yes?

Vinay: 28:37

or no. Yeah, yeah, this is why it backfires.

Dr James: 28:41

The other type is where you pay a little bit every month, you also pay a little bit of interest, and you gradually chip away at that figure, whatever that might be, and then with time, as a bank clerk 25 years, you’ll have eventually paid it off. And these from what you’re saying. They’re just generally better for most people.

Vinay: 28:58

To be honest with you, james it’s rarely even an option for most people, and for those that it might be an option for is rarely one of interest to people, so it’s it forms such a small part of the percentage of the business we do. I mean, I hardly ever get asked about or it’s hardly ever suitable for someone to consider a residential mortgage on interest only.

Dr James: 29:27

So repayment was the more logical thing to do. But if there’s anybody’s out there he’s listening who was meandering down that path of thinking about taking these mortgages, at least you’ve got a little bit more information to bolster your decision at this stage. My second question about mortgages fixed tracker variable. What should we do?

Vinay: 29:45

It’s, it’s.

Dr James: 29:47

there’s no right answer, Because the problem is, by the time you know if it’s over or not, it’s time has passed.

Vinay: 29:54

I mean, look, there are different opinions on this. I’ll tell you what. There’s a client who came to me actually that they came to me for some insurance, actually for some income protection, and they’d been recommended a mortgage broker who’s done some work with a couple of dentists before and they said, oh, I’m really sorry. You know, this person was recommended by a friend, so we’ve, you know, we’ve already discussed and we’re going to go ahead with the mortgage what we’d like to get you to sort of the income protection. Yeah, let’s have a look at what they’ve recommended in a mortgage. Now, this person had recommended a five year fixed rate. So I said can you tell me what the logic behind that was? And then I explained why I disagreed. And their logic was, you know, the mortgage advisor said a five year would be best because interest rates are really low at the moment. And I disagreed with that for two reasons. The Bank of England rates are record low. The banks are offering rates nowhere near as low as they could, and the reason for that is they’re all so backlogged due to demand and COVID interrupting the speed at which they can work. You know, they’ve got most people working from home not being able to speak with colleagues, to answer each other’s questions, help them out, and so forth, so things are really slow. The banks can’t keep up. So that’s why you can’t get a 90% mortgage anymore at the moment, because banks they’re trying to cull the volume of people who could apply for a mortgage, so it keeps the volumes down. What else they’re doing, though? They’re applying loads of different methods. They’re reducing the multiples they use on income, they’re applying more stringent requirements for deposit sizes, but they’ve also been putting up their interest rates, because if you’re the bank with the market leading fixed rate, you’re getting all of the business, but you don’t want that because you’re already too busy, so you put your rates up. And then the bank that was number two, that was getting enough business and now getting too much, so they get overwhelmed, they put their rates up, and so on and so on, and then there’s a race to not have the best and most competitive rates on the market. No bank wants to win a bulk of the business at the moment.

Dr James: 32:18

So interest rates being offered to clients are not as low as they could be.

Vinay: 32:25

They’re not reflecting the record lows in the bank of income rate, so why would you want to tie yourself into something that at the moment, is artificially high for five years? When there’s a vaccine and the world starts returning to normal, banks start getting back up to track with all their workloads. They’ll start competing to get each other’s business again and then the rates will drop.

Dr James: 32:49

So I believe.

Vinay: 32:50

Secondly, brexit is coming. We’re not out of the pandemic for quite some time still. So there’s the continuing economical impact of the COVID. When the furlough scheme ends, a lot of people who still have jobs are made redundant. Sadly, all of these things to me suggest that the bank of income rate will have to remain low for a long time. Because if the cost of everyone’s largest single outgoing is the cost of their home, whether it’s rent or mortgage payment, if you put interest rates up, mortgage rates go up even more and rents go up as a result of landlords paying higher mortgage rates. And if you own a house, your mortgage payment goes up. If you think of your average patient, don’t think of your average colleague your average patient needs this month’s pay for next month’s bills. If their main bills starts going up, some people who are close to not being able to afford their outgoings will fall into.

Dr James: 33:58

So you’re saying this will a strangle the economy effectively and that’s why you reckon it’s going to stay.

Vinay: 34:02

That’s what they want to avoid. They need to keep the economy stimulated when they know there’s going to be things coming that are going to cause some pretty bad problems. I you know Brexit and the impact of COVID. So interest rates in my opinion, the bank of income rates are going to remain low for quite some time and the banks, therefore, will soon be able to start offering more competitive rates when the pandemic is over. So I said to this chap A, you can get a lower rate for two years than the five you’re getting. The two year rate is typically lower than the equivalent fives. I said B in two years, when the pandemic is behind us and the banks are all scrapping to win each other’s business again, you can get yourself another two, three or five year fixed rate then, which will be low, or you can go for a five year fixed rate now, which is higher. And it was a bit of a no brainer after I sort of talked him through the read and we received his mortgage application last week, it decided to take our advice instead of the other person. But this is it. You know people have different opinions. I don’t think the five year fixed rate would have saved that person money, broadly speaking getting a little bit technical here if you compare a two year fixed rate to a five year fixed rate for the maths to be correct. This is why, broadly speaking, it would be a two and a half year fixed rate versus a five year fixed rate. This would be actually accurate on. But let’s say there’s a half a percent interest rate difference between a two year fixed rate and a five year fixed rate. You’d need to see an interest rate increase over the five years of double that difference, so over one percent, for you to have broken, even with the higher five year fixed rate, assuming a linear rate of increase rates. So you need to save quite a lot of money. Paul, let me rephrase you need to see quite a big jump in interest rates over that five years for you to have been better off with the five year rate.

Dr James: 36:10

And I’ve established that’s probably not going to happen.

Vinay: 36:13

In my opinion. I don’t think it is viable.

Dr James: 36:16

Well, I mean, from what I know about finance as well, I would definitely agree with you because at the moment the economy is not going to. I actually think we’re possibly yet to see the worst of the COVID fallout, because these government paying your wages and things like that. That’s not a magic money tree. That can’t last forever.

Vinay: 36:36

Well, it would stop. And, like I say, that’s when we’re going to see redundancies because employers who are only keeping staff on because they’ve been paid through the furlough scheme. I mean, people are horses. They’re not going to sack people if the government are going to pay their wages. Instead, as soon as it starts falling back on them to pay the wages if they don’t have the business you know, cafe owners and whatever if their business is tanked they can’t keep paying staff. I mean to have a look at the number of redundancies already in dental labs. You know the demand isn’t there, they’re closing, they’re making people redundant and that’s going to have a knock on effect. You know that’s just one of the many industries and sectors that’s been massively affected. So you’re right, we haven’t seen the worst of the COVID situation yet and that’s why I think I mean the Bank of. England have even talked about going to negative base rate. Yeah, where happens one, who knows? But they have spoken about it for the first time. They have Europe.

Dr James: 37:37

The European Central Bank, I think, hasn’t negative.

Vinay: 37:41

The Bank of England always maintained historically that they don’t believe negative rates are suitable as a strategy for this country. But for the first time ever they’ve acknowledged that they may be willing to consider it for this country. So you know, that’s. That’s my view on whether you should fix for long term or not. I mean, I’ve just read it read my part of my mortgage was due up about four months and I did a two year fix rate for the same reason.

Dr James: 38:04

Yeah, interesting Good for thought. When we’re talking about loan to value ratios, when we’re talking about your deposit versus, it’s how much money you can get towards the house you could borrow towards the house. I actually learned something when you were speaking earlier, because I thought the figure was still about 10%, but you say that that’s not so common at the minute.

Vinay: 38:26

Not use COVID. Like I say exactly that the easiest thing to do is the largest volume of people have less deposits, so let’s increase the size of the deposit we need and that massively calls. And people with 10% deposits tend to. The applications historically tend to fail at a higher percentage than people with bigger deposits anyway. So the biggest banks will always apply some more stringent lending policy because they haven’t got much security in the house. If they repossess your house with a 10% deposit and put it in auction, they’re making a loss on it. They’re not even getting the full value of the house there. So, you know they cut the least appealing elements of business, which had the largest volume of people applying.

Dr James: 39:18

I hear you what’s your typical loan to value ratio at the minute?

Vinay: 39:21

then, the minimum is 15%. No, no, no, no, no. This is just what the banks have decided there was a bank last week that came out with a 10% option, but they only did it for a week.

Dr James: 39:38

That’s what they’ll do.

Vesselin: 39:39

They’ll tell us oh, for one week we’re releasing a 90% product. That bank might have caught up with all of its work and want to stimulate some more applications. About a month ago a bank did it for two days and that’s it. But for the purpose of this, I think it’s. I can’t say to someone you can get a 90% mortgage, now, go and find a house, because by the time they look for a house, the 90% mortgage won’t be there anymore. So 15% and the rates are not great. 15%. I always encourage people if they can just push their deposit to 20%. This is the conversation I used to have with people a year ago when they used to come to me with a 10% deposit and I used to say try and push it to 15% if you can, because you can save half a percent, three quarters of a percent on your interest rate.

Dr James: 40:31

I’m glad you said that. That was a sweet spot. It used to be 15%.

Vinay: 40:38

It’s currently around 20% and then maybe even 25% where the best rates are. After that, it’s the law of diminishing returns. You put more deposit down and you see marginal drops in rates, but it’s getting away from being in that unappealing category. When I say unappealing, I mean to the bank the smallest deposit.

Dr James: 41:00

Yes, very much the bank’s market at the minute, then, yeah, it is.

Vinay: 41:07

They’re dictating exactly what happens.

Dr James: 41:11

Which doesn’t necessarily benefit us by the signs of it.

Vinay: 41:14

Yeah, and then the goalposts are changing regularly as well, which makes it more difficult because they’re dealing with the developing problem, and so what they’re doing is developing as well.

Dr James: 41:24

What do you think about buy-the-lap mortgages and people who are getting themselves in loads of debt to get houses that they subsequently rent out to people Just broadly, as a rule, I know that it probably comes down to the specifics rather than a black and white answer. What’s your general take on it?

Vinay: 41:42

It was made more complicated a few years ago when they changed tax laws. So higher rate tax payers and we can assume that most people listening to this are going to be higher rate tax payers only get basic rate tax relief in the form of a credit on mortgage interest on buy-to-lets going forward. An easy way to think about this because some people don’t quite understand how that applies to their situation is most people understand that their dental indemnity is fully tax deductible. It’s a bit like one day the HMRC saying you can only tax deduct half of your indemnity and the other half you can’t tax deduct. So it’s the same. The HMRC now no longer allowing higher rate tax payers to fully deduct mortgage interest on a rental property. They’re only allowing, essentially, for it to be half deducted. That increases your income tax bill because on any rental profit you pay income tax at the same rate as your nominal rate of tax. So if you’re a higher rate tax payer you’ll pay a 40% tax. Now if you’re close to earning 100 grand and your rental profit pushes you over 100 grand, you’ll pay 45% tax on some of that money Not as lucrative as it used to be for higher rate tax payers. Secondly, you pay an extra 3% stamp duty on any rental property. Now the biggest one thing I would like to highlight is people have put themselves in an inadvertently precarious position. A lot of people think I’ll buy a small flat, start a place first time buyer, I’ll get something small and cheap. I’ll live there for a year or two and then I’ll buy a big house afterwards when I’ve got some money in the bank and I’ll keep the old place as a rental, which used to be the done thing. If you could afford to do it, great idea. But you pay an extra 3% stamp duty on the next house you buy. So let’s say you had a £200,000 flat and then you wanted to buy a million pound house with your other half. You’re both dentists. You’ve been in the career a few years. Now you want to splash out. Will you pay an extra £30,000 in stamp duty on your million pound house because you want to keep your £200 cheap flat? So the most common way of people building up a rental portfolio was keeping the old house as you upgrade to the next one. It was the most natural way of doing it for people who could afford to do it. But because of the 3% stamp duty being chargeable on the house that you’re buying next, which is usually climbing the ladder more expensive properties. You’re incurring quite a hefty tax bill, which means you’ve eaten a lot of your profit away before you even started.

Dr James: 44:31

What I’m going to say, that it sounds like it’s still possible, but it’s a lot less accessible to your average Joe.

Vinay: 44:40

It’s not that it’s less accessible. It’s just that the figures need to look that much better to make it worth your while.

Dr James: 44:46

Well, I suppose that’s what I mean. So it’s difficult for Joe blogs, who maybe doesn’t know as much about houses as the next gap is, really into it. It’s difficult for him to take a punt on a house that he maybe doesn’t necessarily know, maybe he’s not as forte by any sorts. The other and actually have a profit at the end of the day.

Vinay: 45:06

Exactly. The other element being is when you typically keeping your old house as you buy the next one and trying to build a rental portfolio that way, you never thought about whether the place you’re buying was a good rental prospect or not, because you were living there. Probably not, and you will then end up with a property that is not maximizing the rental potential on it, because typically places that rent well, with high rental yields, are not the type of places you want to live in yourself. So naturally you’ll end up with a bunch of properties in your portfolio that were never really fine tuned for maximizing rental income and profit or capital growth. They were just more about where you wanted to live.

Dr James: 45:51

How are you seeing the same thing on the podcast? When he was on the other week, he said what was it? He said you’re yield on the house. The houses that have the best yield are not always, simultaneously, the houses that you would necessarily want to live in. He has a logic. I can’t remember exactly why. So I think the key thing is to go in and have a plan. I suppose I’m also as well as that. Maybe, if you are going to do that it’s not as easy as it used to be educate yourself. I certainly wouldn’t by any means be attempting to do that, but I hold my hands up and I say I don’t know anything about houses and I just hate for any who had a similar level of level of knowledge to me to jump in and expect to make a quick buck Because, as Vinay says, it’s not as straightforward as it used to be.

Vinay: 46:39

No, the other option, just excuse me. You can buy a limited company. You can’t buy an in your dental limited company. Let me make this clear because a lot of people go. I operate as limited company so I can use the money in my limited company by a property. You have to set up a specific limited company called an SPV special services vehicle, and then you can get a limited company by to let and then you get full tax relief because it’s classed as a business, a limited company. So there’s no issue of only getting partial tax relief on your mortgage interest Stamp duty is still applicable. You pay. The extra 3%. Question I often get is can I move my by to let into my into a limited company? You can effectively sell it to your own limited company, but then the limited company will have to pay stamp duty again. So you’ve already paid stamp duty once, then you transfer it over and pay stamp duty in the longer and, yes, you may well be better off. The biggest problem most people have is they don’t have that initial capital that they. If you’re facing spending 40 50 grand on stamp duty to move into a limited company, you’ve got 40 50 grand. Most landlords probably think, well, I can just use that as a deposit on another house Now by that in my limited company instead.

Dr James: 47:59

Just a quick caveat to that. Am I right in saying that that stamp duty does not apply right now?

Vinay: 48:04

I present the 3% surplus still applies. It’s only the baseline stamp duty that you don’t pay anything on the first half a million pounds. If you’re buying a half a million pound rental property, you will pay 15 grand in stamp duty on it. You won’t pay any of the baseline stamp duty. If you’re buying a half a million pound property to live in yourself, then you won’t pay any stamp duty If it’s your primary main residence.

Dr James: 48:29

obviously if you’re buying a second residence. You will. A little caveat for anybody who’s listening. Yeah, you’ve done a magnificent job of flashing out mortgages so far. I’m learning loads. I’m sure anybody who’s listening is learning loads as well. These are some of the common pitfalls I want it to know as well. On top of that we spoke prior to this telephone call, prior to this Zoom call there are a few ways that you can optimise your mortgage based on the sheer fact that you’re a dentist, so ways you can optimise it which are unique to a dentist. Did I grasp that correctly? If so, what?

Vinay: 49:03

are the ways. It’s not unique to dentists. It just happens to fit very well with the way dentistry is structured financially. There’s something called an offset mortgage. An offset mortgage works well for self-employed people not necessarily for limited company directors because you can’t take the money out of the limited company, whereas if you’re a sole trader, all of the money is yours anyway. An offset mortgage let’s say you have a 100,000 pound mortgage change. If you have a normal mortgage, you’re paying interest on 100,000 if that’s what you owe right now. If you have an offset mortgage, you have two separate accounts. You have a mortgage that you owe money on and then they’ll open your savings account which you will deposit money in, and they’re linked. They charge you interest on the difference on the balance between the two. So the more money you put in the offset account, the less money they’re charging you interest on. So if you’re a 100 grand mortgage and you have 15,000 in your offset account, they’re charging you interest on 85,000 pounds. If you have 50,000 in your offset account, they’re only charging you interest on 50,000 pounds. Now you guys, if you’re sole traders or partnerships, have to save your tax money somewhere. Typically you can’t really do much with it. You need to pay a tax bill every six months. You can’t tie it up anywhere. You don’t want to do anything with it. That risks the capital. I’ve seen a couple of comments from people talking about putting their tax savings in stock market and things like that. I think that that’s really, really important. The preservation is the most important thing for your tax savings. That’s why people usually end up just plonking them in at best, an online savings account or premium bonds or something like that. That gets you crap about that. If you put it in the mortgage, though, they’re not paying you any interest on your savings, so you don’t pay tax. They’re just saying we’ll give you a discount on the money you owe us. Instead, the tax man doesn’t get any money on someone giving you a discount, so you’re making a net saving of the equivalent rates of your mortgage on your tax savings.

Dr James: 51:22

That is really useful. I’m sure a lot of people will find that really interesting. So that applies to anybody who is a sole trader.

Vinay: 51:29

Well, yeah, Now off-set mortgages. How do you? pay their tax up front yeah any self-employed dentist, basically, or self-employed person and high earner, because the more you earn, the more surplus money you have. And until you’ve decided what to do with that surplus money, if you’ve got a good cash flow, you don’t invest your money or tie it up. The second it comes in, you’ll let it accumulate and then you’ll decide what to do with it. Off-set mortgage is a perfect place to put that money in whilst you’re figuring out where to put it. If you’re saving up for a holiday, put it in the off-set account. If you’re saving up for building work, or if you borrowed money for building work on your property, you don’t give 100 grand to your builder all the time. You’ll never see them again. So if you’re borrowing money, you can take an off-set mortgage and if the bank is giving you 100 grand, you put that 100 grand in the off-set mortgage, so you’re not paying any interest on it until you actually start pulling it out to pay the builder. And there are numerous different things that you know to maximise it. And what you do is typically, if you tell the bank when you take an off-set mortgage, the bank will ask you how do you want the savings applied to your account? So the more you offset, the more you save. Do you want us to reduce your monthly payment month by month based on how much you’ve offset? Then the mortgage term remains the same If you’ve got a 25-year mortgage, you’re paid off in 25 years. Or do you want us to keep the payment the same and reduce the term, which is what I recommend to people? So, whatever your payment is, doesn’t matter how much you offset, they never reduce the monthly payment, but what they do is any money you save they essentially put on the back end of your mortgage payment, so you’re paying your mortgage off quicker.

Dr James: 53:19

Right. If I’ve grasped this correctly, you can almost get an interest-free, you know sum of money that you obviously have to repay back.

Vinay: 53:30

Well, I’ve got a dentist who is a pretty much 100% off-set. He owns a practice and he feels that there’s no one that would give him an interest-free business overdraft facility for a couple of hundred grand, which serves him perfectly. He’s got a few hundred thousand in an offset savings account that he can literally access at a moment’s notice and he doesn’t pay a fee for that borrowing facility like he would with a large overdraft or something of that kind.

Dr James: 54:00

So he actually did some of the right, but it’s a very minimal amount of interest.

Vinay: 54:04

Exactly.

Dr James: 54:04

Maybe not minimal, but it’s less than what it would be.

Vinay: 54:07

Well, it’s a mortgage interest rate, so it’s minimal compared to other borrowing facilities. Typically, yeah.

Dr James: 54:13

That is incredible. I think a lot of people listening will find that very useful. Thanks for that. I had no clue that something like that existed. Definitely really good, brilliant. Well, we’ve done mortgages to death. I hope everybody’s still listening.

Vinay: 54:26

Probably as fast asleep by now.

Dr James: 54:30

I actually find it a lot more. I mean mortgages. I mean, isn’t that your kind of cliched discussion topic that puts people to sleep? I don’t really know. I would have imagined it’s more often, but I have to say I’m it’s not the most thrilling of things to talk about, to be honest. yeah, I actually find a lot of that super interesting. But there you go. I never thought I’d say that about mortgages, but here we are. Brilliant, we’ve done those to death. I was hoping to ask, as well, a little bit about income protection, because I know that that’s your dual forte income protection, mortgages. You’ve got other things. You do many various things, of course, but income protection is something that it’s asked about a lot. Pardon sorry.

Vinay: 55:08

It is asked about a lot, so, yeah, it is one of the things that people want to know about.

Dr James: 55:12

What time would it be more super relevant? We all could have done with some income protection. When COVID hit, I don’t even know if we quite could have claimed it then. No, it wouldn’t. Ah, wouldn’t we Right? Never mind.

Vinay: 55:24

That’s professional expenses cover, which a lot of practice principles have. It’s totally different. I’ll let you finish and then I’ll explain what the differences are and why you wouldn’t have covered.

Dr James: 55:35

Brilliant. All I was going to ask was what’s your philosophy on it? Would you generally advise it or do you advise against it? In the instance of most people? What would be the pros and cons of it?

Vinay: 55:46

I think every dentist should have it and then there will be some people listening to that, thinking, well, of course you would make. You make money if a dentist takes it. There will maybe be people listening, but there will certainly be many dentists out there that can vouch for the fact that I’ve often talked them out of taking policies Other people have said that they should have when they come to me for a second opinion. If it’s not necessary, if it’s excessive, I’m the first person to tell someone do you really need that policy? Are you going a bit over the top? But income protection is something I think is really important. I tend to give the same advice to my clients, or no, I don’t tend to. I do give the same advice to my clients as I would give my wife, my family members and take myself. If it’s not good enough for me and my family, why would I give that advice to clients? That’s point one. Because it’s someone who sells income protection. Do you think we should have it? Well, of course they’re going to say that at the end of the day, it’s what I do for a living. I’m never going to say to someone I don’t want to set up financial products for you. In fact I have actually one sort of advice when someone has asked me to do something that was not legal or correct, whatever. But income protection, let me think of a different way around. One of the biggest arguments against income protection that I hear is or two of the two of the comments I often see on I put the money in a property instead. So this follows on nicely from the buy to let conversation moment ago. Or, save your money, put it in a savings account. Cost of income protection varies. Young associate, starting on a you know, 40, 50 grand salary is maybe 35 to 45 pound a month. But based on age and amount of income, the people paying hundreds of pounds a month for seven, eight, nine grand a month of cover and they’re in their 40s or 50s, you know they pay a lot more. Let’s say 50 to 100 pound a month is pretty typical for most young associates for income protection. Right, that’s. That’s if we say 750 a year for argument’s sake, take a sort of median figure there. What’s that going to get you after five years? 750 a year times five, plus some compounded growth on that, that’s going to be 456 grand. If you’ve been phenomenal with your money, you know, and that’s a month or two months worth of your income, and that is assuming you’ve not needed it for years. You know, even if you don’t need it for 1015 years, that’s still only two or three, three or four months worth of your income that you’ve saved. What kind of property are you going to? What kind of property, wealth or equity are you going to build with 50, 100 pound a month for the next five, 10 years? It’s not going to be enough to get you a deposit on a decent property. Maybe after 10 years you might get enough for a deposit on a cheap rental. All right, None of these will replace your income. The assumption that people always have is I’ll retire without ever needing to have used my income protection. So then they look at well, I’m 30, I’m going to retire when I’m 60, that’s 30 years multiplied by 12 months. Times. However many months of payments or whatever the payment that they’ve been quoted, I could be putting 50 grand into something else, but that’s under the assumption that nothing has ever happened to them and that they never use the income protection policy. Now if someone said to me, vin, I’ve got a DeLorean, I’m going to go back in time and I’ve just retired and I’ve never needed my income protection. Shall I go back and tell myself not to take it? Yeah, great, you know you’re not going to need it. It’s all very well now saying and you always get these 55, 60 year old dentists on the Facebook threads I’ve not had income protection. I put it all in this instead and it served me well and I would have wasted tens of thousands of pounds. Great, but you’re already older and you’re saying that historically, there’s no way of knowing, going forward, what’s going to happen. So, for £50 a month which I don’t think many dentists would have to sacrifice much or anything else to be able to pay usually comes out of your surplus, and if you can’t afford £50 a month and you’re a dentist earning an average dentist’s wage, there are probably other factors in the background that contribute to you not being able to afford it. There’s something else that’s not going to plan or write in the background. Otherwise, if you’re earning 60, 70 grand upwards, how can you not afford a £50 a month premium from your surplus, from your disposable income? So you’re never going to be able to buy anything, or do anything less, because you paid income protection. You’re never going to look at your bank account and think, oh crap, I’ve got zero in there. I would have had £100 if I hadn’t paid dentist’s profit in this month. You’re always going to have enough to do what you want and buy what you want, within reason. If you don’t have income protection, though, and you can’t work, I can pretty much guarantee that most people listening to this wouldn’t have enough to be able to be okay after a certain period of time, and there was a lot of people that came back to us after COVID and the lockdown, not because they were necessarily scared, but a lot of people who thought that their savings would be enough to get them by in the event of short-term illness. The lockdown showed them that, after two months of not working, they were skidded. Their savings were gone. It didn’t go as far as they thought it would, and so they said, actually, what this lockdown has done. I’m not scared of getting coronavirus, but what has made me realise is I’m scared of something happening to me like my back goes or I break my hand and I’m off for six 12 months. I wouldn’t be able to last.

Dr James: 1:02:08

It’s rocked my world a little bit. I think it’s rocked a lot of people’s world and that’s why I thought it would be a good question.

Vinay: 1:02:15

Income protection. No, it’s income protection, just to clarify pays for anything that stops you being able to work as a dentist, assuming you take own occupation cover, which is all we would offer. But if you don’t have anything pre-existing, so with an income protection plan, they take you for medical history when you apply. If they’re not going to cover you for something, they’ll tell you before they start the plan. James, you’ve had a back pain on and off for the last five years, so if you want cover, we’ll give you it, but we won’t cover you back. Do you still want the policy? So you’re never going to end up with a policy that 10, 20 years down the line you get a nasty shock, as long as you set it up correctly, of course.

Dr James: 1:03:00

That was one of my reasons to vote it as well, I have to say, because I understand that there are maybe less scrupulous insurers out there in certain industries who will I wouldn’t say, to catch you out Now, I’m completely upfront when I say that that could be completely misinformed and that’s why I thought it was a good question. But what you’re saying is that typically isn’t an issue.

Vinay: 1:03:24

No, I don’t think there are unscrupulous insurers out there. There are unscrupulous advisors out there or less than competent advisors out there that may recommend a product that might be perfectly suited for someone else but to a dentist. So a couple of examples of things I’ve seen. Own occupation cover is the most obvious thing. Most of you guys will know this because Wesleyan drill it into your skull dental score. You need own occupation cover. If you can’t work as a clinical dentist, then you are going to be qualified. You are going to qualify to be paid on the income protection plan. There are policies out there that are classed as suited occupation cover or any occupation cover or working task definitions. I’ll explain those three in order Suited occupation James, you ring me up, I’m the insurance company, and you say I’ve screwed my backup, I can’t do dentistry, I need some time off. And I say, james, you’ve got a dental degree. You can do many suited occupations with your dental degree. You could teach lecture, you could sell dental products, you could work as a dental practice manager behind a desk that wouldn’t cause you back problems. So you can do a suited occupation. I’m sorry, you don’t qualify to be paid. Any occupation cover is the same, but there is no suited to you requirement. They can say you can do a job, you can stack shelves, you can sit in a call center, answer in the phone, you can do something. So you don’t qualify for a payout. And then working tasks is the worst, where every insurer has a different but a short list of tasks five, six, seven tasks, things like bathing yourself, climbing the stairs unassisted, walking for a certain distance without stopping or without assistance, and you need to not be able to do a certain number of them. They might say you need to meet four of our six working task definitions. In order to make a claim Pretty much means you need to be disabled, fully properly disabled, ie you can’t really do anything at all. We would only recommend a plan. That’s own occupation. So the kind of companies that you might refer to as unscrupulous there it’s not their fault, because if an advisor has set up a plan with them, then it’s the advisor’s fault for not giving the correct place. You shouldn’t set up a plan like that for a dentist, and the people that do are the ones who don’t work with medical professionals or dentists. They’re a generic broker and they don’t know these things are important for the dentist sector. So they pick the cheapest one off the screen and they don’t pick the one that covers dentistry correctly. So the other thing sorry, buddy, you were going to.

Dr James: 1:06:28

No, I was just agreeing. I just found that.

Vinay: 1:06:33

The other reason for the single biggest reason for claims being denied is non-disclosure of medical information, ie clients not disclosing the medical correctly. And there’s two ways that can happen. Either the client lies or forgets something which doesn’t happen very much with doctors and dentists. It’s language that you guys speak. Most people forget things because they don’t understand it when the doctor tells them. So that’s less an issue with dentists, and dentists are not going to lie knowingly as often as general members of the public would One would like to believe. The other situation is I’ve had a couple of worryingly clients tell me that the advisor who sold them the plan only took them through a basic medical questionnaire with five or six questions oh, have you been in hospital or did you take any medication? That’s what I do at the beginning of a call with a client to vet them. Someone tells me they’re diabetic. I want to tell them sooner that you can’t have income protection. I want to take two hours of their time off and then say, oh, you’re diabetic, can’t have it. If the premium is going to be doubled because someone’s BMI is high, I don’t want to quote them 50 quid and then afterwards say, ah, it’s 100. I want to tell them. It will be 100 for you, other advisors, if you want to go ahead with the plan. We go through a full, detailed medical questionnaire. We ask every single question the insurer wants answered, and if a client comes and asks and says I’m not sure, I say well, let’s tell them and let them decide if they need to know it or not. That way you will never, ever, be faced with a sorry, you didn’t tell us about this. If you try and make a claim, other advisors, though from what I’ve been told and I would expect this to be a very, very rare thing, because it is just not the correct way of doing it We’ll just assume, if someone says they’re not on any medication, they’ve never been hospitalized, they’ve not needed any scans, that they can just answer no to all the questions on the client’s behalf. The client gets a copy of the medical questionnaire in the post from the insurer with less is saying please read this over, and if there’s anything wrong, let us know. And that’s a 20 page document no one ever reads. They just file it because they assume that the person they’ve gone to for advice has done the job correctly. So it’s really important to be extremely honest. I’ll wait for clients to go in touch with the GP and get a response on dates and things like that. If the client’s unsure, we provide extra information to underwriters when we think it’s necessary because and then we’ll save these emails in with the client’s file. So in 20 years time, if, god forbid, anything does happen in the event of the claim, we’ve got everything reported, you know a bit of a misconception on my behalf then, but I don’t think I would be alone on that.

Dr James: 1:09:37

So the fault in the circuit, the fault in the system is more prominently the middleman, effectively route linking these two parties together. I didn’t know that.

Vinay: 1:09:48

Or or dentists taking the cover out themselves and not setting it up correctly. And then you know, they’ll tell their colleagues oh, I’ve paid tens of thousands of pounds and I didn’t even get a payout. No one’s ever going to say I cocked it up, I did it wrong, and then they said no, that’s something that happens. So different insurers have different types of plans. So dentist provident, for example, royal London LV they all have limited benefit period plans. Again, I’ve had this where we’ve lost business to another broker and the clients got in touch with us, found a cheaper quote than you get me and it’s like for like, and the maximum payout on the plan that they’ve been advised is two years. The plan I set up is to retirement age 65, 68, whatever. So a two year payout of two or three grand a month versus a 37 year payout for two, three, four grand a month, whatever. You know, there’s a reason it’s cheaper. But quite often when you do a quote, if you go directly to the insurer, the insurer won’t give you advice. It’s a non-advised service you get. If you take a policy directly from an insurance company, they can answer questions for you, that’s if you can provide you with choices. If you say, should I have a day one policy or a three month deferred plan, they won’t be able to tell you to answer that question. They will be able to say to you well sir, these are the options available to you and this is what would happen in the event of a claim. Which one do you want? So all the boxes you’ve got to tick when you’re choosing the policy. If you set it up incorrectly, you accidentally tick the wrong box, then you might not realise for 10, 15 years that the plan you took out wasn’t correct for you.

Dr James: 1:11:47

Complexly likely best to get some help if you’re going to do something like that by the signs of it.

Vinay: 1:11:53

This is what I tell people. I mean you’ll get advice. It doesn’t have to be me I’d love it for it to be me, of course, because I know I’ll do it properly for you. But you know, get proper advice, because worst case scenario is if it is cocked up. You’ve got someone to sue. There’s someone’s indemnity insurance that would be there to cover you If the policy was advised incorrectly. If you send it up yourself there’s literally no one, and the premium you pay if you set it up through an advisor shouldn’t be any different to getting that exact same plan if you could, directly to the insurer. So you’re not paying any extra money for the advice that you get. You’re getting the same outcome except you’ve got. If you don’t value the advice, if nothing else, if you do want to set it up yourself and you dictate I want this policy set up like this, but you go through an advisor who agrees that that’s correct for you, you will be protected by the fact that that advisor has advised that plan to you. The other thing that I wanted to highlight is critical illness cover is something less spoken about, but it’s still quite important. A lot of people take it so critical illness cover pays a lump sum if you’re diagnosed with a critical illness. Which critical illness is depend on the insurer. Different insurers offer less and more comprehensive policies and the bit I want to talk about is a lot of people know that you should have an occupation for your income protection. Not many people know that there’s an occupation specific element of critical illness cover, so they often set it up with the wrong company for that reason. They didn’t realise that it was a consideration. You get an additional feature with critical illness cover called total and permanent disability cover, which means if you’re permanently disabled from working, even if it’s not a critical illness, you’ll get a payout, and that can be either own occupation or not. And if it’s not own occupation, the same situation applies as income protection. They’ll say, oh, you can do other jobs, so you don’t get a payout, whereas let’s say, for example, you were doing some gardening, james, and you were shredding some branches with the machine and your hand went in and your hand got chopped off and you’re never going to work as a dentist again, but that’s not critical illness, but your critical illness payout will pay as a lump sum in that event, because you’ll never work as a dentist again. That’s if it was an own occupation policy. Income protection would, of course, cover that as well. But the critical illness which is dentists typically, like I say, wesleyan make sure of this. Dentists know that they should have own occupation income protection cover. Hardly any of them know that they should also have own occupations specified on their critical illness plan. It’s only a very small number of insurers that do critical illness with own occupation cover for dentistry. Vitality used to do it and they stopped doing it a year ago, so it’s just anyone who has a vitality plan already. If you set it up over a year ago, they haven’t stopped to the own occupation cover on your live plan. I’m sorry, because last time I sent this on a webcast I got about a dozen messages from people who had vitality plans from five years ago. That’s something really important to keep in mind. If you’re going to have critical illness cover, you need to make sure it’s got the right definition of cover for dentistry.

Dr James: 1:15:32

There are things almost unique to dentists or specific to dentists that we can do to take advantage of these certain financial instruments that we’ve just spoke off. In addition to that, I just wanted to know, apart from mortgages and apart from income protection, as we’ve just said, is there anything else that VR Vinay Rathod, financial advisor, can help us with financial solutions?

Vinay: 1:15:55

We don’t give any pension and investment advice here. I’m not an IFA, so I don’t give any advice in that respect. If anyone needs a recommendation I can pass them in the right direction. But with us mortgages, remortgages, so both residential and by-to-led by-to-led be it through a limited company, as well the commercial loans, we can help with the insurance requirements for any commercial premises. So if you take a commercial loan you’ll need life insurance with most banks, some of them on income protection. Critical illness cover is another one. Life insurance, of course, trust planning. So if you have life cover you can avoid your family paying inheritance tax on it. Legally we include that for free for anyone who takes cover out through us. I’m trying to think what else? Practice insurance, so overhead cover, you know your public liability. We do not do indemnity insurance. It’s probably the only dental specific plan policy I can think of that we don’t really engage in or we don’t at all engage in. So indemnity we don’t. I mean, I think that’s pretty much it for the time being. I am setting up another venture which will be coming to market in the next few weeks. It’s just commercial utility services. So for dental practice owners who have their gas, electric, so forth, their debit card, credit card terminals. So we’ll be offering a switching facility for that, partnered up with a guy who’s been in the industry for 15 years he knows everything that there is to know about it and sort of hoping that we can offer the same sort of peace of mind. It’s a service that most dental practices need. They need to sign up gas, electric, but they get cold calls from salespeople all day. Some of them might be good, some of them might not be. In this way, hopefully, the peace of mind that is someone that is already known in the dental sector for providing a reputable service can save the money on those areas as well.

Dr James: 1:18:23

Nice one. No problem, vinay. I just want to say we’re going to wrap up now. I just want to say thank you so much. You’ve been with us. With your time. I mean, I’ve learned tons about mortgages, lots of things that I’d never really come across before. The information that you give us I’m sure will be of interest to many people who are listening, and on the income protection as well. Definitely, I was someone who sat in the skeptic side of the fence towards that particular topic. No, I’m a little bit more in the middle and it might be something that I consider in future. Like I said, vinay, thank you for being so generous with your time. Thanks for coming on, no worries.

Vinay: 1:18:59

Thanks for having me, buddy. I’ve enjoyed it. Hopefully the people who do watch will pick something up of interest. People are welcome to get in touch with me and ask any questions. I’m not the type of person who will only answer questions for a customer. I spread the knowledge in the hope that eventually people will see the value in it and will want to come back to us, but we don’t ever do anything on the basis that we expect it. So if anyone needs to run anything past me, they can drop me a quick Facebook message or whatever, and I’m always happy to chit chat.

Dr James: 1:19:37

No problem, especially pertinent for us dentists, because I think that I’m probably correct in saying there is a lack of those specifically knowledgeable in the dental field, specifically knowledge in the finances of dentist field. So, as I say, if anybody was interested, vinay’s on the group, feel free to drop my message, as I’ve said before. Thank you so much for coming on the show.

Vinay: 1:19:58

Thank you, buddy.

Dr James: 1:19:59

Anytime, mate. Anytime, my friend, I’ll let you get off now. You’ve been more than generous with your time, vinay told me off camera.

Vinay: 1:20:05

I’ve enjoyed it.

Dr James: 1:20:05

His wife has got a roast in the oven. I would hate to think I would listen to you tonight and I thought I was keeping him back from that, so I’m going to let you crack on. Vinay Good to see you Take care.

Vinay: 1:20:14

Buddy, nice to see you. Take care, speak soon.

Dr James: 1:20:16

In a bit. Join to become part of a community of thousands of other dentists interested in improving their finances, well-being and investing knowledge. Looking forward to seeing you on there.