The Professional Advisory Feb/2008

The

33 Professional

Advisory For Dental Professionals

IN THIS ISSUE THE HUDDLE: Key To A Productive Day Dr. Ron Weintraub

CHECKLIST FOR SELLING YOUR PRACTICE David Chong Yen CFP, CA

HOW DO I PREPARE MY PRACTICE FOR SALE? PT. II Graham Tuck H.B.A C.A

DENTAL HYGIENISTS AND NON-COMPETITION

WHAT IS COMPREHENSIVE FINANCIAL PLANNING? A Case Study Mark McNulty BA, CFP, CIM

TRENDS IN INSURANCE PLANNING PT. I Dr. Ian Wexler

UNDERSTAND THE LANDLORD & TENTANT NEGOTIATING DYNAMIC Ian Toms B.Sc. (Hons)

David Rosenthal BA., LL.B.

plus ARE YOU READY FOR THOSE GOLDEN YEARS? NOTES FROM THE EDITOR

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The Professional Advisory consists of a group of seven independent professionals who provide services to the dental profession, each of who specializes in a different eld. They have gathered to keep each other informed of the latest developments relating to the profession, and to produce this publication which is designed to provide expert information and advice solely for dentists and their advisors.

Are You Ready For Those Golden Years?

RALPH CRAWFORD BA., DMD As I was reading through the articles for this particular Professional Advisory issue my eyes and mind kept being diverted to a column on my desk that I had cut out of the business section of the Vancouver Sun back in December. The column’s title Ride into golden years may prove to be a rough one dealt with the economic future of the 8,887,508 baby boomers born in Canada since the birth of a Nicole Cyr-Mazerolle in New Brunswick on January 1, 1947 and Tracey Cuthbert, born December 31, 1966 in New Westminster, BC. First of all I wondered how many dentists were included in the almost nine million Canadian boomers and secondly, how many of them, as the column reported, were included in the “53 per cent of respondents (who) said they didn’t have a budget”. The column also made mention of the spending habits of boomers and the drifting into debt referred to as “the number one enemy”.

The more I read through and sorted our author’s reports and the more I kept drifting back to the newspaper column the more I realized that what’s The Professional Advisory is all about - whether you’re a new graduate, a boomer or even one of us old-timers.

It’s about wise spending, debt management and overall good basic planning. Each of this month’s Professional Advisory articles in one way or another emphasizes the importance of these fundamental features that eventually can take you on the road to the Golden Years.

Ron Weintraub talks about The Huddle as a Key to a Productive Day. And isn’t a full dental career of many, many productive days absolutely essential to the Golden Years? Whether you are selling your practice

to move to another location in a few years or you are planning retirement, both David Chong Yen and Graham Tuck lay out some pretty important advice and ground rules in their Checklist For Selling a Practice and How Do I Prepare My Practice for Sale. Even if those Golden Years aren’t on your horizon in the near future there isn’t a day that goes by - let alone a year - that you shouldn’t be aware of recent changes in the laws affecting the role of the dental hygienist as outlined by David Rosenthal and the same goes for Ian Toms’ advice on leasing your premises. Miscalculating either the “Health System Improvements Act, 2007” or botching a lease negotiation can have far reaching economic ramifications affecting your readiness for those Golden Years. As Ian Wexler takes us through Part I of his Trends in Insurance Planning he makes reference to the use of corporations for insurance and retirement planning and how interesting it is to watch Mark McNulty’s clients, Tom and his wife - at age 60, both early boomers - actually go through the process of Comprehensive Financial Planning on the road to their Golden Years.

Inevitably every practising dentist - boomer or not - will face the question, “Are You Ready for Those Golden Years?” Hopefully the answer will be “Yes” because you have been astute enough to follow the sage advice found in the pages of The Professional Advisory. PA crawford@dccnet.com

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The Huddle:

Key To A Productive Day

DR. RON WEINTRAUB Of the many strategies we implement in our offices when we employ our practice enhancement programs, probably the single most effective one is a morning huddle. The salutary effect on communications intra-departmentally and with patients produces astoundingly increased productivity and professionalism. The morning huddle is key to a successful and productive day.

Reasons For The Huddle As the organization of dental offices gets more complex, we need to coordinate our emphasis on patients and procedures, to work as a team, and to present confidence and expertise. Even though dental offices today include technical equipment rendering high-quality performance, successful dentistry cannot depend on technology alone to advance patients’ dental care. An underlying multifaceted support for processing patients’ pre- and post-treatment needs leads to a rise in responsibilities and possibly in numbers of team members. Many offices now include hygienists, clinical support staff including patient coordinator, levels one and two clinical assistants, host and associate dentists, and in-house denture therapists. Some offices also include a greeter and dismisser, a treatment and re-care coordinator, and an office manager.

Smaller offices also have the same needs for these functions. Multi-tasking team members assume these duties. Even a three-person office performs all of these functions, but with many fewer personalities.

We need to coordinate patients’ treatment plans in an organized, timely manner to achieve desired outcomes.

As a result, the need to communicate has given rise to an effective tool. We hold a short team meeting of all stakeholders in the process 20-30 minutes before the scheduled start of the day. We call it “the huddle.”

Anatomy Of A Patient Appointment The primary need for the huddle is the possibility of patients interfacing with six or more persons with different job descriptions within one appointment.

The team needs to make appointments, greet, prepare, and treat patients. Team members need to arrange accounts and perhaps communicate with laboratories when necessary to further treatment plans. The generally accepted steps to facilitate procedures are the following: 1. Appointments - Often made at front desk by receptionist or at chair side by clinical staff 2. Greet - Greeter at front desk when patients arrive 3. Seat - Usually by clinical assistant or hygienist 4. Treat - Doctor, hygienist, specialist, denture therapist 5. Dismiss and render account - Front desk, treatment coordinator 6. Communicate with laboratory when applicable A complex set of steps for one appointment accentuates the need for the team to communicate information about patients’ treatments. They should know patients’ pertinent medical data and dental treatment requirements and share it on a need-to-know basis for that appointment. When the team knows the patients, the treatment plans, and their responsibilities, they contribute to a pleasant experience for patients.

Preparation For A Successful Huddle The key to a successful huddle is preparation by all involved. Frequently, hygienists, clinical assistants, or administrators who have previously audited the charts for the day and have familiarized themselves with prior treatment diagnosed and not necessarily rendered take turns at chairing the huddle instead of the dentist. They also check what procedures will be performed at that visit. Participants have an opportunity to share information regarding all aspects of patients’ needs including procedural information possibly influencing patients’ experience in the office. Preparation helps the team accomplish a successful huddle in 20-25 minutes in a typical office of 18 visits a day.

Benefits Of The Huddle Daily huddles encourage professionals to work as a whole benefiting the functionality of the office and

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promoting a collegial spirit. Specific benefits include the ability of the team 1. To predict the staff, materials, time, and laboratory requirements to prepare for patients’ needs and adhere to scheduled allotted time 2. To anticipate potential problems with a particular patient 3. To highlight previously discussed treatment not yet activated. This is particularly important for re-care appointments.

4. To understand any financial issues administrative staff shares such as loss of benefits, delinquent accounts, or chronically missed appointments 5. To serve as a reminder of social issues affecting patients to help build rapport between patient and staff; such as children marrying, becoming grandparents, divorces, illness in family, and other personal involvements.

Clearly, the value of the huddle is undeniable.

Complexity of modern day office appointments has led to the necessity for structured routine communication to disseminate knowledge of patients’ needs. The

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huddle, therefore, gives the team an understanding of the game plan for patients that day. As a result, team members are more effective in discharging their responsibilities and less likely to fumble. Access to more comprehensive dentistry based on a global understanding of patients helps prevent their needs from falling through the cracks.

Superior performance depends on individual excellence and on how well the team works together.

The synergy the huddle produces demonstrates a phenomenon Bill Russell formerly of the Boston Celtics (Senge, 1990) calls “alignment,” when a group of people functions as a whole. PA Ron Weintraub is a founding partner with the Bayview Village & Downtown Dental Associates and brings over thirty-five years of knowledge and experience in the practice of general dentistry to the Professional Advisory. Large companies such as Patterson Dental, Ash Temple Ltd, Henry Schein Arcona, & the former Canadian Dental Co. have benefited from his insight. As a consultant to Innovative Practice Solutions, Ron advises dentists on practice enhancement, practice purchases, sales, location evaluations, associate buy-ins, and business mergers. Dr.Weintraub can be contacted at (905) 470-6222 Ext. 221 or drronips@rogers.com.

Checklist for Selling Your Practice DAVID CHONG YEN CFP, CA The sale of your dental practice is probably one of the largest financial undertakings in which you have ever been involved and its success will undoubtedly influence you and your family for the rest of your lives. But it need not be extraordinarily stressful or as complicated as you may have heard. Outlined below is a handy check-off list specially designed to guide you through the required steps.

• Timing and planning - By planning in advance (preferably, at least two years ahead) you will be able to maximize your after tax proceeds from the sale.

Also, consider boosting your revenue - this increases the value of your practice.

• 100% or less - Are you selling 100% of your practice or a small percentage at a time? Consider the tax consequences and benefits of being paid by the purchaser over a number of years. If you are to sell only a portion, consider the possible problems which could arise upon the splitting of revenues or payments.

• Valuation - Your dental practice may be your biggest asset. Have it valued by a professional. You have worked so hard over the years to build up the value of your practice; get your full return on investment.

If you are selling shares how should the value be allocated between your professional and hygiene/ technical services corporation? And how should the value be allocated among the assets to minimize your taxes if you are selling assets? What is your tax exposure if the tax department disagrees with the allocation? Are you willing to take that risk?

• Marketing strategy and broker assistance - Consider a broker who will smooth the selling process.

• Sale of Assets vs. Shares - With the lifetime

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capital gains exemption of $750,000 (increased from $500,000 after March 19, 2007) you might be more inclined to sell shares if you have not utilized any or all of the exemption. Don’t forget to multiply the exemption amount! Work with your accountant to ensure your eligibility for the exemption.

• Incorporation - Do you have to wait the required two years after your incorporation to sell shares?

What is your tax exposure if you incorporate immediately prior to the closing? Consider introducing your family members to the corporation in order to multiply the capital gains exemption?

• Negotiations - You know your reasons for selling.

However, you also need to consider the buyer’s motivations for purchasing your practice. You will be in a better position to defend the value of your practice if you have a well-thought out selling strategy.

Be sure to consult your advisors in this process.

• Due Diligence - After locating a buyer, both sides are free to perform their own investigations to decide if they will proceed further. It’s best to disclose any potential issues so they can be addressed.

• Sale terms - Be sure you thoroughly understand the implications and agree with all the terms of the offer, including the fine print. Involve your legal and tax advisors throughout the negotiation process.

• Equipment Lease Agreement - If you have an existing equipment lease agreement it is important to have your lawyer review the repayment terms of the lease. There may be restrictions/penalties with an early repayment.

• Retiring Allowance - Any employees, including your spouse, who have worked in your office prior to 1996, might qualify for a retiring allowance. The

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allowance amount is tax deductible while the employees/recipient might pay no tax on the income.

• Associate Agreement - Negotiate your associate agreement if you intend to continue working with the new owner. The agreement should specify the weekly schedule and the associate fees (percentage). Consult your lawyer where non-competition/solicitation is concerned.

• Building - If you or any related person owns the dental building, be sure to secure a lease agreement.

At times, the purchaser might ask for a first right of refusal or an option to buy the building. It is your choice to grant this option. Consult your advisor to address any income tax and GST issues.

• Excess Assets - If your practice/corporation owns other assets (e.g., building, universal life insurance policy, individual pension plan or any other investments) you might have to remove them from your practice/corporation prior to the sale if you are selling shares. This may trigger a tax bill. Timing of the transaction will be important.

• Non-Competition Clause - Is this amount taxable?

There may be certain income tax elections which you need to make. Consult your lawyer and accountant.

• Consult your Financial Planner to Determine: a) if you are in a position to retire b) what will be done with the proceeds once the practice is sold PA David Chong Yen, CFP, CA with an international firm background and more than twenty-seven years of experience, advises healthcare professionals and owner-managers. Additional information can be obtained by phone (416) 510-8888, fax (416) 510-2699, or e-mail david@dcy.ca.This article is intended to present tax saving and tax planning ideas and is not intended to replace professional advice.

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How Do I Prepare My Practice For Sale?

GRAHAM TUCK H.B.A., C.A. Part II: Four to Seven Years Before Planned Sale You have passed the point of doing major renovations or moving. You will be selling your practice where it is currently located. Let’s make the best of it - renovate where necessary to best suit your needs. Try to utilize your entire area. Eliminate wasted space, paint or wall paper with the help of someone with colour taste and select a colour scheme which will be appealing to future purchasers. First impressions are important.

You have missed your best opportunity to enhance equipment in your practice (see Part I) but now you should consider the oldest room or rooms and replace dental chairs, dental units and stools with good used equipment. Other equipment such as sterilization should come under consideration. If your sterilization is old, this is one of the most important enhancements even before new dental chairs. In fact both sterilization and x-rays should be given equal weight if they are old and giving some problems - replace them or at least upgrade with good used equipment. Check your room lighting, are the fluorescent diffusers yellowing, try the new polished cube diffusers, they can change the brightness very inexpensively.

Try to have your practice look contemporary. Sliding glass panels between the waiting room and the receptionist is very 1975 and prior. Today the receptionist area projects into the waiting room area to be more patient friendly. Artwork on the walls makes the practice warmer and more relaxed. Look for walls that would be enhanced by a nicely framed picture not a free trade promotion picture.

One of my pet peeves is waiting room chairs made with square tubular chromed construction. It appears too cheap. Decent chairs do not have to be expensive, one hundred and twenty five dollars per chair can be purchased from an office supply store and it would be

a vast improvement.

Some practices have unnecessary clutter on all horizontal surfaces. This does not show well, try to reduce clutter by throwing it out or filing it.

Carpets or other floor coverings should be replaced or renewed if the years of traffic have taken its toll on the appearance. Being replaced now, it should still be good when it is time to sell if the quality is there.

Dental decorators can assist in giving your practice a fresh new look that will stand up well past the time in which you would be selling your practice.

Remember; patients and profits determine most of the practice value. Now is not the time to have a closed practice. One of the questions the purchaser will ask is: How many new patients per month does the practice have?

Remember; patients and profits determine most of the practice value.

A valuation would be appropriate to focus your practice for the sale. It should point out any weaknesses that can be corrected prior to the financial statements which are used for the valuation. In some practices the creation of financial statements may even be an improvement. Purchasers have stronger belief in financial statements created by an accountant rather than internally created financial statements.

Now is a good time to look into the terms of your premises lease. The purchaser will need a minimum of seven to ten years of occupancy after the sale in order to get money from the bank to purchase your practice.

OVERVIEW: Try to avoid having a tired looking practice.

You may even find it uplifting to have a rejuvenated practice.

You still have time to amortize the cost over the next few years and also to enjoy the improvements. PA Graham Tuck, H.B.A., C.A., is the broker/owner of Professional Practice Sales (Ontario) Ltd., which specializes in the valuation and sale of dental practices. He can be reached at (905) 472-6000 or 1 (888) 777-8825 or by e-mail at: grtuck@rogers.com.

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Dental Hygienists and Non-Competition DAVID ROSENTHAL BA., LL.B. In past volumes of The Professional Advisory my colleague, Barry A. Spiegel, LL.M., Q.C., and I have written about the recent changes to the laws affecting dental hygienists. Recapping briefly as to the current status - recently, an omnibus bill, the “Health System Improvements Act, 2007” was passed that included major changes applicable to dental hygienist to permit scaling of teeth and root planning, including curetting of surrounding tissue on the dental hygienist’s own initiative, if none of the contraindications detailed in the regulations are present and the dental hygienist ceases the procedure if any contraindications are present.

Dental hygiene often represents a large component of a dental practice and a significant revenue stream.

Imagine the scenario where your dental hygienist, who has been with your dental practice for many years, decides to open a dental hygiene practice nearby and compete with you! While this may sound unlikely, I recently received an inquiry from an entrepreneurial dental hygienist who is opening up an independent dental hygiene practice. The hygienist plans to hire associate dentists and required assistance in preparing the appropriate associate agreements whereby the hygienist would own the hygiene goodwill relating to the practice. Although our firm did not assist the hygienist, the inquiry highlights the evolution of the business of dental hygiene.

Typically a dentist has a verbal agreement or very brief written agreement with their dental hygienists setting out only their hours of work, pay and job description.

This contrasts with dentist associate agreements, which are usually quite detailed and provide for nonsolicitation of patients and non-competition provisions.

Often the hygienists have been with a dental practice for many years. Without a proper agreement with the hygienists that protects your dental hygiene goodwill,

there may be risks and exposure to the value of your dental practice. There are some things to consider to protect one of your most valuable professional assets, namely your dental hygiene goodwill and patients charts.

In volume 31 of The Professional Advisory my colleague, Barry A. Spiegel, LL.M., Q.C., provides tips of negotiating Non-Competition provisions. Those tips should now apply to dental hygienists also. I urge you to re-read Barry’s article replacing the words ‘associate’ and ‘departing dentist’ with ‘dental hygienist’.

Also consider the following: 1. When hiring a new dental hygienist, enter into a properly drafted legal agreement which includes provisions for non-solicitation of your patients and your staff and non-competition within a certain radius of your practice for a certain amount of time. As Barry noted in his article, the geographic radius and time limitations must be reasonable or the courts will not enforce the agreement;

2. For your existing dental hygienists, you can not unilaterally change your existing agreement with the hygienist and demand they agree to a new nonsolicitation and/or non-competition provisions in their agreement. There must be mutual consideration flowing from each party for a material change in an agreement to be enforceable. In other words, the dental hygienist must receive a benefit in exchange for agreeing to non-solicitation and/or non-competition provisions.

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I suggest that you introduce these provisions when you are giving your hygienist a raise in his/her hourly rate of pay, or if you give your hygienist an additional week of paid vacation or some other similar benefit.

In exchange for these benefits, the hygienist agrees to the non-solicitation and/or non-competition provisions.

A properly drafted legal agreement documenting these amendments will assist in ensuring the nonsolicitation and/or non-competition provisions are enforceable against the dental hygienist.

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The new laws regarding dental hygiene may have an impact on your dental practice. Take precautions to protect your valuable asset. As Barry advised in volume # 31, don’t make a costly mistake. Consult your lawyer! PA David Rosenthal is a senior lawyer with Spiegel Rosenthal Professional Corporation whose practice is devoted to corporate, commercial and business law, with special emphasis on advising and consulting for the dental profession. He can be reached at (416) 865-0736; or fax to (416) 363-8451; or e-mail to david@drlaw.ca

What is Comprehensive Financial Planning?

A Case Study

MARK McNULTY BA, CFP, CIM It seems to me that over the past few years financial planning has become synonymous with mutual fund and insurance sales. However, financial planning is not a product, it is a discipline. It is a unique field that requires hard work and a practitioner who has at least a general level of expertise in income tax, investment management, business planning, risk management, cash flow and debt management, etc. Comprehensive financial planning is a rigorous process that determines how you can best meet your life goals through the proper management of your financial affairs.

As an example, a dentist recently asked us to calculate when he could sell his practice and when he did, what he and his wife could reasonably afford to spend each year for the rest of their lives. Prior to being referred to us, the dentist (let’s call him Tom) had purchased a significant universal life insurance policy with premiums in the $100,000 per year range for the next ten years. When I asked why Tom had committed to this policy he said it was on the advice of another financial planner. This planner had asked Tom if he would like to leave money to his children in his estate and of course, Tom answered, “Yes.” Since his answer was

“yes” for this particular issue, the financial planner was correct to recommend the policy. But that was not financial planning, it was product sales.

In my opinion, the planner should have first designed a comprehensive financial plan and showed Tom the downside of the insurance policy. If he wanted to leave such a significant estate it would be at the cost of his other life goals, specifically retirement. Universal life can sometimes be a good strategy. However, the benefit can only be measured through a comprehensive financial plan.

Here’s what we did in Tom’s case: Step One: The Starting Point The first phase in comprehensive financial planning is to gather information and determine where the client is today in financial terms. Tom had a practice valuation of $700,000. He also owned the building the practice was in which was also worth close to $700,000. The practice broker felt he had a purchaser who would buy both the practice and building. Tom and his wife Anne are both 60 years old and live in a suburb of Toronto. Their home is worth $650,000 and they still have a mortgage of $450,000. Their RRSPs are worth $600,000. We consolidated all of this information and created a financial model for Tom that integrated his practice and personal cash flow along with his net worth.

Step Two: Quantify Goals Tom retained us to figure out if he was in a good

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enough financial position to sell his practice. Therefore we had to take all of his assets (excluding his house) and notionally turn them into a cash flow to fund his retirement. This requires us to make calculations on how much income tax he will pay on his practice and building sale, what commissions and legal fees he will need to dispense, his liability to his employees, etc. After figuring out what will be left over if Tom sold everything today, we then translated that into an annual cash flow. The conclusion was that Tom and Anne could afford to annually spend $90,000 aftertax, indexed for inflation, for the rest of their lives.

Step Three: Strategy Tom was happy with this number as it was very close to what it currently cost them to maintain their lifestyle. A great deal of our strategy focused on further improving that number through income tax planning and investment management.

Step Four: Implementation At this stage we came up with a number of strategies to implement. We broke these down into “edible bites” and worked with Tom and his other advisors to implement them one at a time.

Step Five: Monitor Financial Plans need to be organic. They are intended to estimate what is going to happen financially but when “life happens” we need to determine how close we were in our assumptions. This helps us determine

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if there is a need for adjustments to the plan and strategy. We are currently meeting with Tom and Anne every three months to compare actual progress versus our estimates.

Step Six: Repeat The success of any long range plan is to only use it for twelve months before reviewing it. When Tom is ready to sell his practice we will first start the entire process over again to integrate changes. Furthermore, when they are retired we will meet regularly to adjust for inflation, income tax changes, spending changes, investment returns, etc.

As you can see, a great deal of time went into designing and implementing the right plan for Tom and Anne.

That’s why comprehensive financial planning is not about product sales. It is a combination of technical expertise and hard work. But most importantly, the benefit of comprehensive financial planning is that it allows us to take advantage of every opportunity available to the client while reducing the chances of something “coming out of left field”. As Tom put it, “At this stage in my life, I don’t like surprises”. PA Mark McNulty is co-author of The Canadian Small Business Owner’s Guide to Financial Independence. Mark is an Associate Portfolio Manager with Raymond James Ltd. Independent Financial Services – Member CIPF. The opinions expressed by the author are not necessarily those of Raymond James Ltd. Mark may be contacted at 1.866.261.4768 or mark. mcnulty@raymondjames.ca.

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Trends in Insurance Planning Pt. I DR. IAN WEXLER I graduated from the University of Delaware in 1981 with a BA in Economics. I always found economics interesting and challenging, especially in forecasting changes to the economy based upon variables such as pricing, inflation, employment, and the like. As such, I have always enjoyed looking into the future and trying to determine what lies ahead.

In light of writing the bulk of this article on December 31st, I thought it appropriate to share my thoughts and opinions on future trends and changes in insurance world, particularly for dentists.

Insurance Company Consolidation and Confusion The last decade has been a time of tremendous change within the insurance industry in Canada in terms of mergers and acquisitions. At least weekly, a prospective client will inform me that “they really don’t know which insurance company’s plans they have… I bought the plan from Company A, then I received mailings from Company B, then got a bill from Company C!” Sound familiar?

The good news is that insurance company consolidation has slowed to a trickle for the foreseeable future.

Reasons include: 1. In the eyes of the larger companies, there are fewer small Canadian insurance companies that appear financially and otherwise viable to purchase.

2. Based upon recent acquisitions, the dominant insurance companies in Canada appear to be setting their sights on more lucrative opportunities outside of Canada.

The Use of Corporations for Insurance and Retirement Planning With governmental approval of Professional Corporations (PCs), dentists are increasingly utilizing these entities, as well as Hygiene and Technical Service Companies, for insurance planning. The primary reason

for this is to take advantage of the preferred corporate tax rate. Dentists who have set up these entities can take advantage of the lower tax rate by holding their personal life insurance plans inside the corporation, thus paying premiums with corporate “after tax” dollars. In other words, this allows the dentist to either save about 34 per cent in premiums or buy more life insurance. In addition to this, a significant trend has been for dentists to “invest” extra after dollars into the life insurance plan (when it is a permanent plan such as Whole or Universal Life) in order to save for retirement in a tax-sheltered environment. Many know this as a “Corporate Insurance Retirement Plan (CIRP).”

I see this trend continuing and picking up speed for several reasons: 1. An increasing number of dentists, as well as their accountants are becoming educated and knowledgeable about this strategy.

2. In my opinion, both insurance advisors and other financial advisors will continue to “target market” dentists primarily for the commissions these plans generate. This especially holds for high income specialists such as endodontists, periodontists, oral surgeons, and orthodontists. Dentists should be leery of advisors whose sole purpose is to sell CIRPs at the expense of complete and comprehensive insurance planning!

The good news is that insurance company consolidation has slowed to a trickle for the foreseeable future.

3. A CIRP when structured properly and explained with full disclosure, presents a great opportunity for many incorporated dentists to insure themselves and save for retirement in a very cost effective and efficient fashion versus other options both within and outside of the corporate entity.

Some of the negative aspects that I continually see (and would like changed) in the insurance marketplace concerning the corporate insurance retirement strategy include:

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1. Unrealistic interest projections on the investment component.

2. Full disclosure of MERS or Management Expense Ratios. These are the expense charges attached to the investment options associated with permanent life insurance plans such as universal life.

3. Failure to disclose and discuss exit strategies when the practice is sold.

4. Insurance advisors who ignore the greater overall insurance needs of their clients.

Life Insurance With regard to life insurance planning, I see the following trends: 1. Life insurance plans will continue to evolve and change in a number of ways. Concepts that I am aware of include: a. “Custom tailored” term plans b. Term plans that include a return of premium feature 2. Insurance advisors will continue to focus more on life insurance planning than on living benefit planning. This really is no different than what I have witnessed in my almost dozen years in the insurance business. I feel this is mainly due to the inherent difficulties and complexities associated with living benefit contracts, planning, and underwriting. As well, life insurance plans in general, require a lower level of ongoing service, especially in the event of a claim.

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3. Despite fairly recent industry regulations that mandate insurance advisors to disclose which insurance companies they represent and how they are compensated, most insurance advisors, in my opinion, will continue to sell only one or two insurance company’s products due to enhanced commissions and other financial incentives.

4. I envision that due to current mortality statistics, life insurance premiums will remain at or only slightly higher than their current low levels. Another reason is the inherent competitive pricing nature among the insurance companies.

5. The limited availability of Whole Life insurance products.

6. The emergence of a secondary market for insurance products in the United States will have a profound effect on the value (and cost) of life insurance policies in Canada.

In Part II of this article, I will examine and share additional important and timely insurance trends.

Topics will encompass living benefits, underwriting, transitional, and retirement insurance planning. PA Dr. Ian Wexler is Canada’s leading authority on insurance issues for dentists. He is the President of Protect-a-dent and Protect Insurance Agencies Inc. in Toronto which provides life, disability, critical illness, and healthcare insurance products and services to professionals, executives, and business owners across Ontario. He can be reached for questions or other enquiries at (416) 391-3764 or drwex@protect-ins.com

Understand the Landlord & Tenant Negotiating Dynamic unrelated to business terms and conditions.

Understand clearly that in order to negotiate effectively, both parties must communicate with each other. Common impediments to communication are presented below.

IAN D. TOMS 1. Ego - As a bright, well educated and capable proB.Sc. (Hons) fessional, you are self-confident and may present Frequently prospective tenants call and explain that yourself to others as having a big ego. Recall that you while lease negotiations were under way the landlord are likely dealing with a very capable business person suddenly terminated the process and no longer will - also with a big ego - who has significant academic take or return calls, leaving the tenant bewildered. preparation in business, economics, and/or law. You The reason for the termination was common and pre- are on top of your game in the operatory, not necesdictable. The tenant did not understand the landlord sarily in a business negotiation. The landlord is on and as a consequence, the negotiation failed for reasons top of his/her game in this negotiation; you are a

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visitor on the the landlord’s turf. How would you respond to a business person who argued with you over a dental procedure in your own operatory?

2. Personality - Successful landlords are often competitive, intense, bright, and detailed thinkers. Take a few minutes to chat up a landlord in order to develop a strategy to present your position with the greatest chance of making progress. What you perceive to be humorous may be perceived by landlord as arrogance!

3. Culture - BOTH your culture and the landlord’s culture significantly effect how communication is perceived. Be sensitive to and avoid religion and race issues by deliberately focusing only on business terms and conditions.

4. Negotiation style - You need to know, recognize, understand and respond in the same negotiation style as the landlord. Consider each style as a language. If you understand and prefer a protracted, progressive, tedious, and detailed “nibble, nibble, nibble” style of negotiation, do not be surprised that a landlord who prefers a more direct and shorter process will simply end the negotiation!

5. Technical ability - A busy landlord will recognize

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that you don’t know what you don’t know, or worse, that you think you know more than you do, and subsequently will refuse to progress with the negotiation.

Know that there is an entire technical vocabulary associated with tenancy arrangements that takes considerable education and experience to master.

6. Landlord type - Is the decision maker a person, partnership, or institution? Institutions such as Bentall, Oxford, Morguard, First Capital, and Centrecorp interface with prospective tenants through salaried leasing managers, who report to economic, property and legal counterparts that simply compare your proposal to established and rigid corporate policy. Response to your proposal may take days, weeks or even months and the answer may not necessarily make sense, because it is based on the corporate policy. Leasing managers will not cooperate with you if your approach is irritating or your concession requests ridiculous. Your progress will be expedited and has the most likely chance of acceptance if you cooperate with the leasing manager.

In contrast, negotiating directly with the landlord requires you to inventory the landlord needs and respond in a way that makes most sense to your tenancy in the context of these needs. Expect and be prepared for a swift and often instant response, and be prepared to respond in a like manner. You can damage your position if you are not able to respond as directly as the landlord.

A wise tenant recognizes that they should do what they do and know what they know, and that their best interests are served by leaving business negotiations to qualified professionals. PA Based on more than 20 years business experience Mr.Toms, B.Sc. (Hons) acts as a tenant advocate on behalf of select retail and professional tenant clients primarily in the Greater Toronto Area. Mr. Toms is licensed as a Real Estate Broker and can be reached at (705) 743-1220, by e-mail at iantoms@pipcom.com, or through his web site at: www.iantoms.com

The views expressed in any article are those of the author alone. They should not be acted upon without the advice of your “professional advisors”.