Myth-Busting Financial Planning with Reese Harper

Text 'bulletproof' to 345345 to stay in the know about our upcoming book release and the Bulletproof Summit on October 12-13th 2018 in Atlanta!   Bulletproof Dental Practice Podcast Episode 77 Hosts: Dr. Peter Boulden & Dr. Craig Spodak Guest: Reese Harper, DentistAdvisors.com   Watch full video of the interview by clicking here!   Key Takeaways: There are big differences between fee-based and fee-only financial advisors. People assume "fee-based" means you only charge fees, but advisors who say they are fee-based generally also take commissions. Bad financial advice comes from product salespeople who get paid commissions. Good advice generally comes from people who get paid for their time, or percentage against an investment account. Make sure your financial advisor is disclosing ALL FEES UP FRONT. Everyone who is commission based have a strong conflict of interest. They are incentivized for pushing products that may not be in your best financial interest. Your financial advisor should be a registered investment advisor, and an independent, fee-only fiduciary, and nothing else. If your broker/dealer/advisor is spending a lot of money on you it is a red flag. The more you learn about finance the more you'll know the current financial market model is crazy. For dentists who have "found money," the first & best thing you should do is invest it in your business. Dentistry is an amazing career, but there's a huge barrier to entry. Use your money to work toward at least a 20% operating margin beyond your production. If your practice is good and doesn't need investment, you can use your money to: Build businesses Buy liquid assets (minimum 6 months of living expenses) (cash, mutual funds, anything you can pull out that isn't tied up) Work on retirement plans Buy real estate To be a serious investor you have to take risk. In order to take risk you have to be liquid. Pay attention to your debt-to-income ratio. In a calendar year, do you have more than 20% of your gross income left over? If you're not accumulating 20-25% liquidity every year you haven't earned the luxury to reduce your debt on an accelerated basis. Your income can only go to: Savings Spending Debt Taxes The ratio of your income mix dictates what you can do. It's more important to get into the right working situation than it is to pay down your student loan debt. Not everyone is cut out to be a practice owner. There are a lot of benefits to being an associate, and you don't have to be an owner to max your earnings. There is a correlation between income and ownership. Owners tend to make more, but that's because 30% of owners manage their practices really well and are killing it. 70% of owners really struggle, to the point where it's probably a wash whether they should be an owner or not. If you're smart, your first associate hire will cut your income. As an owner you have to go through periods where you make less than you would as an associate. You have to have a net worth that is about 30x your annual spending in order for work to be optional. Dentists don't invest their liquid assets aggressively enough. They're too conservative, and it costs millions of dollars over a 25-year career. The 3-factor model says investments grow more than average because they are: Smaller vs. bigger High value companies vs. high-growth High quality & profitably vs. low-profitability Run if your CFP is telling you to get out of the market now because a correction is coming. You know you're too conservative if your investments didn't beat the S&P return. Your investments can earn 10-13% every year if you invest wisely. Keep tuning in to Bulletproof Dental Practice podcasts for the next interview with Reese!   References: Fama–French three-factor model   Tweetables: It's difficult to get a man to understand something when his salary depends upon his not understanding it. – Upton Sinclair The things that drive owners are not always financial. – Reese Harper No business tries to pay down debt as their first goal. – Reese Harper Money is an emotional thing, it's not logical. – Dr. Craig Spodak As long as you're loving what you do and you're not oppressed by it, that is freedom. – Dr. Craig Spodak