A Litmus Test to Avoid Self-Serving Advisors – Episode #354

The right advisor can play a pivotal role in helping you make smart financial decisions. But how can you know who to listen to and who you can trust? To give you a better idea about the differences between financial advisors, on this Dentist Money™ Show Ryan and Taylor Sutterfield illustrate how commission-based, dually-registered, and fiduciary advisors differ from each other.

 

 

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Podcast Transcript

Ryan Isaac:
Hello everybody. Welcome to a special edition of The Dentist Money Show brought to you by Dentist Advisors, a fee-only comprehensive fiduciary financial advisor just for dentists all over the country. Check us out at dentistadvisors.com.

Ryan Isaac:
Today on the show, we are playing some audio from a webinar we did recently with myself and another advisor with Dentist Advisors, Taylor, and what we talk about tonight is a pretty common question, and there’s a lot to discuss and unpack. The question, or maybe the two questions are, when is it time to hire a financial advisor, and how do I do it? What are the questions I should ask? How should I know if I’m ready? It’s a very important question, and people are asking this right out of school, they’re asking it right before retirement, and everything in between. So this was a great discussion, many thanks to Taylor for spending the time with us that evening on the webinar, we loved it. By the way, we do webinars like this every month, you can check those out at dentistadvisors.com, and if you ever wanna chat with us and ask us questions, maybe it’s time for you to finally hire a financial advisor, dentistadvisors.com, click the Book Free Consultation link. Let’s have a chat. We’ll point you in the right direction, we’d love to help. Thanks for being here, enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
And so let’s jump into this. In my mind, when I wanted to tackle this question, I kinda wanted to be as comprehensive as possible, so I wanted to start here, which is… And this is, I think, a tough one to answer for a lot of people because of maybe… I don’t know the history of what our industry has been and the predominant marketing of our industry. I think… We probably don’t have time to do like a big poll, but I would love to know how people would answer this question, if you can go into the chat right now, and you feel like answering this question. What does an advisor even do? What is the job of an advisor? Taylor what do you think the average person thinks an advisor does if they were asked that question? What do you think they’ll answer?

Taylor Sutterfield:
So, I get two main responses when I ask this to consults, and one is, “Do you do my taxes?” And the other one is, “Can you invest my money?”

Ryan Isaac:
Okay. Some transactional things.

Taylor Sutterfield:
Yeah, I love the first one, ’cause it’s like you just… You have no understanding. You think I’m a CPA, which happens quite a bit…

Ryan Isaac:
Totally.

Taylor Sutterfield:
Where people may not fully understand what a financial advisor does, and the other one is very limited in the scope of, you deal with investments.

Ryan Isaac:
Yeah. It’s very transactional in nature. I think that’s totally true. So our industry was born basically out of transactions. Like the history of planning and advice giving, like talking through your life and life decisions, almost from a coaching or a consulting role is fairly new. I don’t know the exact birth day, [chuckle] of like a more consultative financial planning service but it’s probably barely decades old, where the majority of financial services, investing, insurance, it’s just… It’s really old and it started all with products and transactions, ’cause that’s what it was like. You need some insurance, let’s sell you some insurance, you need a loan, here’s a loan, or let’s sell you some stocks, bonds and mutual funds, and so I think there’s a lot of misconceptions about that. And so let’s talk a little bit about… Unless anyone has any questions. Taylor, do you have anything else you wanna add to that before we move on.

Taylor Sutterfield:
No, I think that’s a great point, Ryan. I think a lot of times, it’s our fault as the financial advisors, and who claims to be an advisor, and what… Advisor is such a loose term and…

Ryan Isaac:
What do you mean by that? Yeah, explain that.

Taylor Sutterfield:
People use that umbrella all the time.

Ryan Isaac:
Dig on that a little bit.

Taylor Sutterfield:
It’s funny because a lot of times we wear… An advisor wears a lot of different hats, and to my earlier point about CPAs, there are CPAs that kinda dip into the advisor world, and there’s insurance agents that say they’re an advisor and they’re selling a product, or they’re selling some type of solution. And so I think the way that we use and view advisor is a little different than what the industry views when they hear the word advisor, because our industry has used that term so loosely for years and years.

Ryan Isaac:
Totally. Yeah, that makes sense. Tonight, like this first part here, we’ll describe how we in our company, how we’ve defined what we would say like financial planning is, and this isn’t even to say like, oh, we’re the authorities, and this is the only way it’s done, and we’re right and everyone else is wrong. This is just what we’ve done in our business to say, well, we have to define something. We can’t just be really vague about what financial planning is, and you get a financial plan, and here’s what it is, because…

Ryan Isaac:
Okay, you said this, Taylor, you said, there’s no barrier to entry in our industry, anyone can be a planner technically. And so you get everyone from literally like lenders who will call themselves like a financial consultant or planner and they’re doing home loans to… The insurance industry is pretty egregious with this. Some do planning, but many are just transactional insurance agents, but they’ll tell everyone they’re planners, and then the experience becomes like you buy an insurance policy and that’s your whole plan. Or people who sell investments, mutual funds or things like that. So you bring up a good point. I think that’s a big part of it, what people say planning is.

Ryan Isaac:
So this is what we say planning is. And again, this could be… This is how we define it. The first thing I’ll say is… It’s funny when I throw these up here… There was an episode we did a while back with Matt and I, and we did a podcast, we did an episode on the podcast. There it is, 282, you can find that anywhere you’d listen to podcasts. And we went through what a typical year is in terms of like, how do we interact with a typical client over the course of 12 months? What’s it like from start to finish, and what’s the experience like? And I think it was a really insightful episode to just describe the interaction, how often we communicate, what do we talk about, what are the triggers for the things we talk, what do we work on, what are the projects and tasks we undertake and work on throughout the year? So if you want a more in-depth back and forth between Matt and I… Matt’s an advisor with our firm too, check that out, Episode 282.

Ryan Isaac:
But here’s a couple of things I wanted to go through first. When you’re even beginning to choose an advisor, what does an advisor even do? And in our industry. It’s a… It’s not totally black and white, but you can kind of whittle down… We can whittle it down a little bit in our industry, there is a growing segment that would be, a list of some of these words, I’ll explain them here in a second. But most people these days are trying to find an advisor that has their best interest in mind, like of course, right. In our industry, that hasn’t been the standard, but it’s an evolving standard…

Taylor Sutterfield:
Don’t you wish that was always the case, right?

Ryan Isaac:
Yeah. Okay, so what I’m referencing for everyone is in our industry, there’s actually two actual legal standards of advice giving, one of them is called the fiduciary standard, and the other one is called the suitability standard, these are actual laws you can go to court over and sue people over. The majority of the industry still, although it’s getting smaller, and this is where it began, is operating on what’s called a suitability standard, and what that means is if a financial person in your life does something egregious to you or does something to harm you, all they have to do in a court of law is prove that what they told you to do was suitable, which is a funny… It’s funny, that’s even a law to me, because what if that was true for dentists, and a dentist only had to do what was suitable for you and not actually what was in your best interest as opposed to the other law in our industry. And it’s a total… You have to operate under a whole different set of standards and compliance and oversight, it’s really crazy. The other one is called a fiduciary standard, and fiduciary is just a fancy way of saying, you have to do what’s in someone else’s best interest, which again is funny that it’s like, it’s a different standard, that’s like the premium plus subscription, it’s not your standard free subscription.

Taylor Sutterfield:
Shouldn’t that just be like the beginner level?

Ryan Isaac:
Yeah, I feel like that’s what the medical profession generally does, I’m sure there’s some bad apples, and that’s what dentist do. You go to a dentist and they’ll do what’s in your best interest for total oral health and oral health care, but in our industry, we just have to do sub-par minimum unless you’re a fiduciary. So this list of words I have on the screen, here’s an easy way to… As you’re going through this thing and you are trying to find out what does my advisor do and how do they get paid, and what are the incentives here, and how do they align? Go to any advisor’s website and just scroll to the bottom where most websites have their compliance or legal disclosures, sometimes they may be on a separate page that says, disclosures. And these are words that are good, these are green flags, I should have put a little icon of a green flag on there next time I will. These are green flags, these are words you want to see on an advisor’s page that you’re going to work with, fiduciary is a thing we just described, is this higher level of scrutiny and compliance and oversight. Fee only as a descriptive way of telling someone how they’re paid.

Ryan Isaac:
This is as opposed to a commission, which we’ll get to in a second. So you can get paid by commissions, you can get paid by fees, fees are like a fee from any professional, like you do a service for someone, and then or they do a service for you and then they send you a bill, like, Here’s your bill, pay it. That’s a transparent fee. It’s like, I did a thing, here’s your bill. A commission is I do a thing, I don’t send you a bill, but the thing I did for you is paying me kind of like in a way that you don’t really understand, and it might be really high and it’s hard to explain. And I don’t have to disclose it to you if it’s a commission half the time in any kind of legible way, so a fee only is a good way to determine how an advisor is gonna get paid and if they’re gonna sell stuff or commissions, which tells you a lot about the relationship or what it could be like, RIA stands for Registered Investment Advisor, usually that’ll be spelled out, it won’t typically be RIA, so I probably should have spelled that out for everyone, that again just indicates a more independent fiduciary advisor, you’re on the right track, you’re not always…

Ryan Isaac:
That’s not always the best. There still could be some things, but that’s a good one, and SEC is the governing body for most large advisory firms that are like fiduciary, fee-driven firms and not brokers and commission sales people that the SEC oversees those people. So if you’re vetting an advisor or you have one right now and you just wanna see what’s up, you can always ask them, you can just be like, do you earn commissions? And if so, what are they and why? And have I paid you any? I mean, those are fair questions, you probably won’t get a really straight answer unless you really grill somebody most of the time…

Taylor Sutterfield:
And I’ve worked at a firm before coming here.

Ryan Isaac:
Yeah, okay. I’ll… How about the…

Taylor Sutterfield:
And had you asked me that question, I would have had a hard time explaining.

Ryan Isaac:
Why?

Taylor Sutterfield:
Well, the problem with is the commissions are confusing even for the people selling the products.

Ryan Isaac:
Even to agents. Right?

Taylor Sutterfield:
Right. And most of the time, it’s just like, you’re going on faith, like, Hey, I’m gonna sell this product, I’m gonna make some money. And that’s basically it, there’s so many different products and every single product has its own tangled web of commissions, so the reason what makes it so hard is there’s so many different products out there, and every single product itself has a whole different commission structure.

Ryan Isaac:
Yeah, it’s tough. Like you said, I’m not trying to disparage people who work in product, financial product sales, because there’s a lot of totally smart, well intentioned, good-natured people and products need to be… People need products, we need insurance. We need investment products. We need loans. It’s nothing wrong with that, it’s just like, transparency and disclosure. That’s the issue. And when you get into products that pay commissions, transparency and disclosure kind of just don’t exist. You don’t get any of that, even for the people selling it, you don’t know as an employee of the big firm that you’re selling and you’re like, I don’t know what I’m getting paid, and there’s tiered systems, but different products, like you said, have different systems, so if you scroll to the bottom of any advisor’s website, you see these words, it doesn’t mean it’s perfect. But you’re on a good track. These are good signs here, these are green flags. Green flags. Okay, so here is… Okay, here’s a list of our red flags, there are more…

Ryan Isaac:
There’s more red flags, the term broker or broker-dealer just refers to a person who is on a pay scale, that is a commission pay scale, meaning they will sell some kind of financial product and receive a commission for selling that product, and what Taylor said, different companies pay different commissions, different products pay different commissions, and when you work in these companies, every month, a product rep will come into your office or do some webinar and come in with a promotion. [chuckle]

Ryan Isaac:
If you’re an employee for a large mutual fund or a large bank or a large insurance company, there will be monthly, quarterly or annual incentives to sell a certain amount of a certain product, and not only pays commissions, but might win you a trip or win you bonus or some other contest. It would be like if I went and got a filling at my dentist’s office, usually there’s a couple types of materials that a dentist can use if they’re gonna fill out cavity in one of my teeth… Don’t hate on me, I’m not a clinician. Okay, but there’s a couple of different types of materials, and usually my dentist can say, Alright, here’s two materials we can use, one’s more expensive one’s less expensive. Here’s the pros and cons of each. What do you want? It’s gonna cost you an extra 50 bucks or whatever it is, it would be like… If there were instead of two choices of materials that there were like a thousand or hundreds and hundreds, and each one of those material companies came in every month to a dentist office and put on promotions.

Ryan Isaac:
And as a patient, you would go in there and they would be like, Oh, we’re putting this one, it is my favorite right now, and you wouldn’t know that the reason it’s their favorite is because if they do it 200 times that month or whatever, then they’re gonna go to Hawaii with their family, like you won’t know these things and they don’t even have to be disclosed, that’s what’s even crazier in the industry is when you’re working with somebody who sells products for a commission, they kind of have to disclose it, but it’s in like a 100-page PDF near the end in some small fine print, and it’s hard, the industry is changing a lot. There’s a lot of change there, but that’s like the nature of broker broker-dealers, that describes the kind of commission-based sales position, FINRA F-I-N-R-A, do you wanna take a stab Taylor what that stands for? I don’t remember. Totally.

Taylor Sutterfield:
FINRA is just a governing agency like the SEC…

Ryan Isaac:
Is it an acronym?

Taylor Sutterfield:
Yeah, I’ve… Don’t ask me what it actually stands for.

Ryan Isaac:
Yeah, I don’t know what the acronym stands for financial something… Probably not federal something. FINRA is the governing body where like I said before, SEC right here, is a governing body over like fiduciary advisory firms, FINRA is the governing body, and so if you see that word, then you know, this might not be a fiduciary. I think we have a question here, go first. I agree with you Jess, Financial Industry Regulatory Authority, that was on a test, I’m sure at some point. Thank you Jess. So if you see the word FINRA, you see the word commissions that might be in the disclosure at the bottom, insurance that can or might not be a red flag and look, you need insurance. So it’s okay to work with an insurance person to get insurance, that’s okay, but life insurance is not a financial plan, disability insurance is not a financial plan, they just can’t be confused with you actually getting planning. And if people are selling insurance as a business model, the commissions selling someone $500,000 permanent life insurance policy will pay so much more money than trying to get a bunch of people to give you like $5000 IRAs to manage, it’s gonna pay you way more money and a lot faster for a lot less work.

Ryan Isaac:
So again, it’s just about incentive, it’s about financial incentives to the people that are doing advice, so like our firm, for example, we consult on insurance, but we don’t make any money from it, we don’t… We don’t make any money from outsource partners, we don’t transact it, and so let’s just want to keep in mind, but it doesn’t necessarily mean that they’re gonna sell you insurance and earn commission, but that’s something to look for.

Taylor Sutterfield:
And to Ryan’s earlier point, we don’t wanna disparage anybody here or say… There’s a lot of great people that sell insurance and it’s a part of a very good financial planning.

Ryan Isaac:
Oh you need it, yeah we refer to insurance sales people, when our clients need to transact something, we say, Oh, talk to this person or this company or this firm, and they’ll implement what we’ve recommended and they get paid their thing, we don’t get paid anything for doing it, and it’s a very clean… Yeah, you need them around, for sure. The term duly registered refers to this is kind of a tricky way for companies to employ advisors who might be fiduciary is like a fee-based. You’ll hear that term fee-based, which it means they might charge you like a transparent fee, but when they’re duly registered, it also means that they can also sell stuff or commissions that aren’t transparent, so that’s a phrase and then registered representative is also pretty…

Taylor Sutterfield:
Yeah, duly registered is kind of like the wolf in sheep’s clothing.

Ryan Isaac:
What do you mean?

Taylor Sutterfield:
What happens there is they get to say, “Hey look, I am held to a fiduciary standard on this side of things,” but what they fail to mention is that they’re only suitability standards on this other side, and so they’ll market themselves, hey, fiduciary fiduciary fiduciary. Meanwhile, they’re gonna give you a ton of recommendations on the suitability side of things, so that duly registered when someone is doing both fiduciary things and suitability at the same time…

Ryan Isaac:
Yeah.

Taylor Sutterfield:
That’s where it’s like they’re trying to get the best of both worlds and use the marketing of a fiduciary advisor, but still be able to sell you and get the commission on the suitability side of things.

Ryan Isaac:
Yep, so…

Taylor Sutterfield:
But again, there are great advisors that do this, but that one is like you really wanna be careful if you see that.

Ryan Isaac:
Yeah, it’s tough. And we’ve just seen this in a big mix, we’ll see someone’s portfolio that has some low-cost index funds, but then there’ll be a handful really expensive, either privately held things or really expensive, actively managed funds to have front and back load commissions on them, and then they’ll have some poorly thought out investment strategy and then a ton of really expensive unnecessary insurance, just kind of that imbalance, so anyway, so here’s a list of words that might be the red flags, here’s a list that’s… [0:19:54.1] ____ So does it… Green flags, and this is kind of more just along the lines of how to start to whittle down who to talk to and maybe make your search a little bit easier. Okay, I took way too long on that, this is what I wanted to is… Is what I was saying like 20 minutes ago, when we start a company, we said, Alright, we need to define how we’re gonna do financial planning, what this even means, and we have to put a definition out there, put a stake in the ground, is that what you say? Flag in the ground? What do you put in the ground? Do you put a stake in the ground or a flag in the ground? I don’t know what you… Do you know the phrase I’m talking about? Put a stake or a flag in the…

Taylor Sutterfield:
Have heard it both ways, Ryan.

Ryan Isaac:
Have you? Sean Spencer. Heard of both ways. So this is kind of the way that we said, Alright, what should financial planning be from… On the left-hand side, it’s kind of like our list of what financial planning should be from a philosophy standpoint, and then on the right is actually how it gets implemented, these are things that we built and invented, so on the left here, you see four keys of a financial planning, how we define what financial planning should be, number one is organized.

Ryan Isaac:
If a dentist asked me what’s the biggest financial mistake a dentist ever makes, I will always say it’s just a lack of organization over a long career with tons of things going on, and you end up making decisions in a silo and not in context of other things, it’s what we call random acts of finance, so number one is getting organized, and I’ll jump over to the thing on the right here, this little periodic table of elements that maybe reminds you of chemistry, this is something that we built to address when we say organized, so let’s put a definition to what organized means, so this table is a list of 12 areas of a dentist financial life that need organization, and not only like one-time organization, you don’t just clean your garage once and then never clean it for 20 years, you gotta periodically move the stuff out, spray it down and clean spider webs and whatever else you have in there. Organization is an ongoing project. It’s just harder, like the first time you ever attempted, and I’m saying the garage thing [0:21:55.7] ____.

Taylor Sutterfield:
Some of these are the garage Ryan and some of these are the kitchen. Some of these… Imagine living your life and never cleaning the kitchen.

Ryan Isaac:
Yeah, that’s even a better analogy, so just we don’t… This is a whole other webinar, we don’t do these right now, but these are areas like investments, how people’s investments are lined up and the risk they’re taking and their allocations and their costs and the diversification. This is their investment life… Part of their life. This here is what we would consider profitability or their income, what income sources is the dentist pulling in? What does that represent in terms of profitability and are those healthy numbers? This would be like the insurance part of a dentist life, again, we consult on this, but we don’t make a penny from any way at all. This middle row is all cash flow, where does all of this income right here, this flows down to the second rower does it all go?

Ryan Isaac:
And there are four places it can go every year, you can save it, SR, savings rate. You can burn it, spend it, burn rate, you can pay you down your debts debt rate or tax rate, taxes, so savings spending, debt, taxes. And then the bottom row is all about net worth, this one, I’ll skip here, over to this one, this one on the right, bottom hand corner, this is what we call total term, This is your magic number, this is your retirement number, this is the metric we use to determine when someone is independent, and there’s some math behind that that tells us why, but these other ones tell us how your net worth is comprised, which matters, because we got liquidity, we’ve got qualified retirement plans, these are like 401Ks, IRAs, things that need to be tax later we’ve got practice or business equity, so private businesses you own, including your practice, and then we have real estate equity, and so the make-up of these four things on a balance sheet will tell us some of the future tax rate in retirement or how liquid they’ll be or is income gonna be passive or do we have to sell chunks of things. Like where is the money gonna come from in the future, that’s the make-up of these four things.

Ryan Isaac:
So when I say organization, this is what we mean, there’s 12 areas of a dentist life that should be pretty meticulously organized, you should have data and all these numbers know what they are, and as they change, which some of them change monthly, daily, some are changing once a year, for example, real estate on our clients balance sheets or practice or business, we’ll update the values of these about once a year, ’cause we’re not gonna go in and update a house value every month, although lately you probably could, honestly.

Taylor Sutterfield:
Yeah, you make a case.

Ryan Isaac:
So getting the self-organized once and then staying on some kind of routine to keep the stuff updated, that’s what organization is, and honestly, that’s the most crucial biggest step in financial planning and financial decision making, because if you’re gonna bring on a partner or pay down alone or buy a building or invest in something, when you have this kind of data at your fingertips to go and look at, your decision is no longer purely emotional, it can be based on math and data, and you have context of the bigger picture, which is like what a lot of people lack when they make decisions. So organize is the first principle, analyze is kind of along the same lines. Once you’ve organized it and you can analyze it and you can see you what are the trends.

Ryan Isaac:
What is my burn rate, my spending. How is this trending in relation to my income number over time, and how is my spending and my income number trending in relation to my net worth down here, that’s how you analyze things, and you can’t do that unless you have the data organized in the first place, number three is decide. And that’s just decision making. So when you have data and you’ve got organization and you’ve got trends, then you have to make those decisions, you have to know, Do I put my kid on payroll or not? Do I do a 401K or profit-sharing or simple or nothing. Do I buy a real estate or pay down a loan or put money into stocks? Should I open a second location? Decisions, decisions, and dentists have to make hundreds and hundreds of them over a career. Many, many small ones, good handful of a medium-sized ones and a few really big ones that can make or break someone’s progress, and then… I’ll tell you… You wanna something there. Yeah.

Taylor Sutterfield:
I was just gonna reiterate the sequential order of this and how important it is, and that’s really like one of the biggest values, and what a financial advisor actually does. If you ask me, what do I spend most of the time doing? It’s one and two, maybe 5% of my job is working with a client and helping them implement and acting, but the vast majority of it is organizing, everything, analyzing it, helping a smart… Make smart financial decisions, and to make one decision, a lot of times there can be hours of organization and analysis that goes into it, and it’s one of the most… We come across people all the time where they have acted and they’re really good at acting, just like you’re talking about a dentist has to make little decisions and act all day every day, but when it comes to your financial life and your financial future, a lot of times the organization, the analysis piece gets swept by the wayside.

Ryan Isaac:
Or it doesn’t happen. Because… Yeah, or it doesn’t happen. People skip the number four… Like three and four all the time, they make a decision and they just act on it and implement it, and the first two never get done.

Taylor Sutterfield:
And then how many times have you brought on a client, Ryan, where they’ve been stoked after the consultation, really excited to get started, you’ve shown them the elements, you’ve explained this platform. And they’re just ready to go in and you’re like, Great. Here’s all of the documents ’cause you have to collect all the information, you have to fill out all the hours of time that you have to take getting organized, and they’re almost upset by the time they finish organizing is like, I can’t believe you have to organize all this data, but I can’t tell you without fail, the amount of times after we’ve done that and we’ve sat down and they’re finally organized for the first time in their life, where we’ll have an hour-long conversation just going through everything that they have… We won’t make any decisions, we won’t do any analysis it all the organization, and they will at the end of it say, this was so helpful.

Ryan Isaac:
Feels so good.

Taylor Sutterfield:
Thank you so much.

Ryan Isaac:
Feels so good, man. It’s literally like living in a house for 15 years and never once organizing the garage, and it’s just stuck, just piles and piles and gets chucked into every corner and stuffed in every covered in shelf and hook, and you finally do it and it just feels… It feels good. Yeah, then you can breathe. And you can move on. Anyway, this is how we define what financial planning is, and the whole point of this little section here, not little anymore, was just to say, This is what financial planning… This is how we define financial planning. So when we say, What does an advisor do, This is like… How we could say instead of just like, Oh, we’ll be there and we’ll talk about stuff, this is the work that’s happening, and this is dozens and dozens of hours of work per person per year at a minimum, just to do these kind of steps. Not including the discussions and the meetings, and the phone calls and texts and emails. It’s a job, it’s a big job that gets done, but when it’s done the right way, the feeling you described Taylor is totally the outcome, so…

Ryan Isaac:
Do you wanna describe this thing? This has to do with accountability, which I think when we go back to these keys and financial planning, acting on something, meaning like you make a decision and then you follow through with it, let’s just say, for example, we get organized and we analyze our income and our cash flow and our savings potential, we decide we’re gonna start saving 20% of our income into various places, we act on that decision, we open some investment accounts, we set up automatic monthly withdrawals, the Big Magic though is like cool we did all this, but can you keep doing it for the next 20 years? Can you keep doing it? You know, it’s like, you sign up for the gym. That’s awesome, that’s a great step. You know you started eating healthier this week, you got your 10,000 steps, but are you gonna do it like next month and next year, and in five years and 10, are you gonna keep this up as a sustainable… So this is something… Do you wanna go through this, Taylor and kind of just… This was from a study that was like on accountability that I think was just really, really cool.

Taylor Sutterfield:
Yeah, this was mind-blowing to me. And obviously, this was a study done by some psychology degree people that are smarter than I am doing all this stuff.

Ryan Isaac:
It’s this big Institute that does corporate psychology and accountability training, but it’s literally, I think called The Accountability Institute or something like that. It’s huge. I had no idea. Anyway…

Taylor Sutterfield:
It was just the probabilities of completing a goal, now what are the chances when you set a goal you’re actually gonna complete that thing. And all of us have experienced this, all of us who set New Year’s resolutions that we literally forgot about two weeks later, I could not remember what the goal even was, but this shows the actual data of what committing to each additional step towards a goal actually does. And I just love, you go over 50% when you bring a third party into the fold, committing to someone else that you’re gonna do something, you’re gonna have a 65% chance of completing that goal, but then this one is just the mind blowing piece, if you have a specific appointment with that person you’ve committed to, there’s a 95% chance that you’re gonna complete that goal, and if we take this and we actually apply it to your financial life or your retirement as a goal, if you wanna have a 95% chance of accomplishing your goal one of the best ways you can do that is find an accountability partner, and we can go on for hours and talk about all the individual jobs and all the individual things that we do on a daily basis with the client.

Taylor Sutterfield:
But when it comes down to the value that an advisor can have in your life and what they actually do and what they bring and the help that they provide, I feel like this sums it up better than anything, it’s just having someone, an objective third party that you can talk to that’s not emotionally attached to your finances and can hold you accountable to your goals and bring you back focused, especially with dentists where you can spend long hours on your feet all day, every day and have so many different worries that you’ve gotta deal with, and a lot of times your retirement and your financial future is so far from what you’re actually focused on the day.

Ryan Isaac:
Yeah. A lot of things on the play and… Yeah, thanks for saying all that. I think if everyone took away just one thing from… The main thing from all this, this isn’t even to say, we’re the only ones who can do this job for you.

Taylor Sutterfield:
No. No.

Ryan Isaac:
This is literally saying like, If you wanna go have a better financial future, just tomorrow, follow these principles, just go get organized financially, build your own spreadsheet, download some apps, call your current advisor and say, Hey, can we start tracking my net worth, am I spending a little closer, and then find someone to have an appointment with, quarterly, twice a year, once a year. I think one stat that we measure a lot of statistics in our own business, when you report on them at the beginning of every year, which I love doing that stuff, but one stat that has been a really consistent statistic over the years has been savings rates.

Ryan Isaac:
The last time I checked, I think average savings rate of all of our clients across the board was a 22 or 23%, we’ve hired, we’ve brought on younger and younger dentists over the recent few years, so it’s going down a little bit as an early stage, but national average saving rates are… They max out at around 5% for… And that’s like 55 to 65…

Taylor Sutterfield:
And we use a different standard where we measure on gross, and the national is on net.

Ryan Isaac:
If it was on gross, it would be even smaller, so the average savings rate of our clients of gross income of our clients is in the low 20s, and it’s across hundreds of dentists and for me, and you’ve seen this too, Taylor. I’ve had enough conversations over through down markets and bear markets and crashes and economic downturns over 15 years that I know for a fact people would not keep saving money through those times or just personal times that they go through hard stuff if we weren’t getting… If we didn’t have this accountability appointment, so if we weren’t texting, emailing, calling, getting on the phone, meeting in person, if we weren’t talking and discussing these things, people would not keep saving through so many different times in their lives and the broader economy as a whole, so… Yeah, if you take anything away from this, go get organized and then set appointments with someone who’s gonna hold you accountable, maybe that’s your CPA, maybe that’s your business manager, your office manager, it could be your attorney, your consultant, maybe you have a financial advisor, if you don’t get someone that’s gonna do those two things for you at a minimum, and I think it’ll make a world of difference, everyone.

Taylor Sutterfield:
That’s a great point, Ryan. It really should come down to the dentist and what they want.

Ryan Isaac:
Totally.

Taylor Sutterfield:
You mentioned earlier, we’re not the only firm, we’re not the only advisors out there, there’s a lot of really great firms and fits for other people in the industry, and it’s really a matter of this question, Well, what do you want? What do you wanna do with your money? What type of investing interests you? And I tell this to people all the time on consults where it’s like, Hey, we’re not… Even within the investing side of things, We take a very firm stance on wheelie in low-cost index fund investing, right, we are not gonna call you with the next hot stock, the next crypto, we’re not calling you with actively managed techniques, it’s very much, “Hey, this is our approach to financial advising and investment philosophy, this is what we do.” And for some people that’s a great fit, and for others it’s not, and that’s an important thing to realize when you’re looking for an advisor and figuring out what you want in an advisor.

Ryan Isaac:
Another way to look at this question is, What do you want to deal with or what do you not want to deal with? That might even be a better question, and you’ll change that answer throughout your life, but the point of this, number two here is just to say, who you end up hiring to be the person to stay in touch with, to organize and analyze your data, to make decisions with, to have your accountability partner. It’s gonna depend on what you want to build. If you’re a DSO builder, you’re gonna want people in your life, you know how to build DSOs. Consultants, attorneys, other dentists, right? So yeah, what do you want? Is just a huge question. And the last thing is timing, this is a really interesting one for me over all the years of having dentists from all walks of life hire us. It’s a question that comes up, has come up a lot, like, when is the right time? And I’ll say our current demographic of dentists over… I don’t know if we’re over 400 now or around there, but our current demographic is like age is around 40 years old, mostly practice owners, although a quarter of our clients are still associates right now, and some of that number is getting skewed a little younger and earlier in the practice, just because we’ve made a push to try to get to know younger dentists more over the last few years and have a service model for them to accommodate them, but the point is, the timing in someone’s life is really interesting.

Ryan Isaac:
I’ve met people who are determined to put things in their life before they need them, so they’ll go like, Oh, we have coaches and we have advisors, that might be overkill, but we’ll need them one day and we’d rather start this sooner than later. I don’t wanna be playing catch up, I wanna get ahead of this, so they’ll hire… They’ll hire teams of people, they’ll hire people in their offices before the collections are really caught up, which can be awesome. That can be stressful. That’s a really personal decision, and then there’s a lot of people who wait until things become painfully obvious and maybe they’ve made mistakes or they feel like they’re just really getting behind, and then they reach out and want to do something, so the timing in someone’s life is gonna be, I think it’s really personality-driven, what kind of… How do you like to typically make your decisions and put things into place, are you typically an early starter, or do you do things like when they’re really obvious and you’re kind of forced to do it. But when you get asked question Taylor, when is a good time you should hire, earlier or later in my life, how do you like to answer that?

Taylor Sutterfield:
Yeah, I think what you touched on is really most important there, and I think it’s a personality fit, because the timing that’s right for you may be drastically different than the timing that’s right for your friend, and some people really benefit from peace of mind early in their careers, and they want that coach really early on, and they’re gonna benefit just from having that peace of mind, and that’s a great reason to hire someone. Right, and then we have other people that come to us and they hire us because they have given up, they’re like, I do not know what to do.

Ryan Isaac:
Totally.

Taylor Sutterfield:
I need help. This thing has just grown way too and it become way too difficult to manage, and if you were to ask me when is the right timing, it’s like if I were to err on one side or the other, I probably would err on bringing it in earlier and getting started earlier, ’cause there’s a lot of things and a lot of headaches that you can avoid.

Ryan Isaac:
Yeah, totally.

Taylor Sutterfield:
We say that all the time, to help people avoid large financial bad decisions, mistakes that they can make along the way.

Ryan Isaac:
If you have any more questions, you want some more resources about this stuff, Dentist Money Show, as our podcast been going for seven years now, every Wednesday, a new episode comes out, you can find that everywhere, and we talk about this stuff all the time, and Dentist advisors discussion group on Facebook, now known as the dentist money Facebook group, a little bit different there. That’s another good resource and always, if you wanna have a chat with this, you can go to our website and dentistadvisors.com, this button here, book free consultation, and it’ll just allow you to book a free call with one of our advisors and you can ask questions and we will do our best to point you in the right direction.

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