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Is your financial plan ready to go the distance?
Have you eliminated all the distractions so you can focus on the fundamentals that drive better results? In this episode of Dentist Money™, Reese and Ryan break down three habits followed by the world’s greatest athletes and describe how the same principles apply to dentists who strive for financial independence at an earlier age.
Speaker: 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, Reese Harper.
Reese Harper: Welcome to the Dentist Money Show, where we help dentists make smart financial decisions. I’m your host, Reese Harper, here with my trusty old co host, Sir Ryan Isaac, and Q in the studio.
Justin Copier: And Q Justin Copier.
Ryan Isaac: The question man.
Reese Harper: Living the dream in the back of the studio. He brings the podcast to the common man. Today, we are going to talk about one of Ryan Isaac’s favorite quotes from one of his all time heroes.
Ryan Isaac: Yep.
Reese Harper: Dr Leonardo Da Vinci. Doctor Da Vinci… Is that how you refer to him?
Ryan Isaac: I mean if he wasn’t a doctor I don’t know who is.
Reese Harper: I was [crosstalk 00:00:55] Leo.
Ryan Isaac: He’s a doctor of all things artistic.
Reese Harper: Leo once said that simplicity is the ultimate sophistication. I feel like that’s a tagline for a cologne or a watch or something.
Ryan Isaac: Could be.
Reese Harper: Simplicity.
Ryan Isaac: It’s the ultimate sophistication.
Reese Harper: The ultimate sophistication. let’s talk about how this concept relates to sports just initially to give people a frame of reference
Ryan Isaac: Okay.
Reese Harper: Let’s talk about a few different athletes and how their process, it just looks easy, and simple, and effortless. Think about your close friend Michael Phelps.
Ryan Isaac: Yeah.
Reese Harper: He’s now coaching, the swim team for ASU.
Ryan Isaac: He is?
Reese Harper: Yeah he’s the head coach of the ASU swim team.
Ryan Isaac: Interesting.
Reese Harper: Yeah, really cool.
Justin Copier: He was the most decorated Olympian in history.
Reese Harper: I remember watching those actually, that was just so cool. Still remember it.
Ryan Isaac: What about your boy Steph Curry? Chef Curry.
Reese Harper: I can’t like-
Ryan Isaac: Serving up a sweet curry dish.
Justin Copier: A little yellow curry.
Reese Harper: I mean what do I do? Bandwagon this? Yes, I love watching [crosstalk 00:01:59]
Ryan Isaac: Splash brothers.
Reese Harper: The splash brothers.
Ryan Isaac: Klay Thompson.
Reese Harper: Yeah.
Justin Copier: Those guys really make it look easy.
Reese Harper: I guess. I mean, kind of.
Ryan Isaac: Steph Curry doesn’t make it look easy, but Klay Thompson sure makes it look easy.
Reese Harper: You know how hard it is, but it’s true. You watch it and sometimes they don’t look like they’re trying that hard.
Ryan Isaac: I got one for you.
Reese Harper: Okay.
Ryan Isaac: Usain Bolt.
Reese Harper: He just lost.
Ryan Isaac: I know, but he would just run and he would just be like-
Reese Harper: Well if he didn’t lose by half a millisecond, yeah.
Ryan Isaac: He would just be like looking sideways.
Reese Harper: He’d slow down and smile and look at his crowd last 10 meters.
Ryan Isaac: He’d do the wavy the hands where it’s like, “Hey!”
Reese Harper: The shooter guns.
Ryan Isaac: I’m like, 20 feet ahead of everyone I just walked.
Reese Harper: I mean, I remember that. Serena Williams. Roger Federer, for all you tennis people.
Ryan Isaac: All the tennis bros.
Reese Harper: Yeah, I mean he’s like a 19 Grand Slam type of guy, you know.
Ryan Isaac: All right, so here’s the thing. We’re going to talk about three things that these great athletes did, or three things that these great athletes do to make their jobs look effortless and how the same principles can help with your finances.
Reese Harper: Can I throw an athlete in there? Like seriously though?
Ryan Isaac: Okay.
Reese Harper: Two.
Ryan Isaac: Yeah.
Reese Harper: From my CrossFit world. We just had the CrossFit Games last week. You have Rich Frowning, okay? And you have Matt Fraser, who now has won two years in a row. Rich Frowning won it for four years in a row, then Matt Fraser for two years in a row.
Ryan Isaac: I appreciate that.
Reese Harper: And these points, as we’re talking about them-
Ryan Isaac: They really relate well-
Reese Harper: Well, they go through so many different types of movements. They were swimming, running, lifting weights, doing gymnastics, throwing heavy things over hay bales. Really. You would have appreciated it.
Ryan Isaac: I did.
Reese Harper: It’s very farmer-esque.
Ryan Isaac: So, let’s bring them into the conversation.
Reese Harper: Let’s do it.
Ryan Isaac: I don’t think it would be appropriate leaving them out.
Reese Harper: Two people will like this.
Ryan Isaac: Yes.
Justin Copier: Ryan and one other person.
Ryan Isaac: Myself and my friend at CrossFit who listens to the show, who’s a dentist. We were saying that there’s a few different points of things that all these people have in common.
Reese Harper: Okay, there’s three essential steps that they go through, and the first one that we want to talk about was how they eliminate unnecessary motion. Okay, these people know how to eliminate the waste. The unnecessary, frivolous, constraining waste in their motions.
Ryan Isaac: Let’s give some examples.
Reese Harper: Let’s do Klay Thompson’s shooting motion.
Ryan Isaac: Okay.
Reese Harper: It’s super simple. It’s almost like he just sets the ball in position right above his forehead, and then really shoots it.
Ryan Isaac: Just like fires.
Reese Harper: [crosstalk 00:04:28] It’s not really Like a big arm motion where he swings it around, and locks it up, and then backs down and then jumps. It’s just like he just kind of has it right above his forehead and then it just kind of-
Ryan Isaac: It launches itself.
Reese Harper: Flies off his hand and it just launches.
Ryan Isaac: Its own orbit.
Reese Harper: It’s this like perfect little arc.
Ryan Isaac: For anyone listening, go to our YouTube channel you need to see the hand motions here right now. Reese Harper’s demonstrating Klay Thompson’s flawless shot.
Reese Harper: So, maybe another one I’m thinking of is, there’s a lot of quarterbacks in the NFL with interesting throwing motions.
Ryan Isaac: Yeah.
Reese Harper: Okay but, Tom Brady has a really like, just cock it and let it go. It’s nothing too exciting, just kind of a little ding dink.
Ryan Isaac: Okay, just a little thing.
Reese Harper: And you’re like, “What just has to happened?” He just threw it and it was really sooth, quick. You didn’t even really notice it.
Ryan Isaac: As opposed to, there’s, Q, if you want to chime in on this, there’s other quarterbacks who do quite a bit of motion, and it reduces efficiency or accuracy, right?
Justin Copier: Yeah I’ll chime in on this. One that comes to mind was Tim Tebow. I mean, when he got in he wasn’t like-
Ryan Isaac: Man, shout out to Tebow, though.
Justin Copier: I mean he is a winner. He was a grinder. But, like when he first got into the league, it was like he’d bring his elbow way down by his hip, and then it would swing down and then back up and then throw and it just took him way too long to get rid of the ball and it wasn’t accurate.
Ryan Isaac: And don’t think calculate that though? I mean in like milliseconds, don’t they calculate some of those extra movements? I mean I’ve seen analysis on this stuff.
Justin Copier: Yeah, I mean, it got him in trouble because there was so much extra wasted motions in his throwing arm, in his throwing motions.
Ryan Isaac: Interesting.
Reese Harper: A lot of great golfers have really boring swings too. I know Q’s big into this. It almost looks like they’re swinging in slow motion, and then the ball just goes a mile. You know where some people are a little bit more wild.
Ryan Isaac: I would say I’ll put you in that camp.
Reese Harper: In the wild camp, man?
Ryan Isaac: Your golfing motion, it’s less boring.
Reese Harper: Oh, man.
Ryan Isaac: I’m like, “Oh, let’s see how this one-”
Reese Harper: There’s a lot going on. I’m kind of a mix between like a toned down Happy Gilmore and a Charles Barkley.
Ryan Isaac: Narles Barkley. You’re more interesting to watch though.
Reese Harper: Yeah, yeah.
Ryan Isaac: It’s a better show. So, how do they do it?
Reese Harper: Okay so, what really happens in these motions is they use their big muscles to generate a lot of speed and power. They’re not using their small muscles. So, a lot of people think shooting a basketball as a matter of pushing the ball into the air with your arms. You know, you’re just kind of thrusting it. When Klay Thompson shoots, he’s doing most of the work with his legs.
Ryan Isaac: Really?
Reese Harper: You don’t really notice it.
Ryan Isaac: The basketball shot is through the legs power? Through the legs? I’m not sports guy, like analyst here.
Reese Harper: Well, we’re a crossfit guy, so technically it is a sport.
Ryan Isaac: I’m all sports. I’m like all sports.
Reese Harper: Just in respect to CrossFit though, CrossFit is a sport Ryan.
Ryan Isaac: It’s the sort of fitness, okay? You’re watching people exercise as fast as possible.
Reese Harper: So that’s-
Ryan Isaac: No, that’s interesting.
Reese Harper: A basketball shot mostly is, I mean, that’s one of the major misconceptions about basketball, is that all of the effort is coming from your arms, where really, it’s a shooting motion that begins from the bottom up.
Ryan Isaac: Interesting.
Reese Harper: It’s your legs, it’s your quads. You know? It’s the calves.
Ryan Isaac: And the further away that you are from the hoop, the more force. Mostly, if I think about standing my driveway with my kids and I’m shooting one from downtown. I’m like really pushing with my shoulders and my arms.
Reese Harper: Yeah that’s common for young children.
Ryan Isaac: And me, and 38 year old financial planners.
Reese Harper: So that-
Ryan Isaac: Hooping in the driveway.
Reese Harper: The same thing kind of happens with a quarterback like Tom Brady, where he’s planting his feet, and he’s using his core to turn his shoulders and hips back and forth. It’s not about this arm motion, necessarily. Most of the power is actually coming from his core, and by the time his arm’s ready to fire, all the power has already been generated with his body, and so, the football comes out of his hands kind of like a slingshot.
Ryan Isaac: Okay, so I can kind of relate to this a little bit. I was golfing with a friend. You can’t call this golfing actually, but I was with a friend who was golfing.
Reese Harper: At Top Golf. Just be clear.
Ryan Isaac: I was hitting balls at Top Golf. I wasn’t golfing with a friend. I was hitting balls at Top Golf. [crosstalk 00:08:31] that’d be awesome. And shout out to Matt, scratch golfer. He was trying to get me to hold still and it was driving me crazy because apparently my wrists are always breaking, and my elbows are always breaking, and my knees and he’s just like, “You gotta just hold still, man.” It’s like all the power’s through a rotating motion through core and legs and hips and my hands look like, you know noodles.
Reese Harper: Yeah, when you don’t use your big muscles to generate the power you’re-
Ryan Isaac: It’s all the little stuff that just starts going crazy.
Reese Harper: Yeah, you’re over compensating with all the other things that are happening and that’s how bad habits get formed. So let’s talk about one of the big muscles of your financial plan. Talked about, you know these-
Ryan Isaac: Segue.
Reese Harper: Yeah, I think it’s important to kind of hit on this. This week, I know we were having a conversation with someone about a couple of the really big muscles in financial planning that had to do with portfolios. Think about that, your portfolio growth, and what actually makes it grow. I think there needs to be more of a focus on a really simple, like we talked about, you know, a really unnecessary motion was kind of one of the things that distracted the athletes from having a really good kind of successful either shot, or throw.
Ryan Isaac: Being consistent too.
Reese Harper: You what to keep it really simple and when you add too many assets to a portfolio, or even-
Ryan Isaac: What’s the most you’ve ever seen?
Reese Harper: Yeah, you see like lots of different types of accounts, or a bunch of different types of funds. Sometimes that misses the point. I mean, the point is that, more things don’t necessarily create better performance. These big muscles of portfolio performance have to do with the percentage of money that you put in different types of assets, not the number of funds you have or the quantity of assets, but the percentage you put in each. And something like a value stock, if you are in a portfolio that you’re going to have for more than 10 years. There’s laws that, you know, have won Nobel prizes that demonstrate that certain types of assets-
Ryan Isaac: Economic laws.
Reese Harper: That you invest in have higher returns than others and just by having small tilts in your portfolio towards certain assets, you can achieve better performance with less effort. So, sometimes I’ll see someone having a bunch of investments in the United States stock market. They might have like nine or 12, but it’s all the same thing.
Ryan Isaac: A lot of times.
Reese Harper: They’re over complicating it by having a larger quantity of stuff. And it’s not accentuating the things that are actually going to give them an advantage, and that was a conversation I was having this week with a friend about portfolio theories. These big muscles of portfolio management are things people just kind of miss out on, that small tilts towards the right asset classes that have the right type of performance over time, having the right tilt towards equity versus fixed income.
Ryan Isaac: The risk, yeah.
Reese Harper: Having less quantity of funds so that you’re not paying unnecessary fees, and taxes, and capital gains taxes, as you try to adjust your portfolio. Those are simple things are like the big muscles, but I think a lot of people get caught up into a lot of the smaller things that probably don’t matter, you know? Adding a lot of investments actually doesn’t really improve your performance. Sometimes it just complicates things, and it is distracting and it makes your whole portfolio have less. It’s just not simple.
It’s complicated and I know it’s kind of that first quote we shared, so. On top of that, there’s a bigger conversation to have about things that impact your net worth more than your investment returns, which you started talking about. Those are these really big muscles to flex and if you don’t engage them properly, so to speak, you’ll rely too heavily, I guess, on your investment portfolio to accomplish goals the same way Tim Tebow is relying too much on his arm and not really on his-
Ryan Isaac: The low elbow.
Reese Harper: Right?
Ryan Isaac: The Low bow.
Reese Harper: Let’s talk a little bit about some of those big picture things that they’re not necessarily about the portfolio but they really are the things that drive returns.
Ryan Isaac: Yeah, well there’s two things there. I mean, for a very long time, our industry, the financial services industry, has just put so much emphasis on the portfolio return. It’s all you hear in financial media, turn on the TV about it, you know, or products in general. And it’s interesting. You could have a really killer portfolio, but if there’s not enough money going into it and not a high enough savings rate, it doesn’t matter. And it’s interesting, of the 12 areas of personal finance that we measure monitor for our clients, the elements, you know.
And there’s portfolio design, there’s risk, there’s insurance, there’s taxes, there’s all sorts of things that we’re measuring, but one of them if it’s not done well, the other stuff won’t be doing as well. And if it’s done well the other stuff will and it savings rate, you know? Someone’s savings rate, if it is being maintained at a high enough percentage over the course of their career, and that’s going to be one of the main, you could call it the big muscles, one of the main primary drivers of how someone’s going to end up one day. And if it’s too low, I mean, you’re just going to have a problem. And it’s funny how it affects so many of the other little muscles. So for example, this just isn’t-
Reese Harper: Before we go into this, Q do you want to define what a savings rate actually is? I think sometimes we skip over that.
Ryan Isaac: Pause to define savings rate.
Justin Copier: Yeah, so it’s just the percentage of money, the percentage of your total personal income that you’re saving.
Ryan Isaac: Categories would include retirement savings, kid’s savings, extra debt payments above and beyond the minimum required debt payments. Those would all be [crosstalk 00:14:31].
Justin Copier: So, you just take your total quantity of money that you’ve saved for the year and you divide it into your annual income. And then you get a percentage, and that percentage is what we’re referring to as a savings rate. Okay? Anyway.
Ryan Isaac: Yeah, well what I was gonna say is that a contrast between the bigger muscles and the smaller muscles in someone’s finances, is one of the smaller muscles that we tend to go to immediately when there’s financial pain, is the budget, and the spending, you know? We kind of feel some pain for a while and then we just had enough and so we just go to the budget and we just, you know, strip out as much as we can and we get like really mean about the budget, and it’s like a crazy diet that only lasts a couple months. You know, you just get tired of it and it doesn’t last, whereas if you just focused on the big muscle of savings rate a little bit better, and you made sure that not only it was high enough but it was automated, you know? And not spending too much money is part of that but, when the savings rate’s healthy and like you’re using that big muscle of your financial plan, the spending kind of just is okay, you know? It is what it is and it’s fine if your savings rates high enough, so-
Reese Harper: That’s good comparison.
Ryan Isaac: That’s one of the big muscles of financial planning.
Justin Copier: Yeah I think-
Ryan Isaac: The quad, is that the quad, or the glutes?
Justin Copier: It could be the quad I think, yeah. That’s in the basketball shot, you know? The basketball shot of-
Ryan Isaac: Let’s call the savings rate the posterior chain of financial planning because it’s just such a powerful part of the body. Like, so much force and power and energy comes from posterior chain.
Justin Copier: Okay, so it’s the posterior chain rate, from now on.
Ryan Isaac: Okay, yes.
Justin Copier: That seems like understandable for the common man.
Ryan Isaac: Yes.
Justin Copier: And woman.
Ryan Isaac: Okay, so look at these, these other two that I wanted to just talk about where the right mix of all your assets, like the right mix of real estate, cash, retirement plans, and after tax investments, that mix is really crucial. And having the right mix of assets gives you a lot more flexibility during retirement and it makes your net worth grow a lot better. And that seems like a really big muscle that people kind of miss out on. They think about some of the smaller muscles, which I’ll hit in a second, but they don’t think about that big muscle, you know? You mentioned the savings rate, which is a big one, but this mix of assets is the second one that I kind of wanted to hit. And the third one that I think is really important is looking at your practice profitability as a real driver of the big muscle, you know?
Rather than looking at your collections, as kind of the signal of whether you’re running a good business, try to look at your overall profitability. After you get paid a fair amount, you know, meaning if you take your compensation and you pay yourself like an associate, take your production, and just say, “I’m gonna pay myself like an associate.” That’s part of your overhead, you know. You’ve got to have a business that you could replace yourself with, and look at it and say, “Okay, I’m getting paid fairly for the work I’m doing as a dentist and my profitability is what’s left over.”
Justin Copier: Yeah what’s left.
Ryan Isaac: You know if there’s only 5% left after you get paid fairly for the work you’re doing as a dentist, your business isn’t really that profitable. It’s barely worth owning, you know. Four, three, you know. I guess it could be worth owning if you just really enjoy doing a lot of extra work for not much more money, but you want to be able to… like maybe it’s just a fulfilling path here, okay?
Reese Harper: Of course.
Ryan Isaac: But, ultimately you’re trying to get that profitability to a point where it’s worth having gone through all the effort and energy and so, if your profitability is too low, all of the fuel that’s going to feed the mix of assets and your savings rate. You know, it’s just, it’s just not going to high enough. You’re not going to have enough fuel feeding this engine, and so, I think a lot of people just kind of discount taking their profitability seriously, and they don’t really know how to measure it, you know?
And it’s not easy because financials sometimes are a wreck and it’s hard to get them dialed in, or the way you’re looking at your financials, you’re looking at profitability and measuring it like, “Well, I’m getting 40%. My overhead’s at 60, I’m at 40. That’s great.” Well, does that really tell the true story of profitability? Like in your market, where you’re at, what percentage would you have to pay an associate to do that production and your profitability is only what’s left over. It’s not including the work that you’re doing as a doctor for-
Reese Harper: Yeah, if you just own the business, not doing the clinical work.
Justin Copier: So what is, just real quick, what is a good target for profitability?
Ryan Isaac: Man, I think that if you were able to hit a 20% profitability in a private service company, like a dental practice-
Justin Copier: After paying the provider.
Ryan Isaac: After paying yourself, you know, whatever 30% for your work as an associate. That’s really profitable. So some people might be thinking, “Well, I’ve heard 50% overhead is really good.” or, you know, there’s some numbers that they’re probably floating through their head and I think what you want to think about is after you get paid the profitability is, you know, it’s probably going to be between zero and 20 to 25% at its peak. And if it’s getting much higher than that you’re probably putting too much stress on-
Justin Copier: You’re not paying the associate enough.
Ryan Isaac: Yeah, you’re not paying the associate enough or maybe your staff’s not being compensated fairly or you’re not marketing properly. Even if profitability were at 15% and, above and beyond what you got paid as an associate that’s still be a healthy practice. I would say, 20 would be a killer target for most people and 15 would be, you know, a place where you should feel okay about it, and once it starts getting below 10 and getting down into the single digit range, it’s probably just a problem, so. Does that help?
Justin Copier: Yeah, for sure.
Ryan Isaac: Let’s talk about the small muscles that I think kind of get brought up in the financial plan a lot. One of those is, we talked about investment returns all the time, you know. So, everyone’s kind of always focused on what the return was, you know. And that is important, but a big return on a small savings rate is still not as good as a small return on a big savings rate.
Reese Harper: Yeah, you know and I was having a conversation, recently about something you don’t think about that often. you know, when we talk with clients or, you just kind of think of your own situation. What do you want your investments to do over your career? There’s kind of two ways to think about it. There’s, “What do I think this asset should do because it’s what it does?” and “What do I even need?” You know? and I was talking to a specialist who, you know, above average income. And we got into that topic about different investment vehicles and which ones have best returns and higher returns. And then I asked “Well what if it turns out, on your income and your savings rate, what if it turns out, the rate of return you even need to retire early and wealthy is like 5%? What is it turns out that it’s really low? Would it change the way you think about the investments that you’re looking for?” And it was kind of an interesting way to think about it because he’s kind of like, “Yeah, yeah. Like why would you take the risk if I don’t need to take the risk?” And so, investment returns, I mean, we call them a small muscle. I mean, you know, they drive a lot of stuff but I think there’s just interesting ways to look at it. What if you don’t need 12% to retire one day?
Ryan Isaac: And that’s not to say that the small muscles aren’t important.
Reese Harper: No, they’re stabilizers.
Ryan Isaac: It’s not like Klay Thompson’s hands aren’t important in the basketball shot.
Reese Harper: No, they call them stabilizer muscles. When the big ones are doing the right thing and they’re like functioning the way they’re supposed to and doing the job they’re supposed to, the little ones make up those little differences.
Ryan Isaac: Yeah, I think by simplifying all of your financial planning down to just saying what returns did you get, it really doesn’t help you quantify whether you’re in a good plan or not.
Reese Harper: Well no and asking that question alone as the primary question about your progress, I mean it’s going to derail you. You’re going to make some poor decisions if that’s how you’re measuring your progress.
Ryan Isaac: Yeah, a few other quick ones that I think are small muscles: interest rates, those are small muscles that probably don’t really affect your financial planning quite as much but they are important, like an interest rate on the loan. I think that’s treated often as like a really, really, really important, big muscle. Like what’s your interest rate on your practice loan? When in reality that one’s probably not near as crucial as your business profitability, or your savings rate or your mix of assets. It’s important-
Reese Harper: Yeah, you don’t ignore it.
Ryan Isaac: We’re not saying you just get bad investment returns and get high interest rates. We’re saying, it’s easy to get distracted by those small muscles and focus on them, whether it’s you know, maybe the cost of what you’re paying your CPA, or the cost of your bookkeeper, the cost of your TPA for your 401k plan, or whether your CPA lets you deduct your car not, you know? Those those things are kind of small muscles, they will affect your plan.
Reese Harper: But not if the big stuff isn’t working.
Ryan Isaac: Yeah, so we’re just kind of encouraging people like focus on these big muscles like these great athletes do, eliminate all these unnecessary motions and it really does have a big impact, so.
Reese Harper: let’s go to a commercial break.
Ryan Isaac: let’s do. I’m parched.
Speaker 4: Hi this is Reese Harper, I’m the host of the Dentist Money Show and CEO of DentistsAdvisors.com. I want to take just a minute and explain why DentistAdvisors.com is different than your average team of financial advisors. We help you plan, invest, and retire better using a unique set of tools you won’t find anywhere else. First, we use our proprietary methodology called Elements to assess your financial health. The Elements framework enables us to give you data-driven objective advice based on a comprehensive picture of your personal and practice finances. We maintain that picture in a custom dashboard that tracks all your assets, debts, and accounts so you know what you’re worth anytime and anywhere. And because we work with dentists and specialists, we can leverage our industry expertise to weigh your progress against your peers. We are the premier wealth management firm for dentists and specialists, and we’re ready to put you on a more predictable path to financial independence. Start now by booking your free consultation today at DentistAdvisors.com. Thanks again for listening. Now let’s get back to the show.
Reese Harper: And we’re back from break. Welcome back.
Ryan Isaac: Let’s get into number two. The number two habit that we really think is important in both athletics and it’s really important in your financial planning, and that’s getting feedback from a limited number of coaches. Now Bruce Pearl, he’s the head basketball coach at Auburn. Go Tigers, for all of you out there.
Reese Harper: Yeah.
Ryan Isaac: He was asked about his philosophy on coaching individual players, and he said “If you talk about teaching a complex skill, I think two things. Number one, obviously repetition.”
Reese Harper: Right, okay.
Ryan Isaac: “Number two, I don’t want too many voices in their ear. If one coach is teaching shooting. I don’t need all the other assistants offering an opinion about what that guy should be doing as far as a jump shot is concerned because he’s gonna get confused. Let them have one voice to listen to and then provide some clarity.”
Reese Harper: That’s really important man.
Ryan Isaac: Yeah, it’s interesting because you just kind of assume that the more feedback, the better. So, because different people know so many different nuances, the more information you get the better and I think you actually see this a lot when you go… Have you ever been boating before and tried to learn how to water ski?
Reese Harper: I was just thinking of that and I was thinking about golfing too.
Ryan Isaac: You got a boat full of people. You’re bobbing around out there.
Reese Harper: If you’ve ever tried to teach like a kid, or a non like, wait… If you’ve ever been in a boat and tried to learn how to water ski, or wake board, or tube in Ryan’s case. If you’ve ever tried to learn how to tube-
Ryan Isaac: Trying to hold on man, it’s really hard.
Reese Harper: There’s a lot of feedback coming from the boat.
Ryan Isaac: A lot of people in the boat.
Reese Harper: You can’t even really hear them.
Ryan Isaac: And you know, everyone wants to get in the boat, no one wants to wait on the bank and so, everyone’s in the boat. The boat’s usually too full.
Reese Harper: Yeah, and there’s a lot of opinions. You’ve got a first timer floating out there in the water trying to get up on skis, and the there’s just like a barrage of like advice.
Ryan Isaac: “Let the boat pull you up!”
Reese Harper: Yes.
Ryan Isaac: “Push with your legs, don’t bend over!”
Reese Harper: “Pretend like you’re sitting in a chair.”
Ryan Isaac: “Don’t use your arms.”
Reese Harper: “Slack with your arms, keep them bent”
Justin Copier: “Stay facing forward, relax.”
Ryan Isaac: “Don’t turn the board too fast. Keep it sideways until you’re-”
Reese Harper: It’s frustrating to be in that situation because you can’t process all the information perfectly. I find that to be the case myself as an entrepreneur. I like to seek advice from a lot of people, and after like one day of getting like three different opinions that totally conflict about what I’m supposed to do. I just go home and I’m like, I don’t even know what to do, because no one agrees.
Ryan Isaac: Well first you stop in one of our offices. You’d be like, “Can you clarify these three opinions for me?” And we stare at you.
Reese Harper: You’re like like, “Well, I’m kind of busy right now. So I don’t know.”
Ryan Isaac: So in terms of a financial plan, right? You might be thinking, it’s not like I’m going to hire two CPA’s.
Reese Harper: Yeah, that’d be dumb.
Ryan Isaac: Or I’m gonna hire two financial advisors at the same time, right? That may be true but it’s entirely possible and very likely, and it’s happening in most of your lives, that you might hire someone like a CPA, and then listen to someone else, like a friend who just saved a bunch of taxes by setting up some separate entity.
Reese Harper: Maybe.
Ryan Isaac: That theoretically may have happened.
Reese Harper: Yes.
Ryan Isaac: The story was that he saved.
Reese Harper: Yeah and then you kind of just feel confused by the advice you got from your CPA. You just feel like there’s a disconnect there. Like I’m getting one person says they didn’t pay any taxes at all last year, and then someone else says that they’re getting killed. I’m getting killed in taxes. I just paid a ton. Like how is someone paying nothing? And you might kind of get to this place where you feel like you’ve got to get more, and more, and more, and more opinions and sometimes that can cause you to just have a really really inefficient financial plan. And you’re not pursuing anything consistently. So, you might hire a financial planner and then listen to your friend who says to invest your money one way. And you’ve been told to do it a different way. And now you’ve got this conflict.
Ryan Isaac: It’s really confusing. I mean it’s confusing.
Reese Harper: We recommend, it’s best to stick with one advisor per specialty. Accounting, planning, marketing, legal, and not let a bunch of competing voices pull you in a lot of different directions. Now, the caveat I will put to this is, make sure that the one advisor you pick is the best person for that specialty, right? You really need to make sure that you don’t just hire like a shooting coach who this is his first job, and you’re like “Well he’s my first coach and it’s the guy that was just there so I’m not going to go against what he says. I’m going to be a good athlete and just listen to my coach.”
Sometimes your coaches an idiot, okay? And you need to leave him and get a new coach, okay? What we’re really saying, the nuance here is just don’t have three coaches at once telling you what to do. If you don’t like the way your coach is coaching you and it’s not getting you the results you want, get a new coach. But, just don’t have three at the same time. I do want to make sure people fire the poor shooting coach, because there are some, whether it’s marketing or legal, or financial planning, or accounting, sometimes there’s some really bad coaches, and it’s just as important to pick up and leave a bad coach, as it is to stick with a good one.
But if someone’s experienced and they are specialized in that area, and they are making a long concerted effort, and they have a track record of success-
Ryan Isaac: Quantify those things before you listen to someone else or you fire the coach, but.
Reese Harper: To kind of finalize this area, there’s a Bobby Jones, he’s of your favorite legendary golfers.
Ryan Isaac: Probably one of my favorite golfers.
Reese Harper: He said, “You swing best when you have the fewest things to think about.”
Ryan Isaac: I can’t relate but, yeah.
Reese Harper: You swing best when you have the most food to eat.
Ryan Isaac: Honestly, that’s just a good time at Top Golf.
Reese Harper: Yeah, I get that. I respect wings and nachos and I’ll swing how I swing. I don’t really care.
Ryan Isaac: Let’s go to the third item.
Reese Harper: Okay.
Ryan Isaac: The third item in financial planning, and a way to make progress that has to do with these athletics, that we talked about, is deliberate practice. And there’s a book by a psychologist named Angela Duckworth. It’s called Grit.
Reese Harper: That’s sitting on someone’s desk right now.
Ryan Isaac: It’s probably on Q’s.
Justin Copier: Its on my desk.
Reese Harper: It’s on yours. Justin Q’s.
Justin Copier: It’s a good book.
Ryan Isaac: I just saw that.
Reese Harper: Q’s been pounding through that. He’s one one that actually came up with this quote too, which I like. The premise of the book is effort to count twice as much as talent, which makes me feel good. So if I just keep working like 14 hours a day.
Ryan Isaac: Yeah, just double your hours.
Reese Harper: I’ll be able to keep up with most people.
Ryan Isaac: Double your hours and the talented entrepreneurs.
Reese Harper: So in her research she analyzed how the best athletes they use their practice time. She said, “It’s not that experts log more hours of practice. Rather, it’s that experts practice differently.” And she says they do the following: They set a big stretch goal. They relentlessly work hard towards that stretch goal, and they seek feedback on how they’re doing, especially when what they’re doing is wrong, so they can fix it. They want to know what it is they can fix.
Ryan Isaac: So stretch goal, it’s like, this is probably going to take a while, and it’s possible we don’t even hit it. It is kind of a big one.
Reese Harper: Yeah, she talks about Katie le Dechy, who’s this kind of this major Olympian that, last Olympics she blew away the competition, set a bunch of world records, and she talked about how Katie set a goal to be the best in the world. And then she practiced every day, and she’d even race against male swimmers to give her more of a challenge, and just consistent practice every day was the way she went about doing it, right? And I’ve got some ideas and how this applies to a dentist’s finances and setting a stretch goal. How would you kind of look at a stretch goal for a dentist as it relates to financial planning?
Ryan Isaac: It would be, I want my network to grow as much as my spending every year. That’d be a good benchmark, you know? If you can do that, if you can grow your net worth every year by as much as you spent, you will have a good retirement at a normal retirement age. Like that’s an average pace to have a good retirement at a normal age. But you might say, “And that might be a stretch though”, you know? Maybe you’re spending like twice as much as your net worth is growing. So, you know-
Reese Harper: Early on in your career to… Ryan’s saying, on average over your career.
Ryan Isaac: A couple decades. But early in your career, it probably won’t grow quite as much. It might be like half of what you spend or worse.
Reese Harper: Yeah and then later on in your career, it might be double, or maybe even triple.
Ryan Isaac: But it could be a stretch goal because growing your net worth is a product of a lot of things. You have to have better spending habits, you have to have better savings habits, your assets have to grow. Your debt has to go down, you know? So there’s, there’s a lot of-
Reese Harper: It’s a good objective measurement. Kind of like Katie le Dechy’s swim time on her laps, you know what I mean? Subjective measurement. You know that if your net worth grows by the amount that you spent in a year, you’ve made some measure of progress.
Ryan Isaac: That’s good measurable progress.
Reese Harper: Yeah, I think that Ryan’s kind of getting to the point, if you think about it in a normal careers like 20 or, you know, 25 years, 30 years 35 years. If your net worth’s growing by at least what you spend in a year, then by the time you’re done with your career, you should have probably 30 times what you spend in the year piled up in net worth, which is sufficient to-
Ryan Isaac: Yeah, that’s a good, that’s a good retirement. Really good retirement. So, you know, you need to start with that stretch goal. The stretch goal could be that net worth goal that in financial planning that’s primarily the real measurement. And then there’s a lot of little things you can do, like practice on a regular basis that can get you there. Not to be self-serving, but you could listen to the Dentist Money Show every week.
Reese Harper: You could. You could just download it on iTunes. You could go to dentist Money… No. DentistAdvisors.com slash listen.
Ryan Isaac: Yeah, you could do that. You could calculate your net worth each quarter. You keep a personal financial statement that let you kind of measure how much your net worth was changing each quarter.
Reese Harper: And then track your spending and compare those two numbers after 12 months.
Ryan Isaac: Yeah, you could take a look at all your insurance policies for cost, and you could figure out how to bring the cost of those down over time, because you probably have a ton of insurance premiums that keep rising over time. You could look at all of your tax deductions with your CPA, on a regular basis like be proactive and reach out and say, “I really want to make sure I’m taking advantage of all the possible deductions I can get this year and am I?” you know, “What can I do? What kind of information do you have on me that I think you have and what do you really have?”
Have more of a conversation, sort of like putting all the onus on the CPA and being like “I hope you’ll figure it out.”
Reese Harper: Here’s the thing too, that this whole section is about being deliberate about that. These are all great tips, you know? But the reality is, that’s a lot of stuff that, A) a lot of people don’t even have an interest in, B) there’s no time, C) not really sure how to do that stuff. So being deliberate too might mean bringing other people in your life to do that stuff, you know? You might have to pay your CPA, or bookkeeper, your accounting person more time during the year to spend more time analyzing stuff for you. You will have to go hire a financial advisor to track your net worth, to track your spending, to measure it against your personal spending, and the progress you’re making.
Ryan Isaac: You have to get like a marketing consultant that actually helps you, and knows how to grow your new patients.
Reese Harper: Yeah being deliberate is-
Ryan Isaac: Or an employee who can really actually have the competency to do that.
Reese Harper: Yeah, I mean it’s funny when you think about like… I think about some of these athletes who train and people I’ve seen who are training for a certain goal, especially in like sports or something like that. And I guarantee Katie le Dechy’s journey during training was not always fun. Being deliberate is not always fun.
Ryan Isaac: Yeah, she in this book that you guys are talking about. It talks about how she actually blacked out one time, mid race and somehow kept going and still won the race but yeah.
Reese Harper: It’s in the grind.
Ryan Isaac: It’s a grind and you end up turning some of these things you know that maybe used to be fun or interesting into a job, you know, at some level, but it’s part of being deliberate, you know? You just have to understand it’s going to cost something in time or money or effort or, you know, energy and, if you’re not deliberate and you just say like, “Yeah those are good ideas, those are the things. I should do those things.” You’re not going to because they’re painful.
Reese Harper: Yeah, I think if you can take all these little actions to make progress like Ryan said, you might have to outsource some of this and get the right coaches in place and get the right leadership in place in your life to help cover you in all these areas. You want to get feedback from those people, or feedback from yourself. Use your net worth as a measuring stick of your performance. Use that net worth has a way to determine am I really making progress towards my goals.
That’s the easiest way for us to look at a client situation and just say “Man, they’re struggling”, or “Man, they’re doing great.” And we can we look at that every three months for every client and our whole clientele and I know, of the clients that I work with personally, I know exactly what percentage of my clients net worth are moving. I know which clients are struggling, and I know which people have had repeated periods of net worth decline, or repeated periods of network growth that’s above and beyond their spending. I know, and I’m worried about that. Like I’ve taken that responsibility on myself to be concerned with that measuring stick and I’m reaching out, and expressing concern, and asking questions and, I just think that in most cases, most people’s financial advisors don’t really have a great handle on a dentist’s complete net worth picture.
They’re not tracking their practice debts, they’re not tracking their practice valuation, they’re not tracking your collections, they’re not understanding your profitability. They don’t know your savings rate real well. They don’t know your spending real well.
Ryan Isaac: Which is a function of… A lot of people are smart enough, but it’s a function of business model and processes.
Reese Harper: Yeah, totally. And so I just think you need to use that net worth as a measuring stick, and if you’re not, it’s really hard to know if you’re making progress or not. It’s like I just worked for five years, what happened?
Ryan Isaac: Collections could be growing.
Reese Harper: Your practice could be worth more money.
Ryan Isaac: It could be worth more money. You could see more cash in the business checking, and those could be, maybe false indicators that things are going well. But your net worth could be stagnant for years.
Reese Harper: Those are small muscles that you could be exercising, and it’s not [crosstalk 00:39:34]
Ryan Isaac: Quit going to the gym and all you do is like curls or tricep sets. [crosstalk 00:39:38]never squat.
Reese Harper: You’re describing my gym experience.
Ryan Isaac: You never squat. Like no, you don’t ever squat, and you just go do curls.
Reese Harper: It’s all about the bis and tris.
Ryan Isaac: They call it the pretty muscles.
Reese Harper: It’s like arm day every day.
Ryan Isaac: It’s all about the bis and tris.
Reese Harper: Deadlift and squat in there, okay? So, let’s kind of wrap this up. I think making things look easy as an athlete requires a lot more effort than making things look hard.
Ryan Isaac: That’s what’s interesting, right? Simplicity really is a result of lots of energy and effort and all these things kind of coming together, and it really is the most sophisticated form of an activity is quite simple, right? And you have to work at it, but one day all your performance will take off and I really think that that’s kind of the point of today’s podcast. To kind of wrap up, I think I just want to repeat these three items: We said eliminate unnecessary motion in your financial plan, right, and use your big muscles to improve that performance. Second, we want to limit the number of coaches to kind of one per discipline, one per competency so you aren’t distracted by a lot of competing voices. And three, engage in deliberate practice where you’re setting a stretch goal, you’re taking really calculated action to get there and you’re actively seeking feedback from people around you.
Reese Harper: Yeah. And at some point, you will make building wealth look simple. That’s the point.
Ryan Isaac: Remember that quote. Simplicity really is the ultimate sophistication.
Reese Harper: Well thanks for going through that guys. Everyone, thanks for listening. If you’d like to leave any questions or comments you can find this episode on the website DentistAdvisors.com slash listen. If you want to call us, Q, what’s our phone number?
Justin Copier: 833 DDS plan.
Reese Harper: 833-
Justin Copier: You caught me off guard there.
Reese Harper: 833 DDS plan. Just making sure you’re with us here. And if you have any questions, or you’d like to take a minute to talk to us. You can call the number 833 DDS plan, or you can go to our website DentisAdvisors.com, click the link at the top to schedule an appointment on our calendar and we’d love to hear from you.
Ryan Isaac: Carry on.Tracking Progress