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Will Your Personality Cost You a Better Retirement? – Episode 19

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According to financial expert Dave Ramsey, “Personal finance is about 80 percent behavior and only about 20 percent head knowledge.” So next time you squander your money or make a bad investment, you probably shouldn’t blame it on your decision to forego a masters in finance. We all have personality traits that make us vulnerable to poor financial decisions. In this week’s episode of Dentist Money™, Reese and Ryan explore nine personalities types common among dentists and discuss how to keep behavioral tendencies from compromising your retirement.
Tune in for the best advice on financial planning for dentists.

Podcast Transcript:

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 cohost, Sir Ryan Isaac.

Ryan Isaac: Sir. Hi Reese, I appreciate you always calling me sir. Always. I’ve never been to England or met the Queen, but yet you insist on calling me sir. Thank you.

Reese Harper: Yep, it’s sort of become my thing. For some reason it just feels right to give you a formal title. Let’s just go with it, and we’ll keep seeing how it feels over the years. We might have to switch it up. We’ve got a great show planned today; we’re going to talk about one of my favorite subjects: the relationship between your personality and your money.

Ryan Isaac: Yeah, we’re going to talk about how different personality types affect the way you interact with your own finances. Some of the research and some of the things we’re going to talk about today come from research done by two guys, Russ Alan Prince and Brett Van Bortel.

Reese Harper: Yeah, they wrote a great book, and there’s been a lot of research done on financial personalities, and we want to try to take what we’ve learned from research and surveys and all of our experience working with dentists combined with some of the more generic research that’s been done across the whole population and kind of figure out some descriptions of dentists that we’ve seen and some examples of what they have gone through. I think it will be a really interesting conversation.

Ryan Isaac: Yeah, so to start it off talking about personality—sometimes it’s known as archetypes.

Reese Harper: Yeah, an archetype. It’s kind of something that you hear in the movies or in scripts or something, right?

Ryan Isaac: Yeah so in storytelling you have these characters—common ones include the hero, right? Someone who’s going to come save the day.

Reese Harper: Love the hero.

Ryan Isaac: You got some favorite heroes?

Reese Harper: Yeah, like Superman, William Wallace, Luke or his presumed daughter. Great ending.

Ryan Isaac: You have a villain; you’ve got your Captain Hooks, your Vaders, your Wicked Witch of the West, Ursula from Little Mermaid—very familiar with that one.

Reese Harper: You’re very familiar with Little Mermaid because you have four girls.

Ryan Isaac: Another character you find in these stories is a sage—a wise old sage. He’s levelheaded. He’s the person the hero goes to for advice, you know like Yoda or Jiminy Cricket. Speaking of Yoda—Reese, do you wanna? No?

Reese Harper: Mmm. [Yoda noise] I’m not going to do a full pronunciation of it, and I wouldn’t even line myself up as a Yoda equivalent, but I do enjoy him as one of my heroes.

Ryan Isaac: He’s one of your favorite sages. Okay, you won’t do the Yoda; I can respect that. We’ll keep it professional. Okay a few more characters—we’ve got the jester of the story; there’s always a lover—self-explanatory. And you have a knight who’s the chivalrous willing party to sacrifice and protect everybody.

Reese Harper: That’s why I call you Sir.

Ryan Isaac: That’s exactly why you call me Sir every time. So those are typical archetypes or personality types in a story. There’s a bunch of these, and they are used to describe different people in a story. So we are going to talk about how these different financial personalities can be categorized, and how their behavioral tendencies can actually influence their wealth.

Reese Harper: Yeah, I love this concept. And to kick it off, I’m going to share one of my favorite Dave Ramsey quotes. He said, “personal finance is about 80% behavior, and it is only about 20% head knowledge.” I like that quote. I love what it says, even though I’m confused as to what other kind of knowledge besides head knowledge there is. Most knowledge resides in your head, but I get what he’s saying. The principle of that quote is solid, and that should be encouraging to all of us because it means you don’t have to have a masters in finance to get the most out of your money. I think he’s talking about good habit development and recognizing when your personality is pushing you away from those habits. If you can push back against those negative behaviors, then you will be in good shape.

Ryan Isaac: Okay so there’s nine of these personality types that we’re going to talk about today.

Reese Harper: Yeah, and before we get into these I want to say one thing. There’s no such thing as one personality for one person. I don’t believe in stereotyping or putting people into boxes, and no one is going to fit the description of a personality perfectly. But hopefully you will see yourself in some of these personalities, and you can use them as a way to understand your Achilles heel when it comes to finance. And in a perfect world, your advisor would understand your tendencies too so he can protect you from yourself when needed.

Ryan Isaac: That’s a good point actually not only understanding who you are and how you interact with your finances, but aligning with the other people that you work with so it’s most efficient and most helpful.
Reese Harper: In other words so they can give you pushback when you do something stupid.

Ryan Isaac: We will move quickly through these since there’s nine of them, but for each of these personality traits, let’s give some examples of dentists that fall into the category and maybe provide a few tales of caution for each one.

Reese Harper: Love it—so we’re going to do a description and some examples, some caution, and I think that will help people know what to look out in themselves. You’re probably going to be more than one of these; so don’t look for the one. I know I have like nine of nine. It’s probably common to have at least two or three. So listen for what ones you think most correspond to you.

Ryan Isaac: That sounds fair. Number one: we’re going to start with the family steward. This would be a dentist that’s focused on taking care of his family. And you might say that would describe everybody. It’s not quite that simple. He’s also characterized by being a very conservative spender in the practice and at home. Typically he’s not super knowledgeable about investments and investing.

Reese Harper: Yeah, the family steward is the dentist that puts a lot of emphasis on paying for his kids’ education, having a nice big home for family gatherings—a big great room and open concept. And making sure he passes on plenty of wealth to his kids. This dentist is also the dentist who wants to turn over his practice to one of his kids for screaming deal—we see this a lot. Well, he’s worked hard in dental school; I’m going to get him started. So by getting started you mean you’re giving him the practice, and he’s not going to pay you for it?

Ryan Isaac: Well, he’ll pay you later when he supports you at like age seventy.

Reese Harper: Because you ran out of money. So sometimes this results to making sacrifices in your personal retirement, and it gives your kids a crutch because your son or daughter that’s coming into the practice never learns what it’s like to go through what you went through. My advice to you Mr. Family Steward (and Mrs.) Okay we’re going to use Mr. and he most of the time here even though 50% of the dentists that are graduating right now are female. We get that; we are not sexist. We just don’t want to be distracting between bouncing back and forth between he and she. So my advice to the family steward is to put the oxygen mask on yourself first; make sure your personal finances are strong enough before you start paying for kids college and spending a lot on gifts for your kids and taking them on trips, or giving your practice away for a steal. We see it and it hurts a lot of people. All right, moving on. That is his caution, and that is his stereotype.

Ryan Isaac: Number two: we’re going to refer to this one as the independent. This is the dentist who likes the freedom that money provides above everything. So for him, working and investing and growing wealth is just a means to an end, and he’s not necessarily interested in wealth management, but he’s very interested in pursuing and spending a lot of time with his hobbies and his lifestyle experiences.

Reese Harper: Right. This is the guy that you see on Facebook and Instagram who it’s like 10 a.m. on a Wednesday, and you’re doing what again?

Ryan Isaac: I kind of admire this guy.

Reese Harper: Everyone wants to be this guy! No one doesn’t want to be this guy. This is the dentist that checks out as soon as the last patient leaves—done. The office manager handles all the business stuff, and it’s okay to outsource, right? We want to encourage that, but the independent may not be paying attention to the details. And sometimes he’s anxious to get away from the practice. So my caution to this group is to make sure that you’re not neglecting the practice at the expense of your hobbies and your lifestyle experiences. At the end of the day, the practice success is all on you, so carve out time for having fun, but also schedule time to work on the practice. It’s going to be tempting to just let your staff figure it all out while you go and play.

Ryan Isaac: So you’re not saying don’t stop surfing?

Reese Harper: No! I’m not saying. Don’t mention specific hobbies.

Ryan Isaac: Running, biking, cross fitting, skiing, reading, gaming.

Reese Harper: There’s a lot of things—the independent basically just doesn’t want to be doing work as soon as he can possibly not be doing work. That can be a challenge.

Ryan Isaac: I still like that guy a lot. All right—number three: the phobic.

Reese Harper: Yes, okay. The phobic.

Ryan Isaac: This dentist can typically be confused and frustrated by the responsibility that wealth brings. He dislikes managing his finances, and one big characteristic though that you will talk about is they typically will avoid the hard, uncomfortable decisions about making financial decisions. They want to do something that they should or shouldn’t, and they just don’t want to talk about it. Let’s just ignore it and see what happens. They will usually end up choosing a financial advisor based on the personal level of trust and friendliness that they have and not necessarily that they will get push back and hear things that they don’t want to hear.

Reese Harper: Great. The phobic: this dentist hates to make tough decisions. An example would be, if you had to let go of a team member, and even if it was in the best interest of your practice, this person just really shouldn’t be there.

Ryan Isaac: They’re stealing from you.

Reese Harper: Or stealing your time and doing nothing sitting there, or just sitting in the chair and not working. This dentist, though, would rather just kick the can down the road and not deal with it. And my advice would be to avoid making decisions about your finances strictly based on how you feel. You need to face your fear of finances and start gaining knowledge so you can gain more objective decisions. And one more thing—phobics need to be particularly careful about the financial advisors they hire because it’s not uncommon to make a phobic make huge financial decisions that are not in their best interest just because they felt good about it. Doing no research because it’s intimidating, scary, and not comfortable. So the phobic can put himself in a bad situation quite often because of their fear of dealing with difficult financial issues.

Ryan Isaac: And I would say it feels like a little bit of a plug, right? I think phobics can be really benefited when they do hire an advisor, because that’s the personality type that needs pushback constantly.

Reese Harper: One of the personality types that need it, but it’s definitely one of the most common. Let’s go onto the next subject—you get what I’m saying folks.

Ryan Isaac: The next one we have: the anonymous. This isn’t the hacker group. This is just the personality anonymous. No one even knows what the anonymous hacker group is anyway, right?

Reese Harper: I have no idea what you’re talking about.

Ryan Isaac: You don’t really?

Reese Harper: I just think it’s something to do with computers.

Ryan Isaac: So the anonymous dentist is mostly just concerned with privacy and confidentiality. He keeps everything to himself—doesn’t share anything.

Reese Harper: The anonymous feels uncomfortable sharing financial information with anyone else, so they end up doing a lot on their own. The problem is, if you hold your cards too close to your chest, you will miss out on great advice from people who have a lot more experience than you do. So if you fall into this category, make sure you take time to find someone you trust to help you out. It could be an advisor; it could be a friend; it could be a family member that you’re going to be transparent with. It’s okay to be private, but it’s not okay to trust yourself and yourself okay. We all need someone else to give us pushback when our own genetics or our own habits are leading us down the wrong road.

Ryan Isaac: So this is what you were talking about when you said multiple personalities need the pushback from an advisor that has their best interest in mind. So there you go, there’s two.

Reese Harper: Yeah, from a different angle probably. The anonymous because he’s not willing to disclose information, and the phobic because they’re trusting how they feel too much, and they have a fear of addressing anything.

Ryan Isaac: It’s hard to talk about. The next one number five: the mogul. The mogul to me sounds like a character out of Harry Potter. The mogul dentist is the one that likes to feel in control of everything. The sense of power drives everything they do, so investing is just another way of feeling powerful. He will rarely question his own decisions, and when he does or when someone else does he will feel pretty stubborn about his choices.

Reese Harper: Yeah, and that description might sound a little bit like a negative description. We probably could spin that a little more positively, because no one really wants to be considered a power wielding arrogant—it’s not like that. People that are moguls have a hard time giving up control. That’s probably a good way to say it. Think of people with very strong opinions, like the person that’s talking on the microphone right now to you.

Ryan Isaac: The guy sitting next to me.

Reese Harper: Maybe that’s why I’m like defending the poor mogul.

Ryan Isaac: Let’s stop right there: I offended you.

Reese Harper: You offended me? Let me see if that’s a description of a mogul. So I’m a mogul. This could be a dentist who’s made an investment maybe that’s not performing really well, but because he made the decision, he’s going to defend it to the grave. Think about how if you don’t like recognizing that you have made a wrong decision, or if you’re not willing to recognize when you don’t have all the answers and allow other people to help you, you might be a mogul. If it’s hard for you to delegate; if it’s hard for you to give up control and let other people take over some responsibilities that you’re dealing with. It might be something that you struggle with. And I’m bringing this up because it’s something I have had to work on myself, and moguls tend to be perfectionists and they tend to like to have things done the way they want to have them done.

Ryan Isaac: I was going to say—I didn’t say that very nicely. The right way to say that is the last thing you just said. The hardest thing for them is probably to just give up and delegate things that they know they could get done better and more efficiently and probably faster.

Reese Harper: Yeah if they did it themselves and didn’t have to worry about talking to people.

Ryan Isaac: Nothing would break. They would never sleep or eat.

Reese Harper: They would never sleep or eat, and they would never grow their business, and they wont have healthy finances because it takes a village.

Ryan Isaac: All right, that’s fair. Number six we have the VIP—we could describe the VIP as someone who sees investing as a way to get status in possessions, the accumulation of that kind of stuff. Prestige and recognition kind of drive the VIPs psychology—is that fair?

Reese Harper: Yeah, the VIP name sounds pretty self-explanatory. It’s one of the descriptions that might have a little bit of a negative connotation, but this is a dentist who likes to have a nice house, likes to drive great cars, and all the other luxuries that make him feel good. He’s probably going to pick the most expensive cruise line over the least expensive. He’s going to pick first class sometimes over coach.

Ryan Isaac: Do they typically want other people to know these things, too?

Reese Harper: Yeah, they do things that give them recognition. Sometimes the purchase that they will make might be publically recognizable things. Cars are just a great example of that. And it’s not an overly negative thing—sometimes people who have nice cars are buying them for other rationale. They just love the quality and the innovation of a nice vehicle. Some people are buying it just to look good in the neighborhood. We all know that can be a negative attribute if you’re buying and purchasing things purely from a recognition standpoint. Long term that’s going to bite you.

Ryan Isaac: But some people like the Lexus because you can actually call a live person and they will put the directions on the computer in your dashboard.

Reese Harper: Different rationale, okay? Ryan is talking about my car. So dentists who fall into this personality type—you’ve got to watch your spending, and get better at making compromises so you can accumulate enough wealth to retire the way they want to. Just because something is high end of luxury doesn’t mean you should own it.

Ryan Isaac: Let’s keep it moving—we’re onto the accumulators. This group is focused on making their portfolios larger. They are performance-driven people; they are cost conscious, and they are usually pretty frugal. They live well below their means even though they could spend more.

Reese Harper: These dentists are the exact opposites of VIPs—they will save and save and never spend. It can even get to the point where they struggle to enjoy all the money they have accumulated when it comes time to retire. A lot of baby boomers are in this category. They put so much focus on saving that they hesitate to spend money on good financial advice. You’ll see this a lot in Asian countries too—savings rates in Japan and China are so much higher than in the United States. A lot of those countries have been through so much poverty that the consumers really do want to hold on to their savings. They don’t want to spend it, so they live in smaller homes, don’t consume as much. In the United States that’s less of a problem so I’m not usually concerned about bumping into a lot of accumulators here. For these types of people—they exist. I have some in my own family. You need to get better at spending money on things that will make your life more fulfilling and be willing to trust an advisor to help you put a plan in place that helps you enjoy the journey. This isn’t a negative attribute—a lot of times we hear spouses yelling at another spouse saying, “you won’t let me spend anything.” Or “you always say I can’t spend it.” That dynamic is not super healthy—just recognize that there are some huge strengths to this personality trait. People that are accumulators will retire on time and they will have plenty of money. All of us should be applauding what that took. It took a lot of discretionary spending cuts and not getting what they wanted all the time. The weakness of that is they don’t get to enjoy their money until it’s too late, or they don’t enjoy it along the way and it becomes hard to spend when they need to.

Ryan Isaac: Number 8: the gambler. The gambler—you know the gambler. He likes to invest just for the excitement of it. The rationale or outcome isn’t the number one—it’s just the excitement. He’s knowledgeable, or maybe he feels knowledgeable about investing, but that’s kind of what drives him to jump in and get his hands dirty. He likes to be in the mix, and he just likes the excitement of lots of different, exciting things.

Reese Harper: These dentists take a lot of risks. They build up their wealth, and then they take a gamble on a big opportunity. Then the deal goes bad, sits in the back for several years, or sometimes even worse the deal goes well and gives them a false sense of confidence. So they will go after another high-risk deal and then implode even worse. So it’s okay to stick with investments that provide more predictable returns and grow your wealth steadily over time—at least until you get to the point where you’re financially independent. Sometimes that gives gamblers enough motivation to know—if I get to this point, then can I play with it? Don’t invest in something just because you haven’t done anything cool in a while. You need to find an advisor who understands your tendencies as a gambler and bounce your ideas off of that person before you pull the trigger on something. That’s my advice to the gambler.

Ryan Isaac: And the last one now: the innovator. This is the person who is always looking for leading edge financial products. They are really savvy people; they are sophisticated investors; they like complexity. Like I said they tend to be tech savvy, and they are pretty quick to defend their experience level when it comes to investments.

Reese Harper: An example of somebody who fits this description would be a dentist—let’s say he invested in a limited partnership to drill for oil. He did it because it’s tax deductible, and he likes that because few people understand that. And they did it because it’s kind of a hidden, unknown part of the tax code. But when the investment goes south, the innovator will sometimes justify the investment he made because he got a tax deduction, which off set the losses. But the truth is, he lost way more than he gained if you really do the math. Even with the benefit of the tax deduction, and a bad investment is a bad investment—you need to own it and move on. I usually tell the innovator my favorite Albert Einstein quote, which I love: “simplicity is the ultimate sophistication.” And some of the most complex financial strategies have been disastrous to the economy. Think of credit default swaps.

Ryan Isaac: The what?

Reese Harper: Okay, I don’t want to go there. 2008. So before you start over engineering your finances, build a foundation of some time-tested investments and principles and make sure you have accumulated enough assets before you go after some of your other interests. Innovators are some of the world’s most interesting people, and this passion isn’t a bad thing but it can burn them. And the innovator needs to be careful.

Ryan Isaac: Well we’ve talked a lot about other people today. Do you want to weigh in? Do you relate to any of these as we have gone through them?

Reese Harper: Yes. I don’t know if I want to divulge because I feel a little embarrassed.

Ryan Isaac: I’ll go first. This feels therapeutic, so I feel like we should do this.

Reese Harper: Ryan what are your weaknesses?

Ryan Isaac: My weaknesses—we don’t have enough time for that. But I would say of this list, I would identify with family steward and independent. If we lived by an ocean, I would probably shut her down and go surfing. The four-hour workweek.

Reese Harper: Well for me, I think it’s pretty interesting. I’ve probably had to focus on the mogul aspect, which I’ve had to learn to trust and delegate other people, not do everything myself and give up some control over things. I hope I’ve made improvements on that over the years, but I guess you will have to be the judge of that.

Ryan Isaac: We got a good team of people doing good stuff.

Reese Harper: It’s taken a while for you to beat it into my head though.

Ryan Isaac: You’ve done well. Well that does it. Good topic! It was a lot to cover, but we made it through. Thank you everybody for listening—remember please leave us a review on this podcast. It helps a ton. If you would like more information, our website is We have a free newsletter you can sign up for. You can schedule an appointment right on our calendar, there’s a link at the top. Or just call the number on the website, and we would be happy to talk anytime.

Reese Harper: Carry on.

Behavioral Finance

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