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It’s the Dentist Money Show, live from the Voice of Dentistry conference!
Live from Phoenix, Arizona, it’s Satur … the Dentist Money™ Show starring Reese Harper and Ryan Isaac! Enjoy this Dentist Money™ first — a full podcast recorded before a live audience. Using a few astute observations from comedian Steve Martin to theme the show, Reese and Ryan introduce a crowd of new listeners to the essentials of financial planning. Join in as Reese and Ryan get down to the nitty-gritty of why having a good financial plan is so important.
Speaker: Welcome to the Dentist Money Show. My name is Reese Harper, I’m your host. I’m excited to share with you a live presentation that Ryan and I recently did about some of our favorite topics in dentistry. This was a live show that we did at the voices of dentistry in Scottsdale, and it has to do with a very important banjo player, Steve Martin.
He’s also one of the world’s best but he actually shares a lot of good financial advice in some of his funniest quotes of all time. But also, in those same quotes, he leaves us with an opportunity to discuss some very important financial topics that I know with be relevant to each of our listeners I hope you enjoy it just as much as we did.
Make sure and visit us at dentistadvisers.com and check out our education library. You’ll find a lot of videos, podcasts and new articles that we’re releasing every week.
Also, when you go to the website, don’t forget to book a free consultation by clicking the “Book Free Consultation” button, where you’ll be paired with one of our dental-specific financial advisers on a day that works for you. We book appointments on off-days, lunches, even on some Saturdays. Check out the calender and find a time that’s convenient. Call us any time at 833-DDS-PLAN. You can also text us at the same number. Don’t forget to submit your financial questions at our free Facebook group at DentistAdvisers.com/group. We take the questions from the Facebook group and use them in the podcast.
Thanks again for listening and enjoy the show.
Speaker: Consult an advisor or conduct your own due diligence when making financial decisions. General principles discuss during this program do not constitute personal advise. This program is financed by Dentist Advisers, a registered Investment advisor.
Host: We have a couple financial guys come on now, and when you hear financial guys in a dental setting you’re like, “Really, financial guys?”
I had the chance to meet Reese Harper for the first time today. Reese and Ryan Issac have terrific podcast, The Dentist Money Show, you owe it to yourself to listen to their podcast, but the other thing is, is Reese is a stitch. He’s really funny. I didn’t have the chance to talk to Ryan as much, but I can already tell, these are not your average financial guys. So with that, I’d like to ask Reese Harper and Ryan Isaac to come on up and do their thing. Welcome to the stage.
Reese Harper: Those are some hip new tunes, tell you what. I like that.
Ryan Isaac: Reese is a stitch, Ryan is not. That’s fine.
Reese Harper: Sweet new tunes there. This is going to be released next week, so we’re going to go into our intro for our podcast… I’m going to actually record our live version here. Bear with me while I do my introduction and we’ll go from there.
Welcome to the Dentist Money Show, where we help dentists make smart financial decisions. I’m your host Reese Harper, here with my trust old co-host sir Ryan Isaac.
Ryan Isaac: What’s happening, Reese?
Reese Harper: Dude, I’m just stoked for today’s show, actually.
Ryan Isaac: Live at Voices of Dentistry. I think for future audiences, for those that might be listening in the future, could we just get some proof that there are living human beings in the room right now? C’mon. This guy back here.
It’s 4:45 in the afternoon on a Friday, they’re going strong. Thank guys.
Reese Harper: One of the things we wanted to talk about was things that are a little bit surprising to both of us. One of the things that have been surprising me a lot lately is how you’re growing such a thick beard when you can’t grow hair.
Ryan Isaac: Thank you, yeah. And bald guys out there that grow beards, the floaters they call them. My wife didn’t want me to grow them [crosstalk]
Reese Harper: -the beard and hair thing.
Ryan Isaac: Yeah its called a floater.
Reese Harper: I can’t grow a thick beard and he can but he can’t grow hair, so-
Ryan Isaac: It’s compensating.
Along those lines there’s a story… it actually has to do with your favorite movie. The one that makes you cry every time.
Reese Harper: Uh oh.
Ryan Isaac: Titanic?
Reese Harper: Yeah.
Ryan Isaac: You know the scene.
Reese Harper: Don’t tell them about that.
Ryan Isaac: Okay. Well, we’re being vulnerable, that’s the whole point. We just learned about being vulnerable. Lets just be vulnerable.
Reese Harper: Say yes to that.
Ryan Isaac: Which scene makes you cry the most in Titanic?
Reese Harper: Honestly, there’s a lot of scenes in there.
Ryan Isaac: When he slips off the board at the end?
Reese Harper: Yeah.
Ryan Isaac: Okay.
I got a story about… it wasn’t the most famous person on the Titanic, but it was the cook of the Titanic. His name is Charles Jawkin.
Reese Harper: Charles, yeah.
Ryan Isaac: You know Charles.
Reese Harper: He was an extra in the show.
Ryan Isaac: He was an extra. I think he is in the movie. I was going to watch it to verify the story.
Reese Harper: He has a little cameo there in the back.
Ryan Isaac: Was he really?
Reese Harper: Yeah.
Ryan Isaac: You remember this. Okay.
So, the cook Charles Jawkins. So, the story of this guy, its actually really cool. What’s interesting about him is that he was a survivor of the Titanic, but the method of survival that Charles used was very unconventional. It was very counter-intuitive.
Reese Harper: Not advisable.
Ryan Isaac: Not repeatable. So, Charles story. The ship starts going down, everybody knows the movie, and the guy was really great because what he did first was he went out and he got life preservers and he got as many people as he could off an in the boat, into the life boats. He threw deck chairs, that’s what he was famous for doing. He got everyone… as many as he could. And then he was like, “Okay. I’ve done everything that I can. I’m going to die. There’s no way we’re going to make this. So many people are not going to make it.” So he did the only logical thing any rational human would do before they’re about to go into the ocean in the middle of the night without hope of rescue, which is he went into the kitchen and he got drunk for like, three hours.
He later said that the first thing that went through his mind when he helped all the people was, “You know what, there’s all this great liquor. This is the most extravagant cruise ship or hotel in the whole world at this point in history, so I’m going to go downstairs and drink all the stuff I never thought id have the chance or the money to drink.” And he did it for lik, three hours. So, the cook of the Titanic is in the kitchen of the Titanic as this thing’s like, cracking and sinking… he’s totally drunk for like, three hours, realizes the thing is still not going down, wanders on to the deck and the story goes, as the bow is kind of tipping into the water, that he stepped over the edge and his head didn’t even get wet. He just stepped into the water, and he floated there with no life preserver, no boat, no piece of wood or a door or whatever Jack didn’t hold on to. He made it and he survived and its the most counter intuitive sequence of actions.
If you repeated the same situation twenty more times, Charles is not going to make it. That’s not a good method.
Reese Harper: I still don’t know why he survived-
Ryan Isaac: They say it’s his blood alcohol level. I think a few people here today could probably make it in some cold water right now at this point.
Reese Harper: It started early today here.
Ryan Isaac: Yeah. They say it heated him up. His blood alcohol level is raised and that kept him alive. The crazy thing is, he was treading water for three hours and he survived when so many other people didn’t survive. Its this really counter intuitive story where the actions he took didn’t match the outcome.
Reese Harper: One of things that we find is really surprising in the research that we’ve done… Gallup did a research study a couple years ago and found that the average American is retiring at the age of fifty-two. The average American median income is somewhere around fifty in change. The ADA did research on the same stats, the same type of research around dentists, and they found the average dentist is retiring at the age of 69, even though the average dentist is making five time what the average American is earning.
National studies show dentists being about the second highest wage earner, but that’s really understated. Dentists are, by far, the highest wage earner on average. Its just that most of these stats are taken by payroll data and even of you who own your own LLC know that the wage that you report is usually much less than your total income. Dentists on average make the highest income on average.
Why are they retiring later, why is this happening? Even if they chose to work longer, a lot of this research is showing a lot of them aren’t able to retire as early as they want to.
Ryan Isaac: We’ve talked about this on the show before. It’s a complex situation.
On the positive side of things… I was just with a group a couple weeks ago, it’s the retired dentists. We were doing a presentation and al to of these guys have sold their practices and are still working into their 70’s and they have plenty of money to do this. Fortunately, you’re in a profession that there’s a lot of longevity. If you’re healthy and you like the work, you can keep working pretty late in life; a lot later than the average person .I think that [lays into it.
What else would you say-
Reese Harper: Dentists are just really different. Its a very different occupation and I think what I kind of want to hit on today… One of my heroes is life is one of the worlds best banjo players in the history of the world and he’s also one of the world’s best comedians.
Ryan Isaac: Is anyone here a banjo player? Can anyone qualify? Raise your hand if you’re a banjo player.
Reese Harper: Okay.
Ryan Isaac: In a whole room.
Reese Harper: A little quiet.
Ryan Isaac: See? Its really rare. We could just be making that up, but-
Reese Harper: His name is Steve Martin, one of the world’s best comedians, but for me he’s mostly known as one of the best banjo players in the world. He came up with some really great financial quotes that we’re going to use to introduce you to some of the things that we think can actually make a difference and help dentists take control of their financial future.
First quote from Steve Martin goes like this. It says, “Before you criticize a man, walk a mile in his shoes. That way, when you do criticize him, you’ll be a mile away and you’ll have his shoes.”
Ryan Isaac: The benefit of having that on the slide is that the person who reads ahead is laughing- He’s like, “That’s hilarious.” Don’t wait for Reese if you already can read ahead. Let it sink in.
Reese Harper: A lot of people don’t know what its like to be a dentist. You have to be a entrepreneur and you have to be a clinician. You’re kind of spreading your time between deepening your ability as a clinician, being more productive… There’s a hundred different services out here in the lobby that you’re also supposed to be figuring out and mastering. Its a really tough hybrid.
If you think of in the services industry across the U.S., there probably really isn’t an occupation that’s so time-driven in order to be clinically productive and yet requires so much as a business owner, as well. It’s a very-
Ryan Isaac: Well in that business owner role, too, I think most dentists realized that at some point I’m going to be a business owner. Raise your hand if you’ve been surprised by an aspect of owning a business you weren’t planning on. Just a few?
Reese Harper: Yeah.
Ryan Isaac: Yeah.
Reese Harper: I don’t think people like to raise their hands-
Ryan Isaac: People don’t like to raise their hand, that fine, but when you think about-
Reese Harper: It’s hard. Raising my hand in the middle of a presentation [crosstalk]
Ryan Isaac: Stand up… no, don’t stand up. Yeah. Stand up.
Reese Harper: I don’t want to raise-
Ryan Isaac: Make an odd animal sound.
There’s so many different aspects to it. Even nuanced things like training people.
Reese Harper: Yes. Training.
Ryan Isaac: Hiring, firing, marketing… there’s so many pieces to it.
Reese Harper: Lets give them a couple resources that I think are useful. For me, one of the things that really helped me make some sense of this is trying to calculate the progress I was making in a new way. When I started my business in 2007… I guess its been a little over ten years now, one of the things I was doing in my own life was, “Is all the stuff I’m doing in my business actually translating to personal wealth, or is it kind of just getting busier and crazier?
I cam up with this way of organizing my personal and financial progress that sort of measured and tracked whether I was getting wealthier or just busier. You can kind of see from this… we’ll give you some resources to download, but one of the really important things to remember is its not really about just investments or just real estate, or just practice equity, or just bank account balances. Its really about getting to your total net worth in a really accurate way, in a way that your believe in.
So, are you worth -540,000 because you just got done at USC, or are you worth 5.4 million because you now have 3 locations and nine associates and you’re really producing well. Or you’re right in the middle. What is your actual net worth? We have to believe in that number just as tangibly as we believe in a bank account balance because the value of our practice is just as tangible.
You ask any successful entrepreneur, “You take market costs from this morning?” A significant portion of the way Mark has been so successful is he’s built business well, right? What’s really important is to actually believe that’s a thing, have confidence in that and continue to aggressively pursue that. If you don’t track it or organize it and you don’t look at those numbers and believe that they’re valid, it can affect your decision making and slow down and maybe not make the right kinds of decisions.
Ryan Isaac: I was going to say, this would be our suggestion. Back to the previous thing with dentists being so complex, one of the ways to start to deal with that is to have processes and systems to deal with things.
This is our suggestion. If you’re going to do one thing in your personal finances to just implement a process to do nothing more than admit what’s happening, put it on paper and track progress, this would be it. Track your net worth.
Reese Harper: Yeah.
And if you don’t know how to do that, lets give them a resource so that we can make sure this isn’t difficult.
If you go to dentistadviser.com/listen, get show episode number 156, where in detail we walk through that process.
Ryan Isaac: Yeah, decision making process.
Reese Harper: Why did you put this quote in here? Did you like this or something?
Ryan Isaac: I snuck a lot of things in here.
Reese Harper: I must’ve said something to you that resonated at some point.
Ryan Isaac: A couple weeks ago, its to this point okay? You need to take decisions that you’re making as a business owner and you need to turn them into processes. For example, you might have a threshold of what your minimum cash is going to be in the business. What you want to keep it at to sleep at night at operate well. But throughout the year, its going to go above that. Its going to go 20 grand above that or 50 or 400,000 more than you need in there. You have to have a process around what you want to do with that money every time. You can’t approach it with a unique decision every time.
Reese Harper: Yeah.
Ryan Isaac: The point was, in this episode we talked about how to formulate a process. I thought this was very sage advice.
Reese Harper: Which is rare that you say something like that about me, which I appreciate.
Ryan Isaac: Yeah, well we’re in front of people and its being recorded, so… you said that the first step of any successful process is probably this principle. That if its not on somebody’s calendar, its not going to get done. And then you said that it probably shouldn’t even be on your calendar. So if you have this process in mind to record, what, a ten-minute job every quarter? I’m going to record my net worth. What are my assets? What are my debts? Maybe put that on your accountants calender or your advisor’s calendar or your business manager’s calendar and just do that.
Reese Harper: I really believe that. In today’s world, too, if a task is not getting scheduled in-
Ryan Isaac: You have a lot of things on your calendar that are funny scheduled things.
Reese Harper: Yeah. Why are you planning to walk to your fridge and drink your water?
Ryan Isaac: You actually have things like that in your calendar.
Reese Harper: Because I won’t drink it-
Ryan Isaac: “Drive to office.”
Reese Harper: How many of your struggle to consume the natural 84 ounces of water you’re supposed to drink every day, raise your hand, lets do this.
Ryan Isaac: They don’t like to raise their hands. [crosstalk]
Reese Harper: These are water issues. If its not in your calendar, its not going to get done/.
Ryan Isaac: More dehydration issues in this room than business owner problems, clearly.
Reese Harper: We were debating having that be the focus of today’s presentation-
Ryan Isaac: Yeah. [crosstalk]
Reese Harper: As opposed to financial topics.
Ryan Isaac: Yeah, that’s true.
Reese Harper: Let’s go to Steve Martin’s second quote. I’d like to say this before you show them the slide.
Ryan Isaac: Yeah.
Reese Harper: I don’t want people to ruin the joke. Okay. Steve Martin’s second best quote of all time about money goes like this: “I love money. I love everything about it. I’ve got a three hundred dollar pair of socks, I have a fur sink, I have an electric dog polisher, a gasoline powered turtle neck sweater. And yeah, I bought some dumb stuff, too.”
Great. See how that works?
Ryan Isaac: Yeah, the delivery was a lot better.
Yeah, the dumb stuff wasn’t the dog polisher, although that does sound kind of nice. I got a new puppy-
Reese Harper: I think I was talking to Addison Clean about his electric dog polisher just recently and I appreciated that he had one.
Ryan Isaac: Yeah. The point of this is that this principle is this true? Dentists need more money to retire comfortably because dentists spend more money than the average person? Is that true?
Reese Harper: Well, what happens is anyone who makes more money spends more money than the average person statistically. Right?
Ryan Isaac: Yeah, you’ll kind of spend into your income.
Reese Harper: I just got done working on my home remodel recently, and it was very hard to say no to some things that, historically, I would’ve said no to. Anyone have a lighting control system in your house? Raise your hand.
Ryan Isaac: You guys can [crosstalk]
Reese Harper: Did you install that or did you buy the house with it? Was that a little bit painful to pay for? But it was cool, right? See, I really wanted one. My wife wouldn’t let me get it, she made me get her a Volvo XC90 Hybrid. That’s what I had to get instead of the lighting control system. You start having to make these trade-offs; lighting control system’s basically like control your house in a very sophisticated way so you feel fancy and I wanted that, but I couldn’t get it ’cause it was like-
Ryan Isaac: Just calling it what it is. It just make me feel cooler.
Reese Harper: It’s nice. There are some practical benefits. I’m sure this gentleman would share with us, but its mostly ’cause it looks really cool and feels awesome.
You start to buy things and do things that… I got to the point where I’ve got a lighting consultant that’s like… I thought I’d have an interior designer, that’d be normal, but by the time I was done there was like, 40 consultants here. You’ve got the lighting consultant-
Ryan Isaac: Did you have a lighting consultant?
Reese Harper: It’s not even just a roofer. A roof material consultant, because we’re doing a healthy home. It’s not going to have any off-gassing. It’s not going to have any non-organic compounds. So, we have all these consultants and they’re convincing me that I really need to have this. I’m like, “Yeah, I can’t believe I was about to remodel my house without a lighting control system. I’m such an idiot. I’m so excited that you brought it up to me.” But like, “What are we going to do?” He’s like, “Well you have package A, B or C. Package A is 85,000 dollars, package B is 100”-
Ryan Isaac: For lights in your house?
Reese Harper: “140,000 and package C is like, 240,000.” I’m like, “For what again?” He’s like, It’s lighting controls. You’ve got to have the network and your base, but you’ve got to make sure that your lights… you’ve got five layers of lighting, you have a kick pad light, you’ve got your book shelf lights, you’ve got your overhead lights you’ve got your furniture lights, you’ve got your colored lights, you afternoon lights, your morning lights, and I don’t understand but I think I want all of this, yes.
Ryan Isaac: Yeah.
Reese Harper: I do need it. This seems really important. It’s like, you’ve got to have lights when you’re playing your video games, you’ve got to have different lighting from your movies and then when you are-
Ryan Isaac: Cooking-
Reese Harper: -coming home to cook, and you’re-
Ryan Isaac: -reading a book-
Reese Harper: And you’re cooking that kale and getting your spinach going with your olive oil, you don’t want to have too much kelvin value coming into your light and your eyes. What if you’re reading your books at night and you’ve got the lamp sitting there and you’re like, “Oh my gosh, the kelvin value’s so high, it’s harsh. Harsh reading materials are really hard to deal with.” And I’m just like, “You’re right. Honey, we need to pick the middle one. It’s the middle one, right?”
Ryan Isaac: [crosstalk] Which is what?
Reese Harper: Like 140,000 dollars. Finally, my wife’s like, “What? For real? I just want.. no. I want a car still.” I’m like, “Okay, yeah.” The guy’s just trying to make us feel guilty the whole time. Bottom line is-
Ryan Isaac: If you want to meet him after out here for drinks and to talk about lighting-
Reese Harper: I learned a lot of lighting, and what I realized was the more money you make… this was a moment in my life where I realized this was an actual option for me and I almost did it and I really shouldn’t do it. It didn’t stop there, though. The remodel could’ve been 3 mil for a 4,000 square foot remodel, or it could be 750 grand, depending on what I picked, on how many different options I wanted. Now I’m kind of like, “I’ve got this old crappy million dollar remodel.” You know? And I’m like, “What happened to me where that’s like a downer?”
Ryan Isaac: Yeah.
Reese Harper: That became the low end.
Ryan Isaac: You’re disappointed with that.
Reese Harper: I’m disappointed with it like, “Oh, you sure are conservative doing that million dollar remodel.” I’m like, “What is going on in my life?”
Ryan Isaac: What happened though, was what? You were at a point where income grew more than it was five years ago-
Reese Harper: Yeah, you have more options and people present you with new things are you guess that its the new normal. I really did have to say no to all these cool things that I really wanted, and I never thought that I’d have to say that when I got to the point where it was time to have the house that I wanted.
Ryan Isaac: And in the year of yes.
Reese Harper: It was the year of yes and I said no. I mean, this is confusing. Now I’m confused. Maybe I made the wrong call.
Ryan Isaac: No, it was the right call.
Reese Harper: I think that’s the point. The more income we make, we get used to this stuff and it really does become different to claw it back. Once you’ve got a lighting control system, and I’m saying, anyone in here who’s got it, you know you’re never going back. You’ve got it now, and if your phone can control your lights, it’s pretty sweet.
Ryan Isaac: You’re not going to take the time to hit a switch-
Reese Harper: No switches.
Ryan Isaac: What year is this? Touching switches on walls.
Reese Harper: So, I think the solution to this is… what I do at least, is I try to track my personal spending and I really look at it every month. I just look at the end of every month and I acknowledge what it is that I’m actually spending. I’m not a big, deep budgeter in terms of granularity causing marital tension in my life because I’m [crosstalk]
I just think its more important to acknowledge what it is. If I asked anyone in this room, “What did you spend last month?” Probably is about ten percent of the people could tell me the number within ten percent of the actual number. Most people here will estimate 30-35 percent under what you’re actually spending. There’s a lot of research that’s been done on that.
It’s important to know what your number is and track it.
Ryan Isaac: Yeah. There’s probably fifty apps that you can do for free to track your spending-
Reese Harper: Yeah, we’re using a lot of them now. We have one that we use called E-Money. There’s mint.com, there’s personal capital, there’s a ton.
Ryan Isaac: There’s a ton of them. And even more specifically, since we’ve already talked about step one, implement tracking your net worth. Step 2, track what you spend. If you combine these two things… One of the biggest question that we get from a dentist in any phase of career is, “Am I on track to being okay? Am I going to end up where I think I’m going to end up and when am I going to end up at that spot?” That’s what everyone wants to know, right? Am I making any progress? Am I getting anywhere from all this hard work and sacrifice?
If you combine those two things: You take your net worth-
Reese Harper: That’s the thing we were talking about earlier on that big chart. Add up all your assets, subtract all your debts and then get your number.
Ryan Isaac: We’re going to give you a resource here, a free download where you watch a little course on this. But if you take your net worth and you divide it by your spending like its showing right here, this’ll give you a number that will kind of tell you the health of how close you are to being work optional or financially free.
Here, we’ll put this up here so you guys can take a picture or write this down. This is normally something that people buy, this financial course. The point of it is how much do I need to retire? That’s the whole thing. What do I need and what is it going to take and how fast am I going to get there? So, if you go to that dentistadvisers.com/vodce, it’ll be a free download… do you know how long it is? It’s like, 45 minutes or an hour or something?
Reese Harper: Yeah, the course is a step-by-step way of calculating your net worth. There’s some charts, diagrams to download and things to fill out so that you can actually calculate your net worth and figure out at what stage you’re at in this retirement progression. We’re not big in to talking about… for us retirement’s got a negative connotation. We have to use that word or no one will know what we’re talking about. We’d prefer to use the word work is optional now-
Ryan Isaac: That’s not a word.
Reese Harper: -but no one likes… we’re milleniallish. We’re in between. I feel lost, I’m not a millennial but I’m not-
Ryan Isaac: Yeah, we’re like the old [crosstalk]
Reese Harper: How much do I need to make work optional? Would kind of be the right approach. I like to think about my whole life as a good progression towards making work optional, as opposed to retirement at this point in time. I think its important to track when is work becoming optional for you, as opposed to like, now I’m ready to retire and quit-[crosstalk]
They die very quickly. I need to have fun as you age as as you’re going through your 30’s and 40’s and 50’s, this is all good times. This isn’t like slave away til the moment of quitting.
Ryan Isaac: Yeah, you might not get there.
Reese Harper: Yeah.
Ryan Isaac: Not to be a downer, but you just might not make it. Statistically.
Reese Harper: We’ve got a couple more Steve Martin quotes. Next Steve Martin quote goes like this, it’s my favorite one: “Always do business as if the person you’re about to do business with is trying to screw you because he probably is. And then if he doesn’t screw you, you can be pleasantly surprised.”
It’s just a really good piece of advice, I think.
Ryan Isaac: The principal of this reminds me of a story I found this week. I just Googled this ’cause I’m like, “I guarantee some dude somewhere in the world did this and it actually was true.” In 2009, in Athens, Greece, this guy named Christos, all right. God bless his soul, he goes hunting for wild boar-
Reese Harper: Boar?
Ryan Isaac: Yeah. Did you hunt-
Reese Harper: We talking traditional boar?
Ryan Isaac: I don’t know the difference between different kinds of boar.
Reese Harper: I just wondered. You brought it up.
Ryan Isaac: How many styles of boar are there?
Reese Harper: A variety.
Ryan Isaac: He was hunting some variety of boar and in this guy’s mind he’s like, “You know what? I’m going to get the upper hand in my hunting game here, so I’m going to put on a bunch of goat pelts.” Sounds like something you would’ve worn in your childhood in Idaho, maybe, I don’t know. He dressed himself in dark gray goat pelts from head to toe and he’s slinking along the forest in his goat pelts. Turns out, there were also other people hunting at the same time and they shot poor Christos in his goat pelts.
Reese Harper: Pause. That happened.
Ryan Isaac: It really happened because I typed into Google, “guy dresses up like animal, gets shot while hunting.”
Reese Harper: He thought of that before it happened just to see if it actually happened.
Ryan Isaac: I just wanted to see if it would actually happen because I was thinking of this principle, this Steve Martin quote. What we wanted to share was that much like poor Christos, dentists can sometimes be very obvious targets for not so well intentioned sales people. Dentists have high incomes, its pretty steady, you can support cash flow and multiple high payments per month, and it makes an ideal target for someone to sell you something.
Reese Harper: And sometimes they’re not quite as well intentioned as Christos was.
Ryan Isaac: Christos tried.
Reese Harper: He was well intentioned.
Ryan Isaac: He was just trying to sneak up on a boar[crosstalk]
Reese Harper: That’s where it falls apart for me, personally because I look at him-
Ryan Isaac: He was just trying to sneak up on a boar.
Reese Harper: So, I think its really important to make sure that you’re getting advice. Think about this not just for financial advisors. When it comes to financial advisors, its simple to start by just saying they need to be a fee-only fiduciary. You shouldn’t be getting financial advice from someone who’s getting paid through a product. That would be like going to the ford dealership and saying, “Do you like Chevy trucks or should I buy a Ford?”
Ryan Isaac: You need a Ford.
Reese Harper: Its just not going to work. I have a friend who works at the Ford dealership-
Ryan Isaac: He tells you to get the Chevy?
Reese Harper: He might say, “You know what? [crosstalk]
But its rare that that’d happen. I think that when it comes to a lot of things… some industries you can’t get away from it. There are good people that get paid on commission to sell products-
Ryan Isaac: Its just the nature of the industry-[crosstalk]
Reese Harper: I think it’s probably better in some industries than others. If I’m a Sundries rep, and I’m getting paid through a commission to supply a large clientele with a variety of dental products and not any one product really stands out in terms of this big ticket, and if I sell this I’m going to go to Hawaii, I think that’s okay. They’re not going to want to lose a relationship over that because there’s not one-
Ryan Isaac: Yeah, its like repeat business-
Reese Harper: -make or break Christmas, you know? In most cases in the financial transactions, a financial advisor that transacts with you, for example our hope, we get paid anywhere from $5,000 a year to maybe $20000 a year depending on the level of engagement someone asks us to hire them for. But our onboarding cost and the cost of getting a customer… it might be 9000 for us to bring a customer on and onboard them, so we don’t really make any money for month five or six or month seven when we finally start making money. That incentive is very different than if I was going to make $90,000 for selling you something, and there’s no recourse on that. There’s a lot of financial products; insurance, annuities, structured investment products, private placements that financial people get a huge commission right up front to sell. We think its highway robbery, we think there should be some massive legislation going on… oh, wait. There was and then it was canceled.
Ryan Isaac: It canceled and no one paid attention to it.
This is what you’re talking about-
Reese Harper: It’s bad.
Ryan Isaac: This is what-
Reese Harper: Just think about that with anyone that you go to buy something from. If the transaction you’re about to engage them in disproportionately pays for their compensation for a year, that’s the worst thing… something’s going to go wrong there. You’re never going to get good advice. That’s never going to be like, “Huh, maybe… I don’t know let me look at it from your perspective.” You’re going to get pressured and you’re going to have people be biased.
That’s happening… just so you know, in this room right now, 75 to 80 percent of you don’t have this. You have the bad one. It’s just statistically-
Ryan Isaac: Here. Let’s illustrate what the bad ones are.
Reese Harper: We drew some pictures.
Ryan Isaac: Okay. Because I think people… this phrase, “fiduciary standard”, I think if you ask most people they might have heard of that. Its becoming more familiar, but what that actually means in the financial services industry… how will I know what kind of standard they’re on?
Here’s a few examples of-
Reese Harper: Yeah. So in this example, you are the green person.
Ryan Isaac: You’re the guy in the blue?
Reese Harper: Green for go.I’m not blue, you’re blue. I’m not going to be that guy.
Ryan Isaac: You’re in the tie today making wrong-
Reese Harper: So, that person’s on one side of the transaction. They get paid different amounts of money from different products they’re selling. Purple product gets them one dollar, two dollars from red, three dollars from yellow. They get to pick which one they’re going to tell you about based on how it pays them. That’s really bad. Not good. Don’t do that. Ask the person, “Do you get paid different based on the thing that I buy?” Ask them if they’re operating in a fiduciary standard. This is what’s typical in a broker-payment kind of structure.
Ryan Isaac: I was going to go back and say, that’s a legal thing to do in that bottom standard. That’s legal. A financial services person can look at a host of a bunch of different products and say, “Which one pays me the most? Which one’s going to give me the biggest bonus?” And then pick that on. All they have to prove is… if you sue them, you just have to prove that it was suitable. It was okay.
Reese Harper: What’s this one?
Ryan Isaac: This is the old advisor payment structure. So, here’s the difference. See how they’re on different sides of this equation-
Reese Harper: It’s a table.
Ryan Isaac: That’s a thin table.
Reese Harper: Did you draw that? That’s a bad picture.
Ryan Isaac: No, its magnetic. It’s supported by magnets.
The way that the relationship should be set up, is the person you’re working with should know what you’re trying to accomplish. You should know what your goals are and your time frames for everything. What do you want to do in your career? Where are you taking your practice? A financial advisor shouldn’t just be concerned with what insurance policy you own or what your 401k is. If its your actual planner or advisor, they should know, are you going to stay in one location? Are you getting out of clinical one day? Are you trying to build multiple locations? Do you want to teach one day?
Reese Harper: Lets tell them the hard thing now.
Ryan Isaac: All right.
Reese Harper: So, if you’re in this model, you’ve got to go to your friend or family member or person that’s doing this and you have to tell them, “You know what? I really appreciate all you’ve done for me, but I’m going to have to find someone else.”
Ryan Isaac: Can you say, “It’s not you, it’s me?”
Reese Harper: What?
Ryan Isaac: Can you say, “It’s not you, it’s me?”
Reese Harper: Yeah. You could do that.
Ryan Isaac: It applies?
Reese Harper: It’s not you, this is me.
Ryan Isaac: It’s me.
Reese Harper: I see where you’re going with it.
Ryan Isaac: I went to Voices of Dentistry.
Reese Harper: That’s the hard thing, though, because most people with hear this and be like, “Yeah, that’s bad, but John’s just such a good guy. He’s just done so much for me.”
Ryan Isaac: Yeah, he’s my brother, man.
Reese Harper: So, here’s the challenge. You’re starting in a relationship like this, if you don’t have an advisor, you’re probably better of than if you do have one in this structure. So, I’d rather see you just not hire anyone and put your money in a bank account your entire life than be in this other structure. It’ll be safer, and you’re more likely to retire.
Ryan Isaac: I think we have an episode coming up on valentines day about breaking up with your advisor.
Reese Harper: We’ve got to go, we’ve got the countdown on our timeline.
Ryan Isaac: Yeah, let’s do this. I’m going to put this back up to…
If you go to our website: dentistadvisors.com/listen, episode number ninety-six; we probably have five or six episodes on there about our industry and how people get compensated and how business models operate and how they work. This one’s a really good one on all the different types of fee structures and how the people in our industry get paid, and if you’ve kind of wondered how the person you work with is getting paid, this is a good resource for you.
If you missed it before, this is the free course download. It’s just for this event, so if you wanted to get this, take a picture or just v-o-d-c-e. And if you ever wanted to have a chat with us, we love talking to people and we love meeting people. We have a bunch of dental-specific advisors that have availability on Saturdays and days off and between patients and lunchtime, so you can call and have a free chat with us. We like meeting people and giving feedback and we’re happy to have a consultation. If you’d like to ask some questions personally, you can go to that link and book a free consultation.
You’re going to finish this up here with…
Reese Harper: Well, we’ve got two quotes. You finished with the Steve Martin one. I think you liked this one.
Ryan Isaac: The old Steve Martin quote. Yeah.
Reese Harper: I’ll get-
Ryan Isaac: You’re going to push the button?
Reese Harper: Yeah.
Ryan Isaac: Okay.
Well there you go. “I’ve got to keep breathing. It will be my worst business mistake if I don’t.”
Reese Harper: It’s great advice.
Ryan Isaac: Yeah. I mean, it makes logical sense.
Reese Harper: This is kind of our… we feel really strongly about this idea that financial planning throughout your life should be an enjoyable process. It should be something that helps you live in the moment a lot more and helps you embrace what’s going on now. Its not this pain of like, “One day, once I get all of this stuff saved and I scrap it all together, I can enjoy life.” Good financial planning is about getting organized, taking bite-sized decisions on a calendar basis, getting stuff on someone’s calendar if its yours or your advisors and making them do stuff. It’ll give you a lot of peace of mind and let you enjoy the baseball game, take the vacations, know that when you’re spending money you’re not over spending or under spending.
The cool thing about my story about the house is because I know my numbers and ratios, I was able to say no to some things that would’ve made me… I know what I feel would’ve made me feel emotionally like I wasn’t in a good spot-
Ryan Isaac: Yeah, but you got some you got to say yes to some things, though.
Reese Harper: I got to say yes to a lot of things that made me happy-
Ryan Isaac: And that’s the point. I think a lot of people feel like they hear “budgeting”, “saving” and “retirement planning” and they think like, “Oh, its this big thing I have to make my life really suck right now and then hopefully in thirty years, then I can enjoy it. Then I’ll get to travel. Then I can have a pool in my yard or have a house I want to live in.” That’s kind of depressing to think about.
Reese Harper: This is my favorite quote that we’ll end with here. It’s from the Dalai Llama. A little bit different from Steve Martin, so it’s on a little bit more serious not. We do do serious.
Ryan Isaac: Yeah, that was a big switch there.
Reese Harper: We’re switching now to spiritual..
Ryan Isaac: Yeah, everyone calm down.
Reese Harper: Pivot.
Ryan Isaac: Get ready.
Reese Harper: Got to give a cue.
“Man sacrifices his health in order to make money. And then he sacrifices his money to recuperate his health. And then he’s so anxious about the future that he doesn’t enjoy the present. The result being that he doesn’t live in the present or the future, he lives as if he’s never going to die. Then he dies having never really lived.”
I think my hope, that Ryan and I both have for everyone here is that you can live and fully embrace the present moment, because of the confidence that you have in your financial future. Thank you.
Reese Harper: Thanks again for listening, guys. I really hope that you enjoyed the show.Retirement Plans