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One Trait Wealthy Dentists Adopt Early in their Careers – Episode 85

persistent financial plan

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The world’s greatest inventors, most accomplished musicians, and best athletes often attribute their success to persistence. It’s the same trait that pushed you through dental school and keeps your practice moving forward. But what does it mean to have a persistent financial plan? In this episode of Dentist Money™, Reese and Ryan explore four steps to developing persistence and how each one translates to long term financial success.

Show notes:

Podcast Transcript:

Speaker: Consult an advisor or conduct your own due diligence when making financial decisions. General principals discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisers, 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 cohost, Sir Ryan Isaac and Q in the studio.

Ryan Isaac: Q in the studio. Welcome Justin Copier.

Justin Copier: How are you guys doing?

Ryan Isaac: Yep.

Reese Harper: Good to have you back Q.

Justin Copier: Good to be here.

Reese Harper: By popular demand, the common man has been brought back into the studio and Q is here as always.

Justin Copier: The voice of the audience.

Reese Harper: A Kirkland purified water bottle in hand.

Justin Copier: Yep.

Reese Harper: The classiest, nothing but the best. The inspiration for this episode came when I was watching my new favorite news program in the evening. Okay, it’s not my favorite, but I actually had been watching it. Megyn Kelly NBC, Evening with Megyn Kelly on Sunday nights.

Ryan Isaac: Really?

Reese Harper: She’s got cool, it’s kind of like a 60 Minutes thing.

Ryan Isaac: Okay.

Reese Harper: She picks four stories. This week it was about, the one I liked this week was how women are being sexually harassed in Silicon Valley by their employers, and like hiding it all and then throwing people under the bus. It was awesome.

Ryan Isaac: Shout out to Silicon Valley.

Reese Harper: I was like, thank you, this is a good story. I was really proud of her.

Ryan Isaac: Okay, good.

Reese Harper: Anyways, so Ed Sheeran was the guest she interviewed last week, and he was asked, how do you achieve-

Ryan Isaac: He’s awesome though.

Reese Harper: … success? How do you achieve success? Because you have red hair, you’re overweight, you’re a goofball, like how did that work?

Ryan Isaac: He actually gets a lot of crap for that.

Reese Harper: Yeah. But he-

Ryan Isaac: He quit Twitter. He quit Twitter over it.

Reese Harper: He gave himself crap on the interview. In front of her he’s like, well, what … She’s like, do you know people think of you kind of as like this goofy … He’s like, I am that goofy, like look at me. Like, he just totally owns it, but he said that the reason he feels he’s successful is because of persistence. He said in this English accent, he was like …

Ryan Isaac: Oh, here we go.

Reese Harper: Persistence, you don’t have to be the best talent in the world, you just have to work hard and keep going for it.

Ryan Isaac: That’s so good. That was awesome.

Reese Harper: Okay, cheerio.

Ryan Isaac: Oh, here we go.

Reese Harper: Right. So a lot of us think that it’d be nice to be born with Ed Sheeran’s voice.

Ryan Isaac: Or yours.

Reese Harper: Well, like I do have good vocal skills. A lot of people do say you sound a lot like Ed Sheeran, and I’m like, why didn’t you tell me to do that then for a living?

Ryan Isaac: I should’ve done that.

Reese Harper: Actually, I’ve never been told that in my entire life.

Ryan Isaac: Okay. Carry on.

Reese Harper: But, sometimes I know you think you could just open your mouth and just start singing and people are going to pay you millions, if you’re Ed Sheeran.

Ryan Isaac: What would that feel like to just have that in your body. That, literally there’s a voice in your head.

Reese Harper: But he was not born that way, that’s the point of this. He was not born this way. He had to work really hard for it and there’s obviously a ton of work that went into mastering his craft before got famous.

Justin Copier: I heard that he had to sleep on Jamie Foxx’s couch for like six weeks before he got famous.

Ryan Isaac: No Way.

Reese Harper: He’s been like, yeah, he’s been through a lot, and he wrote more music for professional artists than he ever wrote for himself initially. He’s the co-writer and writer of a lot of great music that you’ve heard people sing.

Ryan Isaac: What a stud.

Reese Harper: Anyway there’s-

Justin Copier: Crazy talented.

Reese Harper: So to bring this all together, there’s this classic book that everyone’s probably heard of. Well, a few of you have, I shouldn’t say everyone, okay? It’s called Think and Grow Rich. It’s a famous business book, finance book, motivational book.

Ryan Isaac: Safe to assume leadership book.

Reese Harper: Anyway, it’s about, well, it was written by a guy named Napoleon Hill and he interviewed 500 really wealthy people to figure out what they all had in common, and one of the attributes that he observed that was most prevalent was persistence and he spent a whole chapter talking about what it means to be persistent.
This is a common thing that you see in books. I just saw one recently too, called the Eight Traits Successful People Have in Common and actually downloaded it and started reading it the other day. It’s good, and persistence was one of the most common traits among, it was people in 2016 who are the most successful people in the world.
Anyway, and so I kind of wanted to just talk about this idea of persistence today, and how important persistence is in achieving financial goals and achieving financial independence and getting to the point where work is finally optional, just having a good life that you can look back at. I think it’s really an easy … It’s one of the attributes where people can be like well, one of the attributes of success is just, if you’re over six foot then you’ve got a great shot at it, right? And you’re like, well, can’t do anything about that because I’m 5’9″, or I can’t change that, or it’s just a great head of hair …

Ryan Isaac: He’s striking, just a striking look. Just a great coif of hair.

Justin Copier: It’s like well I, you know, Ryan’s bald and his head gets burned sometimes in the summer.

Ryan Isaac: It does, I wear big hats when I do yard work. What?

Justin Copier: Wide hat me.

Reese Harper: So I think that this is a characteristic, persistence is one that everyone can incorporate in their lives a little bit more. It’s as easy as me telling my kid, keep mowing the lawn and stop quitting halfway through when you get the front lawn done. It’s like, there’s four sides of the house.

Ryan Isaac: You have a big yard though, man.

Reese Harper: Okay? It’s an electric lawnmower and you know he can push it, it’s two pounds. Yeah, I think he’s doing great.

Ryan Isaac: Good job, Ethan.

Reese Harper: Yeah. Anyway, so the four things that, in Think and Grow Rich, that Napoleon Hill outlined that lead to persistence was probably one of the most impactful takeaways of the book, okay? So the four things that really drive persistence was one, a definite purpose. He calls it backed by a burning desire for its fulfillment, or you really want to see something happen. You really have a deep passion for it. Q, what’s something that you have a deep passion for?

Justin Copier: I love to ride my bike.

Reese Harper: See?

Justin Copier: Up mountains and I want to get to the top.

Reese Harper: And he’s like, he’s a scratch golfer as you may have known from a name we tried to, we tried to work it out, scratch.

Justin Copier: That’s a little generous at this point in my life.

Reese Harper: You were. Okay, so you have a definite desire for being a scratch golfer, fulfillment for being a [crosstalk 00:06:15].

Justin Copier: Someday again.

Reese Harper: Yeah, one day again. So the second thing is a definite plan and this plan has to be expressed in continuous action, things you do on an ongoing basis that support your definite plan. Okay? That’s a sign of persistence. Third, a mind closed tightly against all negative and discouraging influences.

Ryan Isaac: That’s tough.

Reese Harper: Very tough.

Ryan Isaac: Yeah.

Reese Harper: Especially when I work with you every day.

Ryan Isaac: Yeah, I’m very negative.

Reese Harper: You’re discouraging sometimes.

Ryan Isaac: People know me by my negativity. That’s like my calling card. For those of you who do not understand sarcasm …

Justin Copier: Ryan likes to walk around the office and just insult people.

Reese Harper: Yeah. Okay. He’s really actually a positive … We call him a yellow/white personality.

Ryan Isaac: Yep. I’m just here to have fun guys.

Reese Harper: Yeah, but you want to get people in your life like Ryan and get people out of your life, I will not throw anyone under the bus. I’m just not going to do it.

Ryan Isaac: Okay.

Reese Harper: But all of you have someone that popped into your mind the moment I said-

Ryan Isaac: That negative person?

Reese Harper: You’re like, that guy!

Ryan Isaac: That guy, it’s always, you can’t do it.

Reese Harper: Got to get him out of my life.

Ryan Isaac: Yeah. It’s not going to work.

Reese Harper: The fourth thing was a friendly alliance with one or more persons who will encourage you to follow through with both plan and purpose.

Ryan Isaac: Okay. So get rid of the negative guy and get the positive guy.

Reese Harper: Get a friendly alliance around you with people who are going to encourage you to follow through with things, and that’s a really important. So we’re going to talk about each of these four steps today and how they might look in the context of personal finance.
So first let’s talk about this definite purpose backed by a burning desire for fulfillment, right? How many of us go through the motions with our personal finances, and we don’t really have an end game in mind?

Ryan Isaac: Well, it’s funny when you say have this burning desire and we’re going to relate this to finance for dentists. How many people really have a burning desire for retirement? I mean everyone wants something out of retirement. When you’re twenty years away from that, it’s hard to describe that as a burning desire.

Reese Harper: That’s exactly my point, Ryan.

Ryan Isaac: Yes.

Reese Harper: And, and that’s why I think everyone does though. If I said to you, what’s one reason why you want to do your financial planning? You personally, why are you doing your financial planning today and putting money away and trying to think about your career and build the business that you’re building? Why are you doing that? Because you want to do what with your time at some point down the road?

Ryan Isaac: I just, I want life to be fun.

Reese Harper: Yeah.

Ryan Isaac: I do. [crosstalk 00:08:35]

Reese Harper: Okay. So what’s fun to you?

Ryan Isaac: You know, spend time with my family and exercise and go outside a lot, and just kind of like-

Reese Harper: Go places?

Ryan Isaac: Yeah, go on a whim. I like doing things on a whim, you know? I like to do things, like it’s Tuesday and I feel like just going on a road trip with my family tomorrow morning.

Reese Harper: Yeah, [crosstalk 00:08:54] that’s possible.

Ryan Isaac: But that feels great.

Reese Harper: Exactly.

Ryan Isaac: You got to get prepared for that.

Reese Harper: And I think a lot of people will be able to relate to that. There’s something in their life that thinks them, that makes them get excited about doing financial planning, an idea for how they’re going to use their time that might be different than how they’re using it today. That’s a big common … For you it’s definitely not like fishing, okay? You don’t, you’re not a big fisherman.

Ryan Isaac: I used to be.

Reese Harper: You did?

Ryan Isaac: Yeah.

Reese Harper: Surprising.

Ryan Isaac: Yeah, actually.

Reese Harper: Maybe it’s not writing music.

Ryan Isaac: No.

Reese Harper: Okay.

Ryan Isaac: I don’t know how to do that.

Reese Harper: That might be something I would want to do.

Ryan Isaac: I don’t know how to read music.

Reese Harper: Okay? Or I would like to work on my accents of famous people.

Ryan Isaac: Ed Sheeran impressions.

Reese Harper: I would like to spend some quality time on that, okay? Now a lot of people have ideas of what they want to do with their free time that isn’t … Some people say it’s work, I wouldn’t change a thing. I’m going to just keep working the way I’m working right now, and I love it and this is what I want to do. And that’s great, a lot of people get fulfillment from using their skills to help better other people’s lives and do the things that they feel like they’re really good at, and sometimes that might be work.
And then there’s people that may choose to use their time differently, but I think at some point we hear a lot of dentists talk about, when will work be optional? And I do think that for a lot of people there is a desire, that’s the desire that people have with their finances. If it’s nothing else, I’ve seen it be a new house, a boat, travel, vacation.

Ryan Isaac: You can wrap your head around those things.

Reese Harper: I want to do this with my money so don’t take that away from me, Reese. Even though I’m … No, I might. You can’t take away my cabin, or I really, really want this thing to happen. And I think to some degree financial planning that doesn’t acknowledge that reality, that for most people there is like personal financial goals they just want to have that make life fun. That is a big part of financial planning and it’s not, it isn’t fun to just go through this miserable like behavior-

Ryan Isaac: Like hoard money for 30 years and then hopefully one day you can enjoy it.

Reese Harper: Yeah, I was going to say it’s miserable behavior modification. We’re just constantly trying to be like, no, no, no …

Ryan Isaac: Shame, guilt and fear.

Reese Harper: Yeah. That’s not good financial planning, good financial planning is harnessing a motivation to go and actually do things you want to do that you love.

Ryan Isaac: Yeah.

Reese Harper: For me, those are definitely travel, they’re definitely spend time in the outdoors. It’s definitely work on music-

Ryan Isaac: Restaurants.

Reese Harper: You know, eat really well and do some like great getaways. I don’t like big long getaways cause I like to get back to work and have fun, but like work is fun for me and I really enjoy it. But I do like having two or three days away from it so that I could … And really enjoying that, that time away from work, and so, getting to a place where work is optional for me means I’ll be able to do things that I love.

Ryan Isaac: As you’re saying this, I’m thinking the only way to really do that concretely though, is to define what it means. What does optional work even mean? How is that even calculated and how far away am I from that goal, and am I doing the right things right now to hit that goal, you know?

Reese Harper: Yeah. Well and I think, I think that’s where we’re going to get into that. I want to get into item number two and talk a little bit about that in more detail. Let’s take a quick break and then come back and hit that.
Hi, this is Reese Harper. I’m the host of the Dentist Money Show and CEO of I want to take just a minute and explain why 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 and 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 Thanks again for listening, now let’s get back to the show.
All right, we’re back. Let’s get into item number two, which is this persistence driven by a definite plan expressed through continuous actions. In my mind, a definite plan to make work optional is this idea that we talk about a lot, which is total term. You take what you spend in a year and there’s a multiple of … Well, you start by just calculating what you’re worth, take all of this stuff you’re worth, your practice, your houses, your house, houses for those of you have two or more.

Ryan Isaac: Your debts.

Reese Harper: Your debts.

Ryan Isaac: Yeah.

Reese Harper: Figure out what you’re worth and divide that by your spending and you’re going to get a number, divide that by what you spend in one year.

Ryan Isaac: Your annual spending.

Reese Harper: Yeah. That, that number is going to range, it’s going to be zero for some of you and it’ll be 30, 40 plus for some of you.

Ryan Isaac: You mean the outcome-

Reese Harper: The outcome of that. So if you’re worth $2 million and you spend a 100,000 a year, you’re a 20. We call that your total term, and a definite plan that you can work towards is getting that total term number to get to the place where work really is optional, and work being optional we’d say is somewhere in the range between a 30 and a 40. Like that’s the work optional kind of-

Ryan Isaac: Or above.

Reese Harper: Or above, anything above a 30. At a 30 you really do get to a point where the math starts to support you not having to work anymore.

Ryan Isaac: Yeah, at very modest increases that are required in your investments and, yeah.

Reese Harper: Yeah. Yeah, I think that’s the point you can get to and say that’s a definite plan. Now, how you get there through continuous action, what do I have to do to make that happen …

Ryan Isaac: Yeah.

Reese Harper: What are some of the things that you can think of that are really driving that?

Ryan Isaac: Yeah, something we talk about all the time is just automate your savings, right? Take it directly, if your CPA approves of this, take it directly from your business checking account and put it to your savings accounts. Don’t bring it home first, don’t put it in the family checking and be like, we could remodel the kitchen or buy a Tesla.

Reese Harper: Yeah, it’s amazing how just that one simple thing can change whether money is there or not.

Ryan Isaac: It’s not, it’s not simple, I mean, it’s not new advice. People have been saying that it’s been, … [crosstalk 00:15:35]

Reese Harper: That book by David Bach, Automatic Millionaire, the whole point of a 250 page book is automate your savings.

Ryan Isaac: Yeah. But I mean that is real, that is real because, and we all do this, if money comes-

Reese Harper: I’m going to do a quick a quick G …

Ryan Isaac: A G?

Reese Harper: … for an important good moment or essential moment. Which is, automate your savings, people.

Ryan Isaac: Just do it.

Reese Harper: Let’s just do that.

Ryan Isaac: And you can go beyond that. Okay? So I automate my savings now, does that make me automatically retire? No, it’s not going to now, but that’s one good step. The second thing you do is just monitor how much, what percentage of your income are you saving? And just take all the stuff you’re saving and your income and compare those two numbers, and if you’re saving less than 20% of your income, you probably should work on that a little bit, you have room for improvement. If you’re saving north of 20% of your income, you’re probably on track if you have enough time ahead of you to save a good chunk of money and reach those goals.

Reese Harper: Yeah. I think that another thing I would look at that’s important is to make sure all your practice financials are organized and that they look clean, because you need to be able to make sure that the amount of money that you’re earning is healthy for the size of your business.

Ryan Isaac: Profitability.

Reese Harper: And then I would also say that one continuous action that you can do is track your personal net worth on a quarterly basis. You have to add up your cash, add up your real estate assets, add up your practice value, add up your investments and retirement plans, subtract all of your debts from that and calculate what your net worth is, and track that every three months, and you’ll be able to start to … That’s the work that’s required in order to really know if …
That’s the persistent kind of part of this. I really feel like good financial planning really is like applying some of these consistent tasks, because if you’re not going to do them, hire someone to do it for you, like us. But if you’re going, no matter what, if you’re not going to-

Ryan Isaac: Just make sure they get done.

Reese Harper: Yeah. Financial planning consistently. Financial planning is tracking your progress and organizing and being able to measure the problems that are in your numbers. And if you can listen to this podcast and digest it enough on your own and read a few books, then do it on your own. Just get it done, and if you’re finding yourself falling behind, then get some help, because financial planning doesn’t happen just by avoiding hiring someone.
If you’re just avoiding hiring someone and saying, yeah, I’ll save the money it would cost to hire someone and I’ll be able to do this on my own. Well if you’re not going to do it on your own and you’re not going to persistently track your net worth, track your spending, organize your numbers, make adjustments, then you know, all you’re doing is neglecting your own financial health. You’re neglecting the point in time where work’s going to be optional for you.

Ryan Isaac: And we’re being nice about this. I would say, I just got off the phone this afternoon with someone who actually tracks their stuff very well, like meticulous. It’s really cool to see, but the truth is most people do not do that, the vast majority of people are not doing that. I mean for most people it’s not fun, it’s not interesting, it wasn’t a background.
A lot of people don’t even know where to start. You know, you say just open an Excel spreadsheet and make some rows for your balance sheet and every column is a different quarterly entry. They’re like, what are you talking about? That sounds awful, and I don’t even know … I don’t even have Excel right now.

Reese Harper: Yeah. Totally, what is that?

Ryan Isaac: What is Excel?

Reese Harper: I have a phone. Yeah.

Ryan Isaac: So yeah.

Justin Copier: Hey, before you guys move on, I was just going to mention that for our listeners who are interested, they can go to a, T as in Tom, T as in Tom, and you’ll be able to get a free guide book that talks about how to calculate your TT and shows you how to do your net worth and all that sort of stuff.

Ryan Isaac: So really you could go download the guidebook, and then just follow the guide book once a quarter.

Justin Copier: Yeah.

Ryan Isaac: Set a task on your phone to alarm and beep at you and then just do that every quarter.

Justin Copier: Yes.

Ryan Isaac: Download the book, fill it out.

Reese Harper: Yep. Let’s go onto the item number three, which is getting all of these negative and discouraging influences out of your mind. Now he says a mind closed tightly against all negative and discouraging influences. It doesn’t say don’t hang out with negative and discouraging people, because we all have-

Ryan Isaac: Bring that person up, man.

Reese Harper: It’s just close your brain off, and I have to do this a lot. I have a lot of people that try to distract me from my plan, like every day.

Ryan Isaac: You looked at me when you said that, but I’ll-

Reese Harper: Not you necessarily. I was more looking at the wall …

Ryan Isaac: Okay.

Reese Harper: … by your head. Okay. But there’s a lot of people … So every day is a process of taking in what people say about what you’re doing, and most of them … They might not be negative and discouraging. Like, oh you, you know, sorry [crosstalk 00:20:39]

Ryan Isaac: It can be really distracting.

Reese Harper: They could be like, you should do this.

Ryan Isaac: Yes.

Reese Harper: Or why don’t you do that?

Ryan Isaac: Which is usually more common than someone just telling you’re doing a really bad job.

Reese Harper: Yeah, and I think that really can happen a lot with finances because on average there’s probably ten financial planners for every dentist in the country, you know? There’s at least seven or eight, we don’t know how many there are. There’s probably like a hundred and … You know, there’s close to 200,000 dentists and probably a million different financial people, if you only take financial advisors into account. If you take all the CPAs and all the attorneys, and all the at home experts that do personal finance, and your family that probably have opinions about your money-

Ryan Isaac: Ten to one.

Reese Harper: You’re at ten to one, easily. And so you-

Ryan Isaac: That’s just financial people, that’s not other things that … Like not entrepreneur stuff and change, expand your practice consultants.

Reese Harper: Well I mean, you have to buy equipment and there’s nothing wrong with someone selling you equipment, but that’s chirping a lot and you’ve got to get a hold, you know. There’s always something. You just get distracted, I mean you get, you get a lot of opinions and so if you don’t know what you’re doing … You’ve got to pick your plan and stick with it and kind of not let all the other inputs coming into your life distract you from that plan, because you’re going to get a lot of inputs in your life that will make you make adjustments.

Ryan Isaac: So some common ones.

Reese Harper: Yeah. Well you get a lot of people saying, I don’t know why you don’t hire an associate or, you should have hired an associate already or, you shouldn’t hire an associate-

Ryan Isaac: Buy that building. Why are you still leasing? Go buy that building.

Reese Harper: Or why are you putting money in that? Or why you saving money there? Why don’t you pay your debt down faster? Why don’t, why … Don’t pay down your debt or do pay down your debt, or put that on a 20 year loan, put it on a 15, put it on a ten.

Ryan Isaac: Pay cash for your cars, finance your cars.

Reese Harper: Yeah, all of these things are really, they’re just floating out there. Hire, you’ve got to replace your staff, get a better marketing agency, you got to get a better office manager, pay your office manager on production, pay the office manager on profits, give your office manager some ownership in the practice, you know? There’s a lot of inputs that you’re going to have to process.

Ryan Isaac: Not that those are, none of those are inherently bad. Those are just things to work out.

Reese Harper: They’re just things that you have to pick from, and I guess the more you can get like solid around what your plan is and then not let things like herd mentality of what everyone else is doing or media get into your life. I mean, let’s talk specifically, the biggest thing here that we’re referencing is your portfolio, your investments, and your retirement plan. You don’t want to let market downturns or you know, the media or friends or all these inputs, tell you that your plan is bad and you don’t want to internalize that.
Because if you do have a good plan and if you have thought through it, well star by that, put a little asterisk. If you haven’t thought through your plan, well, this does not apply to you. This only applies to you if you like have a well thought out plan and you’ve spent the adequate amount of time on it, then just let all of that stuff kind of wash over your shoulders and let the negativity kind of do its thing and you just stay focused, because I think that a lot of people derail and change their strategy.

Ryan Isaac: What you said before in another episode about changing the allocation of risk of a portfolio during a market downturn, you know? Like it was a really bad day, now it’s time to change.

Reese Harper: Totally.

Ryan Isaac: Even though I’m still 30 years away and my goals haven’t changed. My feelings have, therefore it could change.

Reese Harper: So the fourth thing that we were going to talk about is this friendly alliance with more, one or more people who are going to really encourage you to follow through with both your plan and your purpose, and that’s what the fourth principle of persistence was. So, in the past we’ve talked a lot about financial archetypes, we’ve talked about personality types that interact with money in a lot of different ways, and there’s two archetypes that describe people who don’t like to involve others in their financial lives very often. That’s what we call an anonymous person and a DIY.
The DIY and the anonymous, both of those people tend to be very private or super protective about what they believe the right answers are. They’re not very open to feedback, and they tend to be super confident in their own decision making even though their research may not be as comprehensive or they might not have as much information or knowledge.
It’s just, they don’t want to talk to people. Anonymous, doesn’t want to talk to people about their money because it’s scary or embarrassing or it just feels like they’re giving up privacy rights, and the DIY people tend to just question anything anyone says for any reason. You know, they feel like they’ll get to it and do their own research and then they’ll make their own decision. I think both of these personality types, to some extent, are very healthy attributes that all of us could incorporate. Be a little more skeptical of what we hear and be a little more private before we just share everything about our own finances.
But to some degree they can really hurt, and it’s important for people who are overly focused on those to overcome those tendencies and find someone who can hold you accountable to help you avoid some of the most common mistakes that lead to these big setbacks. So tell me a little bit about how you kind of view this and how you feel, as a financial adviser, you have a relationship with your clients that might help them follow through with both a plan and a purpose.

Ryan Isaac: Yeah. Well we’ve talked about this before in terms of having a team, you know. I think the episode, Justin, Q, is called like The Nine People Dentist Should Know. Is that the episode?

Justin Copier: Yeah. I don’t know the episode number, but that’s the title.

Ryan Isaac: Okay, we’ve talked about this before. Having a team of people around you for the accountability, for the encouragement, and for the plan itself, whether it’s a tax person and a bookkeeping person keeping your P and L really organized so you actually know what money’s coming in, what money is going out and how efficient your practice is. Or a financial advisor that’s telling you, look, you’re halfway to your retirement goal, your make work optional goal, and every year you’re increasing this thing, by whatever it is, and here’s the path you’re on. Or you’re saving x percent of your income, that’s really good and your peers are saving this and you’re above average and keep doing that, you know?

Reese Harper: Yeah.

Ryan Isaac: Having people around you like that, that give you like specific guidelines of where you’re at and what you’re doing … And then also can give you pushback and feedback and kind of hard opinions on what to change if a change is needed, that’s really healthy to be surrounded by people like that, teams like that.

Justin Copier: Yeah. I was going to say this is not to be confused with somebody that’s just going to agree with you on everything.

Reese Harper: Yes. The yes man. Yeah.

Ryan Isaac: Yeah. It’s very, it’s very true.

Reese Harper: I see that. We see that a lot on, you know, and I think a good financial adviser can really … They have incentives that line up with helping you through these. This these four kind of persistent steps that we’ve talked about. Vanguard we recently relaunched or released a white paper on this that had some pretty groundbreaking research that concluded that behavioral coaching from a financial advisor, if you’re just getting feedback on how to view your portfolio and view your investments, can add between one and 2% in net returns after all their fees.

Ryan Isaac: That’s crazy, to your portfolio.

Reese Harper: And that was them looking at their own portfolios that they have people managing directly and assets the advisors manage on their platform, because Vanguard mutual funds are purchased by advisors and by people buying them directly, and they concluded that between one and 2% in returns was added through behavioral coaching or can be added through behavioral coaching depending on … On average, right? And you might be the personality type that doesn’t need any behavioral coaching or any support, and you might be the person that could probably use 3% worth, you know, or three or 4% worth, right.

Ryan Isaac: A little nudge.

Reese Harper: And so there’s, in order to get to that one to 2% average, there was some people that needed three or 4% a year in help, and some that needed nothing. So you’ll just have to be your own judge of whether that’s you.
The second thing they found was, if you can get all of your investments in the right account types, they call it asset location, and we won’t get into that today, but certain mutual funds in certain investments need to be in certain account types that are taxed differently. One example would be, by putting a stocks inside of a retirement plan, like small cap stocks instead of retirement plan that grow a lot, that’s not the right place to put them. You’d want to put those inside of a taxable account and maybe put your bonds inside of your 401K, because that way the interest income that’s paid from your bonds on tax shielded inside of your 401K where the stocks, since they don’t really pay any interest or those who pay dividends, those type of stock, you’d want to hold those in a brokerage account. And they estimated that 75 basis points or 0.75% per year in net returns, on average, would be added by just having assets in the right location.

Ryan Isaac: That’s a lot.

Reese Harper: They also averaged, they said that 0.35% in returns would be added to the average investor’s portfolio by just rebalancing correctly with new cash flow. So you’re making deposits to your investments, doing it properly. I mean, when you take all of this stuff together that they talked about, it’s like north of 3% a year that you’re going to gain through using a financial advisor. And essentially, depending on the person, that it’s like adding returned to your portfolio but not really paying for it, right? Because you’re going to pay your fee only financial advisor on a percentage of your account, and in many cases it’s not going to do anything but add returns to what you could have achieved.
So, when people say, well, why do advisors charge on a percentage basis? Or why is that a good way to pay them? It’s because a lot of things that they do are reflected in returns, and it gives them an incentive to help you make good decisions, and it also gives you an incentive to pay them in a way that takes the least amount of pressure on your end to constantly be thinking about, well, I just talked to my advisor, I don’t know if I want to pay $285 an hour for that, and you won’t call as much. Like you won’t engage your adviser as much, you know that with attorneys and with different consultants. Like you know when someone’s on the hook on an hourly basis or a flat rate, you’re not going to engage them as proactively.

Ryan Isaac: Which means you’ll miss things.

Reese Harper: You’re going to miss things and-

Ryan Isaac: You’ll skip stuff.

Reese Harper: … and your advisor won’t have the same incentives.

Ryan Isaac: You start making decisions without the person that’s hired to help you make good decisions.

Reese Harper: Yeah, and then eventually you lose the accountability and you’re self directing everything again. I think these are four good things to kind of remember when it comes to persistence, if want to hit them again, Ryan. Just to go through those real quick.

Ryan Isaac: A definite purpose, right? Know what you’re doing it for. A definite plan, which we would define as something being accountable to numbers and data, right? Well, he called it a mind closed tightly against all negative, discouraging influence, so we would say probably just keep distractions at bay.

Reese Harper: Yeah.

Ryan Isaac: Right?

Reese Harper: Yeah.

Ryan Isaac: You put it that way. And then align yourself with a good team of people around you that help you stay accountable and on track to those goals and the plan that you’ve laid out.

Reese Harper: Yeah. Well this has been a great episode. I want to hit with a fine, hit with a quote here at the end from Calvin Coolidge, one of my favorite quotes. He was the 30th president of United States, for those of you who do not know that. I mean they might not even know he’s a president.

Ryan Isaac: Like how we start this out by saying probably no one’s read one of the most popular books of all time, Napoleon Hill thing-

Reese Harper: We’ll see. We’ll see.

Ryan Isaac: Everyone knows Calvin Coolidge, 30th President.

Reese Harper: He said, “Nothing in the world can take place of persistence. Talent will not, nothing is more common than unsuccessful men with talent. Genius will not, unrewarded genius is almost a proverb. Education will not, the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘press on’ has solved and will always solve the problems of the human race.”

Ryan Isaac: Deep.

Reese Harper: Yeah, it’s a deep quote. I like it.

Justin Copier: I would carry on. Carry on is a good one too.

Ryan Isaac: You know what? I’m going to tag onto that. I was just coming home from Denver the other day. I was in an Uber, the guy, my driver’s from Ethiopia and I said, hey, can you give me a cool saying from your country? And he said, little by little, eggs will walk. That’s what he said, and I had to like think about it from and he said, it means persistence. If you just give it time, you sit on your egg, the egg will grow legs and walk because it becomes a chicken. Little by little eggs will walk.

Justin Copier: I like it.

Ryan Isaac: So anyway, uh, thanks for listening. Thanks for being here. Q.

Justin Copier: Good to be here as always.

Ryan Isaac: Q’s good to be here. If you have any questions for us, if you want to leave any comments on these episodes? You can go to the website and find these episodes at The website that Q mentioned earlier to get your free download for the TT guidebook where you can track your net worth and figure out your total term, is just Tom, Tom or total term, but it’s just TT. That’s it. If you want to talk to us, schedule on your calendar, there’s a link at the top of the website and you can always call us too, 833-DDS-Plan.

Justin Copier: Carry on.

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