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Is Your Retirement Plan Built Like a Steinway Piano? – Episode 22

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What do finance and pianos have in common? Pretty much everything. As the composer of your financial future, you need the right instrument to unlock your wealth-building potential. But a lot of dentists are using models that are out of tune. In this episode of Dentist Money™, Reese & Ryan describe the sound of a well crafted retirement plan.

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

Reese Harper: Welcome to the Dentist Money show, where we help dentists make smart financial decisions. I’m your host, Reese Harper, here with my co-host sir Ryan Isaac.

Ryan Isaac: Hey there, Reese. I know you’re excited for today’s show.

Reese Harper: You betcha.

Ryan Isaac: Because we’re going to talk about one of your favorite subjects, which is music and specifically the piano.

Reese Harper: La musica.

Ryan Isaac: La musica, as they say in Italian.

Reese Harper: El piano.

Ryan Isaac: In Russian.

Reese Harper: I don’t know what language or accent that was. But it is one of my favorite subjects. But it’s one of your favorite subjects too, Ry.

Ryan Isaac: It’s true.

Reese Harper: At least you were in a band.

Ryan Isaac: I was in a band once.

Reese Harper: See, and I wasn’t ever really in a band.

Ryan Isaac: Which I’m sure most people know. That’s what they know me for.

Reese Harper: Actually, I was in a two-man band that never really saw live stage time.

Ryan Isaac: Really?

Reese Harper: Yeah.

Ryan Isaac: What were you called, I don’t think I knew this.

Reese Harper: Last Boy Scouts.

Ryan Isaac: Seriously?

Reese Harper: Yeah, we had a gig. We had one or two shows.

Ryan Isaac: This is not in the script and this is awesome. The Last Boy Scouts?

Reese Harper: Cree, if you’re listening, we had a good run. It was a great run together.

Ryan Isaac: Last Boy Scouts, okay.

Reese Harper: So, just so you know, the band broke up.

Ryan Isaac: Okay.

Reese Harper: We saw a little bit of stage time.

Ryan Isaac: The limelight.

Reese Harper: And Cree went and got his PHD from Chicago.

Ryan Isaac: Oh, the math guy.

Reese Harper: He’s an economist now, and I went into finance. So we just … Music and finance have deep roots, okay?

Ryan Isaac: They do, they do.

Reese Harper: And I think it’s a natural transition.

Ryan Isaac: We both made the transition from…

Reese Harper: You’d be surprised how many people are in finance that have music roots.

Ryan Isaac: This is the creative brain side to it, that makes sense to me.

Reese Harper: And the math-y side, I don’t know.

Ryan Isaac: It makes sense. But you haven’t let go of the roots completely, you actually have, in your desk upstairs, you have the slide-out drawer and the piano keyboard that comes out, and you can play every once in a while.

Reese Harper: Yeah, occasionally we’ll play a tune.

Ryan Isaac: If it’s a good week.

Reese Harper: Depending on the day, what day the market goes.

Ryan Isaac: Yep.

Reese Harper: We got DOW goes up 100 points, you’ll hear maybe an optimistic jazz tune, and if it’s a decline we’ll have a little blues riff.

Ryan Isaac: All right. Well, you recently let me talk about crossfit on a podcast, so I’m going to let you talk about pianos today.

Reese Harper: But I’m not going to rant about pianos, for all you haters out there.

Ryan Isaac: Stop talking and get to the finance stuff!

Reese Harper: This is a related issue, people.

Ryan Isaac: Yeah, we’re going to relate something here. You’re going to teach us what goes into crafting a high-quality piano, and in the world of pianos, let’s start there. What are the best brands? Give us some education.

Reese Harper: You know, for all you dentists out there who moonlight as concert pianists, there’s probably a few of you.

Ryan Isaac: That’s a big market.

Reese Harper: And if you’re in the market for a top-of-the-line piano, you’re going to want to look at something like a Steinway or a Bosendorfer. Steinways get made in New York and Bosendorfers are made in Vienna. Those are probably two of the highest-end ones.

Ryan Isaac: That sounds classy.

Reese Harper: And you’ve probably heard about a Steinway, but probably haven’t heard about the Bosendorfer.

Ryan Isaac: I’ve never heard of the Bosendorfer.

Reese Harper: Yeah, there’s some … European pianos, there’s a lot of really high-end European pianos.

Ryan Isaac: Okay, and how are they made?

Reese Harper: Well, they’re not mass-producing these things, Ry.

Ryan Isaac: Not the Bosendorfer.

Reese Harper: Now, if you’re getting a mass-produced piano, what they’re doing is they’re trying to limit … Steinway and Bosendorfer, they’re trying to limit the volume of pianos they sell every year. They’re focusing on quality, not volume of production. You’d probably be surprised at how many pianos they make in a given year.

Ryan Isaac: Do we have the numbers?

Reese Harper: Some manufacturers will make hundreds, some will make tens of thousands. And some will stay less than a thousand, or even the low hundreds.

Ryan Isaac: Really?

Reese Harper: So you can’t really make a great living off of 100 pianos a year.

Ryan Isaac: Well, what does a Bosendorfer cost?

Reese Harper: You’ll see, that’s when you get to your north of 100,000 dollars for a starter piano.

Ryan Isaac: A starter Bosendorfer.

Reese Harper: Yeah, I mean, even … And Steinway’s got … Their best pianos are definitely north of 100,000 too. And so, that’s your range.

Ryan Isaac: Okay, this is interesting. So what are some of the things that these high-end piano manufacturers will do to make a better piano?

Reese Harper: Well, a cheaper piano, let’s say a mass-volume piano like a Yung Chang or a Kowhai, you’ll see a lot of those that are … What they’ll do is the cheap pianos will cut their sound bards, this piece of wood that’s underneath the strings. They’ll cut them in mass quantities. They don’t really shape them in any way that’s specific to the wood that was cut.
So each soundboard in a cheap piano is just like … There’s a bunch of these soundboards that are cut, and you just kind of shape the piano around this mass-produced soundboard.

Ryan Isaac: That’s the foundation of the piano?

Reese Harper: It’s the wood underneath the strings.

Ryan Isaac: They build it around that.

Reese Harper: Yeah, and so, that’s the kind of main resonant thing that makes all the sound bounce off if so you can hear anything.

Ryan Isaac: Okay.

Reese Harper: But then, a higher quality manufacturer will shape the soundboard to match … They’ll shape the whole piano to match the soundboard, and they’ll carve the soundboard specifically to the wood that they had for that tree.

Ryan Isaac: Oh my gosh, okay. So they’re probably making, the high-end ones, only maybe one of a time, and they’re adapting to the subtleties of each piano and the wood, and the characteristics of the materials they’ve got.

Reese Harper: Yeah, they’re going to custom shape the rims, which are the pieces of wood that encase the piano, so that the rim itself isn’t just one mass-manufactured piece. They’ll put together each action individually, an action’s like the key, and the hinge and the hammer that strikes the string, that’s called an action.
So each piece of … Each key will have its own action constructed specific to that key. And it’ll be tuned to that range in the frequency.

Ryan Isaac: Geeze.

Reese Harper: Anyway, things you don’t really think about.

Ryan Isaac: No, ever. I would have thought the Yamaha was just fine for my house.

Reese Harper: Yeah.

Ryan Isaac: So, what we’re going to do today … Natural segue into this, but this did have a point. Because what we’re going to do today is compare the value of a well-crafted piano to the value of a well-crafted financial plan.

Reese Harper: Yeah, I think this is a good … Pay attention, people. This is worth your time here, okay? We’re getting into some quality.

Ryan Isaac: All right.

Reese Harper: Yeah, and maybe a good way to set this up is to say that some of the mass-produced piano brands are still pretty good. I’m not a total slob, I don’t have enough money to blow on a high-eng Bosendorfer without thinking about it. So if you’re just learning to play, or if you have some decent experience, a Yamaha’s going to work just fine for you, or a Kowhai.
Now, if you’re an accomplished musician, and you’re playing in concert halls and you’re at a point where you know how much pressure to put on certain keys to make the hammer hit the string just right, then you’ll need a piano that does justice to your skill level.

Ryan Isaac: Okay, so the argument then that we’re making for dentists, is that in the world of wealth management, you’re among the more accomplished financial class, top 1% of income owners in this country according to the latest studies.

Reese Harper: Yeah.

Ryan Isaac: You’re dealing with more complexity in your situation, so you need a financial plan and an advisor that does your situation justice. So an out of the box, one size fits all plan isn’t going to be the answer for you.

Reese Harper: Right, and no matter how skilled the financial advisor is, if he or she doesn’t have the ability to make those nuanced, quick adjustments to your financial plan, the outcome won’t be as good. And some advisors, they just don’t have a set of tools to help them do their job the right way, and they depend entirely on feedback from the client.
So this doesn’t allow for adjustments to be made quickly and on a regular basis. So, overall, the performance just won’t be the same. And it’s not uncommon for a financial advisor to gater information from a client, during a client meeting.

Ryan Isaac: It’s pretty typical.

Reese Harper: Yeah, over phone calls. Instead of being prepared for those meetings in advance. So instead of using that time to make really calculated, nuanced decisions, the client and the advisor are using the same time just to try and get on the same page.

Ryan Isaac: Yeah. And what you’re saying is if all you’re doing is having conversations in meetings instead of making decisions in those meetings, it gets pretty inefficient, and it can slow down your progress. Plus, what ends up happening, and we know this from experience too, when you sit down to meet with a client, the majority of the meeting is talking about things that are top-of-mind for the client, rather than some objective data that you’re trying to work on.
And we’re going to stay with the piano theme then. We’re going to get into some good parallels to wealth management that we can use. So, hopefully that’s okay with everybody.

Reese Harper: Yep.

Ryan Isaac: You’ve alluded to it a little bit, but let’s talk a little bit more about piano material, specifically.

Reese Harper: Yeah, and how those relate to financial planning. So, a piano has a ton of moving parts and components, and even the high-end manufacturers, they’re not making every piece of it. For example, there is a company called Renner, they build these action components that I talked about. There’s the key and the hammer and the action…

Ryan Isaac: Renner Action Company.

Reese Harper: Yeah, it’s a … Let’s just call it that.

Ryan Isaac: Okay, Renner, all right.

Reese Harper: But then Steinway, or whoever the piano maker is, they’ll reassemble those parts to meet their own specs. So they’ll take these action components, they’ll reconfigure them, and arrange them to meet their own specifications. Which might be more rigid than they come out of the Renner factory, or a slightly different configuration so that they strike the string differently, or have a little bit faster action. A lot of people reassemble them, themselves.

Ryan Isaac: Interesting, so you could have two different pianos with Renner actions, assuming that Renner is the brand of brands.

Reese Harper: It’s a good brand for actions.

Ryan Isaac: It’s a good action brand. But they won’t necessarily perform the same because they’ve been altered, or installed differently depending on how the piano manufacturer itself reassembled and installed them.

Reese Harper: Yeah, exactly. That’s true in the world of financial planning and investing too. This is probably a really close parallel. You can’t just say, “Both of those investment firms use Vanguard,” or, “Both of those firms use I-Shares funds.”

Ryan Isaac: They’re an index shop.

Reese Harper: Yeah.

Ryan Isaac: They use index funds.

Reese Harper: There’s a … Oh, okay. Somehow you assume that there’s no difference now between the two firms, and the more competent the firm, they’re going to reassemble a portfolio to be more closely aligned with a client’s situation, and the outcomes are going to result in higher expected returns, lower capital gains, reduced trading costs, and better rebalancing.
And they’re going to look at new cash flows and deposits differently, so just don’t get confused by trying to put all pianos into one box and say, “Oh, it’s a Baby Grand.”

Ryan Isaac: Okay, well what about servicing a well-built piano? Because I’m sure even the best pianos, they need routine maintenance.

Reese Harper: Yeah, they do. And even the best pianos have to get a little TLC here and there. And so, if you … Because you invest in the quality up front, the maintenance is less invasive, and it’s easier to adjust to maximize performance.

Ryan Isaac: Yeah, you don’t have to bust out the hammer?

Reese Harper: No.

Ryan Isaac: Is that what you do, you bust out a hammer, start banging away on the keys? Or jack hammering, assuming that’s how you fix it and maintain it.

Reese Harper: Okay, on the nicer models it’s just less of an overhaul. It’s more of an adjustment. Because everything’s constructed so well that you can fine-tune it. You can use more tools to fine-tune it, and you have more options on how to arrive at really specific sounds that you’re trying to get.

Ryan Isaac: And when you … So, if you don’t maintain a piano, I’m just kind of curious. If you don’t maintain it frequently or periodically, or you bought a cheap one to begin with, what’s the maintenance process? Is it a big overhaul every time? All new keys and strings?

Reese Harper: Well yeah, because I mean … You guys probably have those pianos where … Someone out there has got, every six months the thing sounds like its broken? It’s just so out of tune. You’ll have an upright that’s just been slapped together, and the tuner gets in there and he’s like, “Oh, it’s because your hammer’s fallen off,” or, “Your strings are disconnected.” Or, “You’ve snapped a string.”
Or, no matter how tight you try to stretch a string to get it back into shape…

Ryan Isaac: You just can’t.

Reese Harper: It just loosens and it doesn’t stay in place, the knobs are just cheap.

Ryan Isaac: So it’s like an emergency repair every time. Everything’s a big, huge fix.

Reese Harper: Yeah, it’s always broken.

Ryan Isaac: It’s the same thing with a good financial plan that is well-designed and maintained right from the beginning. Over time you will avoid the headaches and the pain that comes from big financial setbacks, and you’ll have the right context to make big financial decisions, too.

Reese Harper: The bottom line is, if you don’t maintain … If you invest in something that isn’t a quality … If you invest in a mediocre financial plan, or you have a really cheap, slapped-together product, over time there’s a ton of maintenance that can come with that.

Ryan Isaac: You can develop cracks.

Reese Harper: Yeah, you can replace the whole freaking soundboard. That’s really expensive to do, because you have to take the whole piano apart now. But anyway.

Ryan Isaac: Okay. So, what this means for a dentist though, is that a good financial plan should incorporate things like the value of the practice, your profitability in the business, tax rates, investment returns, risk management, insurance, a lot of other things. And if you don’t have a strategy that addresses all of these on a regular basis, it’ll cost you in the long run.

Reese Harper: Yeah, good financial plan has to take into consideration more than just like an investment or an insurance product.

Ryan Isaac: One product that … Right.

Reese Harper: Yeah, or just one meeting that you had. And I think that’s a good thing we should talk about next, is this idea of settling in with time. It takes a lot of patience to build a good piano, and a grand piano rim? That’s the thing that goes around the soundboard, the exterior, the sides of it.

Ryan Isaac: Like, the sides of it? Okay. That’s a layperson would call it, the sides. Is that the sides, Reese?

Reese Harper: So, you have to … Sometimes you have to sit around for months after they’re bent so that they can even be worked on further. And there are probably like 12,000 parts in a piano, if you break them all down, that require different amounts of waiting time. Even the strings get stretched in stages. You don’t just stretch a string…

Ryan Isaac: And put it on?

Reese Harper: And put it on. The wood needs to sit and shape, and then left there for months at a time. That sound board has to be treated sometimes for a really long time.

Ryan Isaac: So you can’t just take the strings and put it all in one pull? You can’t just give the strings a couple little tugs and it’s all good?

Reese Harper: This is science, this is science, Ryan. Okay? You can’t rush it. And the same goes for financial planning, you can’t just put plan together really quick and expect it’s going to work its way out the way you want to. It’s a really long-term process, you have to regulate it, you have to review it, and you’re got to allow things to sit and develop naturally before rushing to conclusions.
You want to put a thoughtful plan together, and then gradually help it take shape, rather than just forcing the issue. And that happens a lot with financial planning, you know?

Ryan Isaac: Yeah, well it does. I’m just thinking of how often that does actually happen. I think the expectation, a lot of times, is to hurry and do things. People, they get in trouble when they try to speed up the process of building wealth or creating a good investment plan, a philosophy, by trying to time the market or put a bunch of money into a risky investment to hit the home run.
So, the investors though, who come out ahead are the ones who let their investments work for them over a long period of time, and they’re not expecting immediate results.

Reese Harper: Yeah, you have to give your strategy some time to play out. And I think it’s really important to make sure the financial advisors don’t rush to conclusions on the recommendations they give to clients. You’ve got another client’s personality, you’ve got another financial behavior over time, the decisions they’ve made historically, the things they tell you, are they really accurate? Are they a reflection of biases that you might have as a dentist?
And I think that a good financial advisor doesn’t really rush to conclusions on all the recommendations that they make. They like to give a recommendation, let the client sleep on it for a week, see if they feel the same way, come back, do it in a few days and then make sure that you’re on the same page. I don’t know, sometimes it’s just scary to see how fast people slap things together and move on.

Ryan Isaac: Well yeah, how often have you seen with clients the right answer be to just wait on things?

Reese Harper: Yeah.

Ryan Isaac: Sit and think about it, and wait, and let things develop. That’s so true.
Let’s talk about the workers for a minute, the people that put the pianos together.

Reese Harper: Totally.

Ryan Isaac: I want to know who these people are. They probably take a lot of pride in what they do, especially in these higher-end manufacturers. I imagine there’s a big different then between the assembly line worker at whatever mass-manufacturer, and then the piano builder at Steinway and Bosendorfer.

Reese Harper: Yeah, there’s a huge different in probably in the level of pride and satisfaction they have in their job. But also, the skill level that they bring to the table. Because the Steinway craftsman or craftswoman is super, highly trained. And because of the enormous investment that the company makes in training, they’re willing to pay a lot to employ these people over many years.
And the best companies, they have really good training programs that move people up the ranks and create a lot of skilled replacements so that there’s always backup when people are out, or when they need people to rise up to the next level of service in the company.

Ryan Isaac: Yeah, of course there’s a cost that goes along with employing people at that skill level, I assume.

Reese Harper: Yeah, it’s another reason you’re paying more for this type of piano. The people aren’t just following instructions, they’re more focused on the outcome. So they’re given a lot of autonomy, right? They can use their own judgment to make decisions about each piano as well.
For example, there’s a person in the assembly line called the voicer, and it’s their job to make sure that the tone from a particular set of hammers sounds the right way, that they like the tone. It’s a little bit subjective, and it’s specific to a manufacturer. The tone that a manufacturer is trying to get out of a particular soundboard or model of a piano.
And that voicer, in a high-end factory, has got the authority to replace components in the action to make the voice fit…

Ryan Isaac: On individual pianos.

Reese Harper: Individual pianos.

Ryan Isaac: Specifically, and interesting.

Reese Harper: Yeah, and at a lower-end factory, every employee in the assembly line isn’t even skilled enough to make those decisions, and they’re not given authority to make those kinds of adjustments. So those flaws, if there are flaws in the piano along the assembly line, they’re not identified until it’s clear down the end of the assembly line, the end of the construction process, at which point it’s too late or too expensive to really justify the change. And so that’s where you get your low-end quality.

Ryan Isaac: Interesting. So you’re saying then, that all financial advisor firms that are not created equal. The quality of workers or advisors, analysts, administrative staff, they have a big effect on the quality of the financial plan, and the speed at which a dentist can build wealth.

Reese Harper: Yeah, every step of the way. And I think dentists can relate to this. If you hire an associate, it’s nice to have someone’s experience so you can trust them to exercise good judgment, and adapt to the needs of each patient. It’s also nice to have someone who’s going to recognize when preventative treatment needs to be done, so that you can avoid a more painful and expensive procedure down the road.
And it’s nice to see for us as patients, when a dentist hires that type of support staff and admin staff to build really solid processes within the practice, and I think we try to do that same thing in our firm, and I think that’s really important when you’re looking at a financial advisoring firm. If you’re hiring one person, you don’t have a really good set of checks and balances. And if that one person doesn’t have a solid administrative staff, or an analyst staff to really catch this…

Ryan Isaac: Process.

Reese Harper: Then there’s no process, then there’s no way … There’s not enough opportunities to catch fine-tuning and quality control along the line.

Ryan Isaac: It is, it’s nice to have a firm with skilled support staff, as a Bosendorfer assembly guy would be.

Reese Harper: You’re a Bosendorfer type assembly.

Ryan Isaac: Would I be a Bosendorfer?

Reese Harper: I think that’s the right place for you. There’s a lot more bald people over there in Vienna.

Ryan Isaac: See, there we … Let’s end it on that. Is that how we’re going to wrap this up? Are you going to play us a little song on the way out, I don’t know.

Reese Harper: No, there’s no piano.

Ryan Isaac: There’s no piano here.

Reese Harper: We can’t do that folks, but let’s leave them with a few questions.

Ryan Isaac: Okay.

Reese Harper: So, think about this. Do you have a financial plan that you can make sense of? Does it make sense to you? Can you explain your financial plan to somebody else? Do you have an advisor who can help you make quick adjustments when things are out of tune? And is your plan molded to your specific situation, or does it feel more like a mass-produced model?
Maybe another question that’s important is, did you pay for expertise, education, and knowledge, or did you simply buy a product as your plan? I think those are, they’re interesting thoughts.

Ryan Isaac: Good, that’s a great place to end. And we will look for the upcoming album and possible tour of, what was it, the Last Boy Scout?

Reese Harper: The Last Boy Scouts.

Ryan Isaac: Okay, The Last Boy Scouts.

Reese Harper: You can … There’s an opening in the band.

Ryan Isaac: Really?

Reese Harper: There was two and one is gone, one remains.

Ryan Isaac: There’s only two guys. There’s always openings in the Last Boy Scouts, all right.

Reese Harper: Tryouts next week.

Ryan Isaac: Okay, well thanks to all our listeners for joining us. Remember, leave us a review on this podcast. If you’d like more information, follow us on Facebook…

Reese Harper: Facebook!

Ryan Isaac: Or visit You can sign up for a newsletter, or schedule an appointment on our calendar. We also have our phone number on the website. And give us a call, we’d be happy to chat.

Reese Harper: Carry on.

Advisors, Getting Organized, Behavioral Finance

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