Get an estimate of your practice’s worth. If you’re considering selling your dental practice, merging with a DSO, or planning your financial future, knowing your practice’s value is crucial.
The Elements Financial Planning System™, originally developed by Dentist Advisors, is a proactive treatment plan for your financial health. Our advisors use Elements to monitor your key financial indicators, benchmark your performance against other dentists, and optimize each moving part of your wealth strategy.
To learn how the Elements® function, click on one of the four main questions answered by the table or select an individual block for further explanation.
Elements takes hundreds of financial jobs to be done and simplifies them into 12 main categories which our team uses to make sure all the accounts, data, and documents related to your financial plan are accurate, up to date, and easily accessible.
With a clear picture of your income, personal spending, practice profitability, savings, debt, insurance, assets, and so on, our advisors can turn your various financial inputs into quantifiable scores that provide an objective diagnosis of your financial health.
Your Elements scores will highlight gaps and opportunities in your plan, and give our advisors the ability prioritize adjustments that will help you:
A list of action items will be documented and used by our advisors to:
See how your performance compares to hundreds of other dentists. Take our Elements® benchmark survey to receive your free report.
Explore educational content related to each Element in our periodic table of financial indicators
How to Build the Right Retirement Plan for Your Practice – Episode #701
How to Budget Without Feeling Like You’re Cutting Back – Episode #676
Thinking of Selling to a DSO? Pause and Do This First – Episode #669
How To Plan For The Present – Episode #666
Why Do Dentists Feel Like They Don’t Make Enough Money? – Episode #664
How Much Life Insurance Do Dentists Need? – Episode #661
How Much Is Your Practice Really Worth? – Episode #659
The Cost of Following Financial Influencers – Episode #657
How to Coach for Better Patient Outcomes and Profits – Episode #654
The Psychology Trick That Helps Dentists Stress Less and Focus More – Episode #652
Where’s Your Money Going? How to Track, Cut, and Align Spending – Episode #649
Listener Q&R #9: Tax-Loss Harvesting, Wash Sales, Liquidity & Stress – Episode #647
Helps us determine whether the client will experience too much volatility risk for their personal level of spending and age.
EQUITY INVESTMENTS divided by TOTAL INVESTMENTS = Your Rate
Measures how much money the practice owner keeps as a percentage of collections. This serves as an important indicator of business efficiency.
TOTAL PRACTICE-
RELATED INCOME divided by TOTAL COLLECTIONS = Your Rate
Measures how much insurance a person has compared to how much they need based on annual spending and net worth. Coverage is evaluated for the following types of insurance: life, general disability, business overhead disability, buy-sell, key person, personal liability, and business liability.
INSURANCE
COVERAGE HELD divided by INSURANCE
COVERAGE REQUIRED = Your Rate
Indicates how much of a person’s income is being put away for future expenses, emergencies, and retirement.
ANNUAL SAVINGS divided by TOTAL
PERSONAL INCOME = Your Rate
Helps us understand a client’s spending patterns and retirement preparedness.
ANNUAL PERSONAL
SPENDING divided by TOTAL PERSONAL
INCOME = Your Rate
Indicates whether a person is servicing too much or too little debt for their individual circumstances.
ANNUAL DEBT
PAYMENTS divided by TOTAL PERSONAL
INCOME = Your Rate
Indicates whether tax liability could be reduced with better tax planning.
ANNUAL TOTAL TAXES divided by TOTAL PERSONAL
INCOME = Your Rate
Estimates the number of years a person could live on his/her cash or cash-like assets outside of a retirement plan. Lt also indicates the amount of after-tax money an individual can access if needed.
TOTAL LIQUID ASSETS divided by ANNUAL PERSONAL
SPENDING = Your Rate
Estimates the number of years a dentist could live on the assets he/she has within qualified retirement plans (401k, IRA, etc.).
RETIREMENT ACCOUNTS divided by ANNUAL PERSONAL
SPENDING = Your Rate
Estimates the number of years a person could live on his/her current practice equity. It also indicates how much of a person’s wealth is concentrated in the practice.
TOTAL PRACTICE EQUITY divided by ANNUAL PERSONAL
SPENDING = Your Rate
Estimates the number of years a person could live on his/her current real estate equity. It also indicates how much of a person’s wealth is concentrated in real estate.
TOTAL REAL
ESTATE EQUITY divided by ANNUAL PERSONAL
SPENDING = Your Rate
Estimates the number of years a person could live on his or her current assets if they did not grow. This includes cash, investments, practice value, and real estate equity.
NET WORTH divided by ANNUAL PERSONAL
SPENDING = Your Rate
Tt (Total Term) is the crown jewel of the Elements® table because it indicates how long you could live on your current wealth if it did not grow. In other words, it provides a conservative estimate of how many years you could survive if you stopped working today. Tt is calculated by dividing net worth by annual personal spending. It is also a summation of the four blocks to its left which represent each asset type: Rt (Real Estate Term), Pt (Practice Term), Qt (Qualified Term), Lt (Liquid Term).
The four blocks to the left of Tt (Total Term) estimate how long you could live on your liquid assets, qualified retirement plans, practice equity, and real estate equity respectively. These represent the four asset types in a dentist’s portfolio, and when added together, they create your Tt. These four blocks also provide a clear view of your asset distribution to help you and your advisor understand if there’s an opportunity for better diversification.
Podcast #82
The Numbers Dentists Need to Know to Retire Better
The second row of the Elements® table calculates the percentage of your total income that goes toward savings (Savings Rate), spending (Burn Rate), Debt (Debt Rate), and Taxes (Tax Rate). These are the only four places your income can go and it’s important to keep them optimized to accelerate growth.
Podcast #95
This is Why Dentists Spend Too Much Money
The top row of Elements® contains Er (Equity Rate), Pr (Profitability Rate), and Ir (Insurance Rate). These ratios indicate risk levels within your investment portfolio, business, and insurance profile respectively. The amount of risk you should take in each area will depend on a number of factors including your tolerance for risk, career phase, liquidity, and financial goals.
Podcast
How Much Insurance Does a Dentist Need? – Episode #100
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