Myth-Busting Financial Planning with Reese Harper

• There are big differences between fee-based and fee-only financial advisors.
  • People assume “fee-based” means you only charge fees, but advisors who say they are fee-based generally also take commissions.
• Bad financial advice comes from product salespeople who get paid commissions. Good advice generally comes from people who get paid for their time, or percentage against an investment account.
• Make sure your financial advisor is disclosing ALL FEES UP FRONT.
• Everyone who is commission based have a strong conflict of interest. They are incentivized for pushing products that may not be in your best financial interest.
• Your financial advisor should be a registered investment advisor, and an independent, fee-only fiduciary, and nothing else.
• If your broker/dealer/advisor is spending a lot of money on you it is a red flag.
• The more you learn about finance the more you’ll know the current financial market model is crazy.
• For dentists who have “found money,” the first & best thing you should do is invest it in your business.
• Dentistry is an amazing career, but there’s a huge barrier to entry.
• Use your money to work toward at least a 20% operating margin beyond your production.
• If your practice is good and doesn’t need investment, you can use your money to:
  • Build businesses
  • Buy liquid assets (minimum 6 months of living expenses) (cash, mutual funds, anything you can pull out that isn’t tied up)
  • Work on retirement plans
  • Buy real estate
• To be a serious investor you have to take risk. In order to take risk you have to be liquid.
• Pay attention to your debt-to-income ratio.
• In a calendar year, do you have more than 20% of your gross income left over? If you’re not accumulating 20-25% liquidity every year you haven’t earned the luxury to reduce your debt on an accelerated basis.
• Your income can only go to:
  • Savings
  • Spending
  • Debt
  • Taxes
• The ratio of your income mix dictates what you can do.
• It’s more important to get into the right working situation than it is to pay down your student loan debt.
• Not everyone is cut out to be a practice owner. There are a lot of benefits to being an associate, and you don’t have to be an owner to max your earnings.
• There is a correlation between income and ownership. Owners tend to make more, but that’s because 30% of owners manage their practices really well and are killing it. 70% of owners really struggle, to the point where it’s probably a wash whether they should be an owner or not.
• If you’re smart, your first associate hire will cut your income. As an owner you have to go through periods where you make less than you would as an associate.
• You have to have a net worth that is about 30x your annual spending in order for work to be optional.
• Dentists don’t invest their liquid assets aggressively enough. They’re too conservative, and it costs millions of dollars over a 25-year career.
• The 3-factor model says investments grow more than average because they are:
  • Smaller vs. bigger
  • High value companies vs. high-growth
  • High quality & profitably vs. low-profitability
• Run if your CFP is telling you to get out of the market now because a correction is coming.
• You know you’re too conservative if your investments didn’t beat the S&P return.
• Your investments can earn 10-13% every year if you invest wisely.
• Keep tuning in to Bulletproof Dental Practice podcasts for the next interview with Reese!

Fama–French three-factor model