32. The three financial stages in a dentists’ life and how to “own” them
With Tim McNeely
From fresh-out-of-dental-school to mid-career-earner to aspiring-retiree, each phase of a dentists' career is unique.
Each phase requires a different approach to wealth management (if a dentist plans to thrive in their professional and personal lives).
Picking a winning financial strategy doesn't start with finding the right balance between your 401k and your Roth — according to today's guest.
Instead, it starts with defining your relationship to money: what are your needs, your priorities, and your goals?
Meet our guest
Tim McNeely is a leading advisor to dental entrepreneurs, a Certified Financial Planner and a Certified Investment Management Analyst. He has a passion for helping dentists succeed in all stages of their careers, and is also the host of The Dental Wealth Nation podcast, a best selling author and a keynote speaker.
In this episode
- How should young dentists manage their debt and begin the process of building wealth?
- What are some common financial mistakes that dentists make?
- How financial strategies need to shift as retirement nears?
- What are some benchmarks of which mid-career dentists should be mindful?
- What can dentists learn from the wealth management strategies of the "super-rich?"
Through that whole journey, the whole constant companion… and the thing I would encourage everyone to think about is to always be implementing strategies that are flexible and adaptable. Because life changes, and what worked for you two years ago may not work today.
Welcome to The Path to Owning It podcast by Provide, hosted by me, Corey Brown, a marketing leader at Provide with over a decade in the healthcare industry.
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And you’re not alone. So to help you achieve your practice ownership dreams, twice monthly, we’ll tap into our unparalleled network of industry experts… who will join us on our quest to provide the answers to your most pressing questions.
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Today we are joined by Tim McNeely, a leading advisor to Dental Entrepreneurs, host of the Dental Wealth Nation podcast, bestselling author and keynote speaker. Tim is a certified financial planner, a certified investment management analyst, and has a passion for helping dentists succeed in all stages of their careers. Tim, welcome to the show. We are so excited to have you on today.
Likewise, I'm thrilled to be here.
I thought I was a busy guy, but whoa, I mean, what a bio. I mean, where do you find time to even help dentists in their careers?
Well, when you build a business right, you can do all the things you want.
Okay. Well, that'll be a separate episode for us, but today we're going to kind of talk about the three stages in a dentist's career. And I know that you have kind of a very unique story about how you began working with dentists. And I would just love if you could share that with us.
I'll tell you, I'm known for helping dental entrepreneurs build true wealth so they can thrive no matter what life throws at them, but my life certainly didn't start that way for sure. You see, I started my life as a very ordinary financial advisor, thought it was my job to manage an investment portfolio, and well, as you know and anyone listening to this show knows, there's a lot that goes into a dentist's life beyond the investment portfolio. And I met and fell in love with my wife, who happens to be a dentist.
But it turned out we had another person in our relationship and it was her dental practice. We'd be out to dinner or on date night and all of a sudden the conversation would turn to work and it would be, you know, I just don't know what to do about that grumpy patient or I've got to hire new staff or I'm getting killed in taxes. And as that ordinary advisor, I just couldn't help her. And I really found myself in a job I hated and I couldn't take care of the person I love the most.
I knew something needed to change. And so I started to reach out for help. I hired some of the top consultants in my industry to really teach me how the super rich manage their wealth, and the lessons that I could learn from that. And my wife and I started implementing some of those lessons, and we got back to enjoying our date nights again and having fun. But as you know, life is full of curveballs, and sometimes it'll throw you something you're not ready for. And the same was true for my wife and I.
I'll never forget being down in San Diego Del Mar. We weren't down there though for the beaches, the sun and the sand. We were there because my wife was having problems with her hands. And as you know, in dentistry, your hands are everything. If you can't practice dentistry, what's gonna happen? Now we weren't just worried about the practice invading date nights. What's gonna happen if she can't practice? How are we gonna make the mortgage payments? What's our future gonna look like? And, you know, thankfully we had done the planning.
And when the doctor walked in the room, we weren't worried, we weren't scared, we were calm, we were confident because we knew, no matter what he told us, we were gonna be okay. And that's really when I knew this is what I wanna do. I love dentistry, I love helping dentists, and I saw the big impact I could have when we really moved to advanced planning strategies to really build that life of significance so that you can thrive no matter what life throws at you.
Yeah, what an amazing story. You mentioned these kind of these planning strategies and that's kind of what I want to talk to you about today. Within a dentist's career, they typically go from starting being hundreds of thousand dollars in debt to mid-career making maybe as much as the top 5% of earners in the US to eventually, hopefully, retiring a millionaire, right? So there are kind of lots of crucial points and options along the way and that's where we would love your expertise, Tim. So let's start at the beginning with one's dental career and assume that they are kind of fresh out of school, they've got a large amount of student loans. What do you suggest to them to get on the right path towards building wealth?
I'll tell you, even before building wealth, I want to pull back just a little bit because this is a step that I think gets ignored so often, and that's getting clarity, right? We're so quick to jump into advice, and advisors, they provide advice, but what I find is most dentists want leadership. They want someone to really help them make those choices and sort through their options. And so before trying to figure out, you know, do you pay off your student loan? Do you go work for this practice? Do you open your own? Get some clarity about what you want your life to look like. And you're just starting out, so the good news is you can change your plans, you can change where you wanna go, but at least get some clarity around what's important to you. Where do you wanna head? What does your life look like? And then once you do those things, then you can start putting a plan into place, but you gotta start with that clarity. And so you've graduated dental school, congratulate yourself. That's the other thing you should do.
Realize you've just done something incredibly hard. And one of the lessons I've learned is, I feel like so often I'm always reaching towards this golden ring that's just right ahead of me, right? If I could just do this one more thing, this one more thing, then I'm finally gonna make it. But the truth is, the more I do that, the more I fail to look down and see all the things I've already accomplished. And that's a danger every single one of you can fall into. And so, you know, one of the keys to actually building wealth…
Interestingly enough, is finding contentment in where you are right now. So get clear, be content, recognize your successes. And now how do you actually start building wealth? Well, you need that plan. And one of the things that I see ignored so often is just that the failure to start saving and investing in yourself and getting clarity and really assembling that right team of advisors to help you achieve your vision.
And you know, you talk about getting clarity, it sounds almost unreachable. What are some strategies that you have, or what suggestions do you have for young dentists to kind of find what really is important to them?
I'll tell you, when I do this with my clients, is we always really center around seven key areas that we find clarity is so important. The first thing is, figure out what's important about money to you. Is it about providing for your family? Is it financial stability? Is it because you want to accumulate things? Is this the status that it brings? Like figure out what's important about money to you. Then dive in and figure out who your most important relationships are.
Right, and if you're a young dentist, you may not have those most important relationships yet. So imagine what they might be one day for you. From there, dive in and start doing that assessment of what are your assets, what are your liabilities, what does that picture look like? Then do an assessment of, you know, what does your current team look like? Do you have a team? If you're right out of dental school, chances are you don't have anyone to talk to.
So start figuring out who your board of advisors is gonna be, who are those trusted partners, the people who can provide leadership to you, not just advice, but leadership on where to go. Do an assessment of that team. Then figure out what do you like to do when you're not working? What's the process look like for working with advisors? Are you really hands on? Are you really hands off? So get some clarity around those areas first, because that will help you figure out who the right advisors who can provide leadership for you are.
That's great advice, Tim. Let's say that we have kind of gone through that exercise with you, we've gotten clarity, we know what we want, but now we're on a track of like we wanna build wealth, right? So what are some of your payback strategies, I guess, when it does come to student loans? Because that's one of the big questions we get from dentists, so I'd love to get your thoughts on that.
Yeah, absolutely. And when it comes to student loans, right, there's different options for paying these down, right? Everything from income-driven repayment plans to refinancing loans to accelerating the payments. And it's hard to say which one's right for you because once again, that's gonna come to that clarity piece. There's some doctors who I talk to and we're running the numbers, we're crunching them, and the strategy becomes, hey, your loans are at a great interest rate.
Your practice is doing really well. Pay the minimum on the loans. Don't accelerate those payments. For other doctors, they say, oh my gosh, you know, I just hate this burden of having a payment. I can't sleep well at night. I know the interest rates are low. I know I really shouldn't technically pay them off, but I want to sleep well at night. And so for them, the right answer is to pay those off. But the point is get some kind of debt management strategy in place that aligns with your goals.
And... maybe your goal is to go work in the private sector somewhere. And so in that case, you know, maybe one of these income-driven repayment plans or debt forgiveness programs makes a lot of sense for you. But if you're going into private practice and you want to own it one day, well, being on the hook and working for another entity for years may not make as much sense. And so that's why, you know, I come back to that clarity of goals is so important because we can get lost in those strategies and tactics.
And without something driving us forward, you're gonna end up making mistakes all along the way.
Speaking of mistakes, I'm sure that you've seen young dentists, you know, they start making some money and they don't have the clarity that you speak of, right? So they start to either buy things or pay off things that maybe you wouldn't recommend. What are some of those kind of common financial mistakes that dentists make early on in their careers?
I'll tell you that the one that I have fallen prey to, and I'm sure a lot of our listeners will fall prey to, is I love cars. I love the technology, I love the cars, I love the latest and greatest. And you know, so cars for the most part, now there's a way to do it right, but for the most part, cars are depreciating assets and they usually don't go up.
And so, you know, instead of going out and buying the latest and the greatest and something brand new right off the lot, why don't you look around for a used car? There's so many good values out there. And you can drive great cars. I drive a 2007 Jaguar XKR that I bought from another doctor who never drove it. It's a hundred thousand dollar car that I got for less than the cost of my wife's Honda. Like that's how you can make some smart choices out there. And really get the things that are important to you. So watch out for that lifestyle creep because that's what we're talking about is right? You make more money, you wanna spend more money. You wanna buy more things.
And that's one of the mistakes I see. The other big mistake I see is really the failure to put together an emergency fund. I mean, this is simple, basic financial planning 101, but you are gonna sleep so much better knowing that you've got some living expenses tucked away in an account, and that if something happens, you've got the assets there to pay for it, right? An emergency fund is gonna help you sleep so well. And so lifestyle creeps a big mistake.
Not having an emergency fund is a big mistake. And the other mistake I see is not saving for retirement, at least not starting that habit. I don't care if you start with $1 going into some kind of a retirement plan, just start that habit. Because you are gonna have to accumulate assets and build wealth for the things that you want, whether that's retirement or putting kids through school or acquiring practices, right? You're gonna have to build some wealth out there. So start that habit of paying yourself first.
Yeah, that's awesome advice and remind me to call you when I'm looking for my next vehicle. But let's say that we are taking your advice, we're not gonna fall in the lifestyle creep, we decide we wanna save for retirement. What are some sort of beginner level investing strategies found to be successful?
I'll tell you, things that are on autopilot are really the success strategies that are out there. Keep the expenses low, right? When I deal with investments, I wear another hat, the registered investment advisor hat, so I'm not going to go into specific asset allocation strategies or anything, but it really is like, keep your costs low. Don't get swayed by what your neighbors and everyone else is talking about or the latest hot tactic. That's the best way to lose money, right? Pick some kind of long-term strategy that you can put money away in and really recognize that power of compounding interest. Start early, that's the most important thing you can do because the earlier you start, the better off. And the studies have been done time and time again versus saving a little bit of money early versus saving a lot of money later. The people who saved just a little bit earlier do much better. And so just start that habit, get started.
And this might be a little biased question for you, but when do you think a dentist should enlist the help of a financial advisor? Is it ever too early for that?
Well, actually, and interestingly enough, you may expect me to say, yeah, you shouldn't list someone right away. But I would argue, no, you need to enlist the advisors, not just for advice, but for leadership. And you've heard me say that a couple times, right? Advisors provide advice. But what I find and what I provide to my clients is leadership, and there's a big difference. Because leadership is gonna help you see a bigger picture of what's possible. It's gonna encourage you to think, hey, yeah, you really can get that practice. Yes, you really can do that. And then leadership is going to help support you. And so, you know, if you're just looking for advice, you know, talk to people, get the advice, but you really want to start from the very beginning by putting leaders around you, people who can provide leadership in different areas for you. And you want to assemble that board of advisors, those resources who can help you throughout your entire career.
And how do you suggest young dentists go about finding the right ones for them to support them in the way that they may not know that they need yet?
I'll tell you, one of the best ways is asking your peers, right? When you're going to meetings, when you're getting your CEs, like talk to the person sitting next to you, right? You will be surprised at the wealth of knowledge in those rooms and just ask them, say, hey, I'm struggling with this. Who should I talk to? The other way is look for thought leaders. You want to work with thought leaders in the industry and thought leaders are people who write, speak, and publish in dental who are sharing the strategies, the tactics, and the leadership that can help you move forward.
Reach out to the people who can really help you accelerate and anticipate those things that you don't even know you're gonna face one day
Yeah, that's fantastic, Tim. You know, we've discussed kind of the first financial stage of a dentist's career and that need to set a priority and find leadership, but when we come back, I'm curious on your financial strategies for dentists kind of in their mid to late careers. More with Tim McNeely right after this.
I'm Corey Brown and this is Provides, the Path to Owning It podcast. We're back with Tim McNeely, leading dental financial advisor and thought leader to discuss what established dentists can do to set themselves on the right path for retirement. You know, Tim, we talked a little bit about earlier, dentists and their kind of early career things to do, what are priorities.
Let's talk about the dentist who is kind of mid-career. They're more established. Can you just talk about how their financial position changes at that point?
Yeah, absolutely. And for me, this is where it really gets fun. And this is where it really gets exciting because you as a mid-career dentist, you have options. Oh, wow. Do you have options! And you know, one of the things that's happened is by the time you're mid-career, hopefully you've reduced your student loans a little bit. Hopefully you've paid off some of that debt that you have. Hopefully your income has increased pretty substantially.
And so you've got options now, right? You've accumulated possibly a house, maybe you’ve bought a practice, maybe you're thinking about, hey, I'm ready to leave that associate position? I've been there for quite a while now and you're ready to step out. So you've got options ahead of you. And it's also where complexity really kicks in because now you've got more moving parts than ever before. And so as a mid-career dentist, right, I really find, like I said, that increased earnings, more earnings, more potential, right?
Maybe you want to go out there and acquire a building for your practice. Maybe you want to start acquiring equipment so that you can upgrade your practice and really do that kind of dentistry you've always wanted to do. So mid-career for me is a lot of fun. Not only that, but now things like retirement planning really kick into high gear because you have that clarity that you were playing with as the new dentist and maybe those visions have shifted a little bit, right? Maybe you're married now, have some kids. So your life will change. So now you've got some estate planning concerns that are kicking in. And then often I find that dentists are very generous, right?
You have causes that you've become passionate about. So now philanthropy becomes part of that, right? How do you use your practice? How do you use your assets? How do you use your wealth of knowledge to start giving back to the community? And so it really becomes a lot of fun. And the other thing that really kicks in for a mid-career dentist is the issue of risk management and asset protection. You know, there's a lot of people out there who look at you as a dentist and think, you've got lots of money, you're doing really well, and I'd like a piece of that. And you know, when I came into your office, I think I got hurt a little bit and, you know, I'm going to sue you. And so really that risk of protecting everything you've worked so hard for, so it's not unjustly taken from lawsuit, divorce, or some other unjust means, that becomes a big, big major concern for those mid-career dentists is really protecting everything you've worked so hard for.
And how would they go about that? I mean, I know personally I've worked in dentist officers for about a decade and have certainly run into those issues with patients where they maybe feel like they didn't get the correct treatment or something went wrong and now they want reimbursement. So how would they go about protecting themselves against something like that?
Well, I mean, there's everything from some dentists will set up their own insurance company that will include a dental warranty program for retreatment of cases, or a lot of times just having the proper liability insurance and professional liability insurance can help protect. And then there's other asset protection strategies, the use of trust, the different kinds of planning that can be done to make sure that your assets are separate from your corporate assets and that things are protected so that if someone comes after you don't have anything to offer them because it's all owned by your trust. So there's things that can be done, but you have to do it before those issues arise.
Right, and when is that ideal point in their career to kind of set this up? When is it not too early or too late, in your opinion?
Got it. What are some other benchmarks that dentists kind of in their mid-career should be shooting for to kind of stay on track for their personal goals or for retirement? I'm sure this varies dentist to dentist, but in general, what would you say?
Let's shift a little bit now. We're going a little later in the career. You know, retirement is on the brink. Maybe it's five or 10 years away. What kind of financial shifts should be made, if any, with that goal in mind?
Because the bankers, you guys are going to look at the practice and try to evaluate, do you want to fund this thing? And the best, and you're looking at the financials, so clean up those financials, start doing that tax planning. And doing tax planning can actually help you save money when you sell the practice so that you put more money in your pocket.
The other thing that, you know, really late stage and even, you know, kind of the later end of the mid-career dentist really wants to look at is the healthcare planning, longevity planning. The rise of concierge medicine, a lot of the advanced planning that's coming out around healthcare, cancer prevention, whole body scans, there's so much that can be done. And I don't know about you, I don't wanna live a long time unless it's a good quality of life. I just don't wanna live a long time for the sake of living long. I wanna have a good quality of life and chances are you do too. So that healthcare planning, succession planning, liquidity, right?
You want to make sure you've got ample assets that you can dip into for vacations, for funding education. And so you know really your whole goals really are gonna shift throughout your entire career. But once again it's gonna come back to that clarity piece, right? What are you actually trying to achieve? Maybe your goal is to sell the practice and continue to work back because you love what you're doing. You just want to offload the hassles of ownership because you're done with that piece. Once again clarity is so important.
And speaking of clarity, I know we've talked a lot about, you know, a dentist's career and different stages. Now that we've kind of hit on all three, could you summarize what kind of like the ideal financial strategy would look like if you could pick it from the beginning of one's career to retirement, what would that look like?
Yeah, absolutely, right? It's a journey for sure. And when you just graduated, right, you're excited, the world's your oyster, you're ready to get out of there, but you got debt hanging over your head. And so first things first, build that financial safety net, right? Get that emergency fund paid off. Get a debt management strategy in place. And that doesn't mean you pay off everything, it just means you have a strategy for dealing with it.
Then as you gain experience, as your practice grows, continue to assemble that team. Do that from the very beginning, but lean on that team. And you know, I'm a fan of private practice. My wife's in private practice. I love private practice. I would encourage you everyone to consider ownership. It may not be for you, but you definitely have to look at it. You definitely have to consider it.
So as your practice grows, your earnings are going to grow and it's okay to upgrade your lifestyle, but make sure you're doing it in a responsible way, right? This is a marathon. It's not a sprint. So once again, mid-career continue to really focus on reducing debt. Pay off those loans.
Then as you start moving into late career, right, you can see retirement on horizon. You can see that your lifetime of hard work is about to pay off. It's real. It happens. But make sure you're prepared. Go full throttle on your retirement savings. Make sure you've stored up enough so that you can fund that retirement you want. Your investment should really change from growing your wealth to preserving your wealth.
But through that whole journey, once again, the whole constant companion, and the thing I would encourage everyone to really think about is always be implementing strategies that are flexible and adaptable because life changes. And what worked for you two years ago may not work today. And what's working for you today may not work in three years. So make sure you're putting things that are flexible and adaptable in place because life will change for you.
Yeah, Tim, thank you for that. That's fantastic advice. I do wanna hit on this one thing because I know that you speak often on what you call the super rich and how they handle their fortunes. What, if anything, can dentists learn and implement for themselves from what you've learned of the super rich?
I'll tell you, I love studying the super rich. I've helped underwrite a lot of research on the super rich. And when I say super rich, I'm talking about people worth north of half a billion dollars. And the reason I want to study those people is I don't want them as clients. I don't have any clients that rich. I want to learn from them and you should want to learn from them too. And the super rich do two things extraordinarily well.
Number one, they have an elite team of people who provide leadership to them. They have the advisors, they have that team of people who aren't pitching products, who aren't trying to sell things to them, but who really understand what they're trying to achieve. And then that team does everything in their power to help support them so they can get to where they want to go. So the first thing the super rich do is they have an elite team of the best of the best people who are advising them and providing leadership.
The second thing the super rich do so well is they trust... but verify, like our president Ronald Reagan used to say, trust but verify. And they do this through a process called stress testing. And stress testing is really questioning the underlying assumptions of the planning that you've done. And this becomes so important as your level of wealth grows is you wanna do two things. Number one, you wanna be making sure you're taking advantage of all the opportunities that are out there. And secondarily, you wanna make sure you're catching errors in your plans before they occur because the errors will actually go down.
You'll have less plan or less errors in your plan as your wealth grows But the severity of that error is gonna cost you a whole lot more right a 1% error of a $10,000 net worth not that much money a 1% error of a 10 million dollar net worth… Well now we're talking some serious change and so, you know, you really want to be catching those errors. So the super rich they build that elite team around them of people who are gonna provide leadership and they're stress testing their plans on a continual basis.
Great advice, Tim, thank you so much. I'd like to mention that if any of our listeners would like more information on that topic and much more, you have a lot of resources that are available for them. One, your book, Dental Wealth Nation, as well as Becoming Seriously Wealthy, to which I know you wrote the foreword, would be great tools. Could you tell us a bit more about where our listeners could get a copy?
Yeah, absolutely. Super easy to get. You go to DentalWealthNation.com and you'll see a link there. You get the book. I'll send it to you for free plus shipping.
Fantastic. And of course you have your own podcast, Dental Wealth Nation, it has an entire library of episodes. What types of topics could they expect to find there?
I'll tell you, we dive into a lot of the super rich strategies that the super rich are using that you can use. And we also interview other thought leaders. We talk to people who can help you hire the best people for your practice or get the equipment financing or help you finance a practice or the attorneys that will talk you through everything that goes through, you know, lease negotiations and the buy-sell agreements.
So you've got a resource of thought leaders, super rich strategies, and even interviews with other successful dentists.
Awesome. And then lastly, if any of our listeners would like to enlist your leadership and support services for their practices, how can they reach you?
Awesome. Tim, you know this topic has been so enlightening. I just want to thank you for your time and expertise and we'd love to have you back again soon, okay?
Oh, it's a joy, Corey. And thank you so much for supporting dentists out there. It's an incredible industry. And if you're thinking about getting on the path of ownership, I couldn't encourage you more. Go do it. You won't regret it.
Awesome. Thank you, Tim.
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