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Copyright 2014. All rights reserved.
The Dental Financial
Life-Cycle
Business & Personal Financial Planning
Strategies for...
Copyright 2014. All rights reserved.
Cambridge Wealth Counsel
Counsel. Plan. Prosper.
Robert Hockett, CFP
robert@cwcounsel...
Copyright 2014. All rights reserved.
Our Firm
• Fee-Only®
Fiduciary – Comprehensive Wealth Management
• Founded in 1996
• ...
Copyright 2014. All rights reserved.
Our Dental Clients
Licensed professionals who desire to work with trusted
experts to ...
Copyright 2014. All rights reserved.
Our Wealth Services
• Goal setting
• Life and career coaching
• Cash flow analysis
• ...
Recognition
“Best Advisors for Dentists in US”
Dental Products Report, 2011-2014
“Top 150 Advisors for Physicians in US”
M...
Copyright 2014. All rights reserved.
Media Coverage
Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies »...
Copyright 2014. All rights reserved.
Presentation Overview
1. The Dental Financial Life-Cycle
2. Client Case Studies
3. Au...
Part 1.
The Dental Financial Life-Cycle
Copyright 2014. All rights reserved.
The Dental Practitioner’s Scorecard
www.cwcounsel.com/UDA
Copyright 2014. All rights reserved.
Who we are » 1. Dental Fina...
Copyright 2014. All rights reserved.
Basic Facts
• Average income for dental professionals (2012):
• $202,000 General Prac...
Local Demographics
• Utah Practitioners: 1,804
• 97.3% male, 2.7% female
• 1,562 patients per dentist
• Arizona Practition...
Local Demographics
• Idaho Practitioners: 904
• 94.4% male, 5.6% female
• 1,753 patients per dentist
• Nevada Practitioner...
Regional Income Demographics
General Practitioners
•Average income: $205-$225k
•Average revenue: $775k
Specialist Practiti...
Dental Trends
• Retirement Age Extends (61/68/75)
• Debt Profile 250/400/800K in Debt
• Solo vs. Group Practice (30% Group...
Where do you fit in?
Copyright 2014. All rights reserved.
Copyright 2014. All rights reserved.
==
Financial Life-Cycle: Stages
Professional
Adolescence
Professional
Maturity
Full F...
Copyright 2014. All rights reserved.
==
Financial Life-Cycle
Professional
Adolescence
Professional
Maturity
Full Financial...
Copyright 2014. All rights reserved.
==
Financial Life-Cycle:
Professional
Adolescence
Professional
Maturity
Full Financia...
Copyright 2014. All rights reserved.
==
Financial Life-Cycle
Professional
Adolescence
Professional
Maturity
Full Financial...
Why Stages?
• The three stages represent specific financial levels
of progress with the goal to transition through the
lev...
Your Goals are Important
Copyright 2014. All rights reserved.
Who we are » 1. Dental Financial Life-Cycle » 2. Client Case...
Where do you fit in?
• Lack of knowledge can often be a hurdle in reaching our
hard fought goals
• By helping our clients ...
The Dental Practitioner’s Scorecard
www.cwcounsel.com/UDA
Copyright 2014. All rights reserved.
Who we are » 1. Dental Fina...
Stage 1: Professional Adolescence
Timeline
•Time in Stage: 7-12 years
•Target Age for Completion: 40
•Milestones: Decide o...
Stage 1: Professional Adolescence
Copyright 2014. All rights reserved.
Who we are » 1. Dental Financial Life-Cycle » 2. Cl...
Professional Adolescence - Stage 1
Milestones
•Review and set written personal and business goals
•Review and benchmark pr...
Greed/Fear
Copyright 2014. All rights reserved.
Stage 1: Professional Adolescence
Key Strategies
•Eliminate all undisclosed conflicts of interest
•Have Fee-Only Fiduciary...
Copyright 2014. All rights reserved.
Stage 1: Professional Adolescence
Key Strategies
•Four key areas of focus in years 1-...
Stage 2: Professional Maturity
Timeline
•Years in Stage: 20-25 years
•Target Ages in Stage: 35-60
•Milestones: Continue wi...
Stage 2: Professional Maturity
Copyright 2014. All rights reserved.
Who we are » 1. Dental Financial Life-Cycle » 2. Clien...
Stage 2: Professional Maturity
Milestones
•Track business cash flow
• Set annual investment and capital goals to harness c...
Stage 3: Full Financial Freedom
Timeline
•Years in Stage: 25-35 years
•Target Ages in Stage: 55-90
•Milestones: Wealth Har...
Stage 3: Full Freedom
Copyright 2014. All rights reserved.
Who we are » 1. Dental Financial Life-Cycle » 2. Client Case St...
Copyright 2014. All rights reserved.
Stage 3: Full Financial Freedom
Key Strategy
•Commercial Property Ownership/Practice ...
Copyright 2014. All rights reserved.
The Dental Practitioner’s Scorecard
www.cwcounsel.com/UDA
Who we are » 1. Dental Fina...
A Word on Investments
• Stage 1 – Stage 3: Investments play an increasingly
important role
• Retirement is about spending ...
Part 2.
Client Case Studies
Copyright 2014. All rights reserved.
Retirement
• Timing: 25 to 35 years in practice
• Annual Spending: $150k to $200k (after tax)
• Housing:
• No debt on hous...
Retirement Projection #1
Dr. Alfred B. New: Assumptions
•Married, 35 years old, retirement at 65, live to age 90
•Retireme...
Retirement Projection #1
Monte Carlo Simulation
Copyright 2014. All rights reserved.
Who we are » 1. Dental Financial Life...
Retirement Projection #1
Save Additional $30k in Taxable Account
Copyright 2014. All rights reserved.
Who we are » 1. Dent...
Retirement Projection #1
Dr. Alfred B. New: Results
•Result in Monte Carlo Simulation: 64% success rate
•To achieve 92% su...
Retirement Projection #2
Dr. John R. Mature: Assumptions
•Married, 46 years old, retire at 65, live to age 90
•Retirement ...
Monte Carlo Retirement Simulation
Copyright 2014. All rights reserved.
Who we are » 1. Dental Financial Life-Cycle » 2. Cl...
Retirement Projection #2
Dr. John R. Mature: Results
•Result in Monte Carlo Simulation 94% success rate
Retirement is abou...
Another Word on Investments
• Investment returns in projections range from 7-8%
• The most sure way to fail in retirement ...
Copyright 2014. All rights reserved.
Average Investor Results
20-Year Annualized Returns by Asset Class (1993 – 2012)
Source: Dimensional Fund Advisors for Dim...
Cambridge Wealth Counsel
WM=IC + AP + RM
Wealth Mgmt. = Investment Consulting + Advanced Planning + RM
• Investment Consul...
Copyright 2014. All rights reserved.
Client Case Study #1
• 15 years in practice, $125k income per year
• Single, male, ea...
Copyright 2014. All rights reserved.
Client Case Study #2
• 24 years in practice, $500k income per year
• Married, age 56,...
Copyright 2014. All rights reserved.
Client Case Study #3
• 14 years in practice, $430k income per year
• Income $430k per...
Copyright 2014. All rights reserved.
Call to Action:
www.cwcounsel.com/UDA
Who we are » 1. Dental Financial Life-Cycle » 2...
Conclusion
• Dental Practice can be both rewarding and challenging.
Working with the right Expert Team in the right way wi...
Copyright 2014. All rights reserved.
Persistence
“Nothing in the world can take the place of persistence.
Talent will not;...
Copyright 2014. All rights reserved.
Cambridge Wealth Counsel
Counsel. Plan. Prosper.
Robert Hockett, CFP
robert@cwcounsel...
Part 3.
Audience Questions
Copyright 2014. All rights reserved.
Copyright 2014. All rights reserved.
The Dental Practitioner’s Scorecard
www.cwcounsel.com/UDA
Who we are » 1. Dental Fina...
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Dental Financial Life-Cycle

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  • Rob was an Assistant Vice President in the Private Financial Advisory Group of Wachovia
    Established to advise extended-family members in financial planning after $120MM sale of family company to a Fortune 500 company
    Opened in 1999 to non-family members
  • Strategic Individual and Family and Practice Goal Setting
    Life and Career Coaching, Cash Flow Analysis
    Insurance Review, Tax Planning, Estate Planning, Charitable Giving
    Investment Management, Retirement Planning and Retirement Plans and Implementation
    Financing Negotiations – All Types
    Business Real Estate Consulting
    Strategic Practice Planning
    Dental Practice Purchase/Sales Analysis
  • Dental Financial Life Cycle:
    State of the Union
    The 3 Stages
    Income and Cash Flow
    Personal Debt
    Practice Structure/Debt
    Investments, Retirement
  • Across Region…data not very helpful
    Gross revenue:
    - Patient/Practitioner Ratios show skew
  • The old adage…we do not know what we don’t know rings true.
  • Note for Rob: These numbers are drawn from the summary data points sheet for years 1-6
  • Review and set written personal and business goals
    Outline specific numbers, tasks and dates of completion
    Share with a trusted friend Spouse
    Review and repeat
    Review and benchmark progress regularly
    Using data from industry and advisor sources( -3 Stages Outline)
    Review personal and business borrowing for rate changes/terms
    Every 3 years…your credit worthiness may change for the better
    Review and upgrade your tax projections to minimize surprises and give time to make pre-year end adjustments(2X Year) –
    SL interest not deductible now.
    Accelerated Depreciation is a plus on equipment
    Set up a separate account for estimated tax payments(Fed-State
    Review, design and execute Estate Plan-
    41% of attorneys do not have wills
    Need everything-wills, trusts, powers of attorney(Springing)
    Guardian of minor children is biggest sticking point.
    Review, design, fund, and monitor retirement planning
    Outline target retirement date
    Set up Taxable accounts and fund emergency reserve first – 3 months spending.
    Setup Retirement plan in practice…tax deferred investments
    Add Spouse to practice retirement plan – fund the plans regularly.
    Review, analyze, and select, cost effective- proper insurances in all areas
    Upgrade/Increase, Level Term, Disability Insurances, Pension Plan Protection Disability, Business Interruption. Also increase Personal Liability Umbrellas to $3MM General and $5M Specialists.
  • Note for Rob: These numbers are drawn from the summary data points sheet for 7-25
  • Milestones: Wealth Harvesting and Preservation are the Milestones in Stage 3. Continue with review and monitoring of changing needs in the areas of personal and business goals. Personal and business budgets and benchmarks. This stage focuses on preparing the business for sale and maximizing the net after tax amount. The net proceeds of sale are then invested in the taxable investment accounts. The Investment portfolio is sizeable and the asset allocation is managed for Wealth Harvesting and Inflation hedge. Monte Carlo Retirement Modeling is used to regularly back check probabilities of success in retirement. Downsize house -pay off all debt.
  • Note for Rob: These numbers are drawn from the summary data points sheet for 30-Retirement
  • From Stage 1 – Stage 3 of the Dental Financial Life-Cycle, Investments play an increasingly important role.
    Retirement is about spending and monthly cash flow. Regularly Harvesting Wealth in a sustainable way in Stage 3 generates this cash flow in a way that if structured correctly has the highest probability of success. Investments –over time- grow and create the largest asset of the Dental Practitioner.
    Investment Accounts followed by Commercial Real Estate, then Practice Sale Value are the three legged stool upon which Full Financial Freedom and retirement sit.
  • Business: Work part-time (75% will)
  • Remember: Retirement is about monthly spend after work ends.
  • Cold start-up: Most successful dental start-up
  • No need to mention it again, just leave this sitting on the screen at the end.
  • Transcript of "Dental Financial Life-Cycle"

    1. 1. Copyright 2014. All rights reserved. The Dental Financial Life-Cycle Business & Personal Financial Planning Strategies for Dental Professionals Presentation for Utah Dental Association Annual Meeting - 2014 March 13/14 2014
    2. 2. Copyright 2014. All rights reserved. Cambridge Wealth Counsel Counsel. Plan. Prosper. Robert Hockett, CFP robert@cwcounsel.com www.cambridgewealthcounsel.com 801-783-2241 Offices in Atlanta and Salt Lake City - Serving Clients Nationwide -
    3. 3. Copyright 2014. All rights reserved. Our Firm • Fee-Only® Fiduciary – Comprehensive Wealth Management • Founded in 1996 • Clients in 15 states – over 50% are licensed professionals • Advisors have ~16 years of experience Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    4. 4. Copyright 2014. All rights reserved. Our Dental Clients Licensed professionals who desire to work with trusted experts to accomplish their most important personal, family and business goals—without conflicts of interest. •Practice Types • General dentists • Specialists: Ortho, Endo, Pedo, Perio, Pros, Oral Surgery •Financial Ranges • Income: $225K to $1.25MM • Total Net Worth: Generally $500K to $12MM Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    5. 5. Copyright 2014. All rights reserved. Our Wealth Services • Goal setting • Life and career coaching • Cash flow analysis • Insurance review • Tax planning • Estate planning • Charitable giving • Investment management • Retirement planning • Financing negotiation • Business real estate consulting • Strategic practice planning • Dental practice purchase Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    6. 6. Recognition “Best Advisors for Dentists in US” Dental Products Report, 2011-2014 “Top 150 Advisors for Physicians in US” Medical Economics, 2006 – 2013 “Top Fee-Only Firms” Utah Business , 2011 “ Top 10 Fee-Only Firms” Atlanta Business Chronicle. 2004 - 2012 Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    7. 7. Copyright 2014. All rights reserved. Media Coverage Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    8. 8. Copyright 2014. All rights reserved. Presentation Overview 1. The Dental Financial Life-Cycle 2. Client Case Studies 3. Audience Questions Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    9. 9. Part 1. The Dental Financial Life-Cycle Copyright 2014. All rights reserved.
    10. 10. The Dental Practitioner’s Scorecard www.cwcounsel.com/UDA Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    11. 11. Copyright 2014. All rights reserved. Basic Facts • Average income for dental professionals (2012): • $202,000 General Practitioner • $337,000 Specialist • 193,000 active dentists in the U.S. • 178,136 active private practitioners in the U.S. Source: American Dental Association Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    12. 12. Local Demographics • Utah Practitioners: 1,804 • 97.3% male, 2.7% female • 1,562 patients per dentist • Arizona Practitioners: 3,275 • 84.5% male, 15.5% female • 1,979 patients per dentist Source: American Dental Association Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    13. 13. Local Demographics • Idaho Practitioners: 904 • 94.4% male, 5.6% female • 1,753 patients per dentist • Nevada Practitioners: 1,320 • 83.8% male, 16.2% female • 2,063 patients per dentist Source: American Dental Association Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    14. 14. Regional Income Demographics General Practitioners •Average income: $205-$225k •Average revenue: $775k Specialist Practitioners •Average income: $335-$347k •Average revenue: $945k Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    15. 15. Dental Trends • Retirement Age Extends (61/68/75) • Debt Profile 250/400/800K in Debt • Solo vs. Group Practice (30% Group Now) • Technology War –Expensive –Narrows Gap GP/SP • Perceptions of Retirement Spending to Low 50% • Govt Regs – 2013 HIPPA Omnibus Final Rule • Must Have Compliant Agreements w/Vendors • Mandatory Disclosure for Cybersecurity breach(lost iPad) • Fines levied 250-500K up to Maximum of $1,500,000. • Be Very Careful and become compliant(1/24/2013) Copyright 2014. All rights reserved.
    16. 16. Where do you fit in? Copyright 2014. All rights reserved.
    17. 17. Copyright 2014. All rights reserved. == Financial Life-Cycle: Stages Professional Adolescence Professional Maturity Full Financial Freedom Target Ages 28-40 35-60 55-90 Milestones Build financial foundations Wealth accumulation and advanced planning Wealth harvest and preservation Timeline Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    18. 18. Copyright 2014. All rights reserved. == Financial Life-Cycle Professional Adolescence Professional Maturity Full Financial Freedom Associate Income $136K – $300K $150K – $350K $150K - $350K GP Owner Income $250K $350K - $550K Final 5-7Retirement SP Owner Income $400K $400K - $750K Final 5-7Retirement GP 401k Max year 8 Roth 401k + cash balance x2 Creditor protected SP 401k Max year 3 Roth 401k + cash balance x2 Creditor protected Additional savings Begin to fund investment accounts Funding min. $75k / year Tax strategies for distribution Income & Investments Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    19. 19. Copyright 2014. All rights reserved. == Financial Life-Cycle: Professional Adolescence Professional Maturity Full Financial Freedom Housing Careful, start modest Move to dream home & pay it down Mortgage paid off Student Loans Student loan interest non-deductible Debt paid off Student loans paid off Personal Debt Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    20. 20. Copyright 2014. All rights reserved. == Financial Life-Cycle Professional Adolescence Professional Maturity Full Financial Freedom Business: Startup 10-15 year amort. Debt paid off 5-7 years - prep sale Business: Buy-in 10-15 year amort. Debt paid off Prepare for sale to partners Business: Purchase 10-15 year amort. Debt paid off 5-7 years - prep sale Commercial Property Save down payment Pay down building Building paid off – rent to buyer Business Debt Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    21. 21. Why Stages? • The three stages represent specific financial levels of progress with the goal to transition through the levels “on time” or early. • The penalty for transition delay or not completing the corresponding milestones is significant financial hardship for you and or your family. Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    22. 22. Your Goals are Important Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    23. 23. Where do you fit in? • Lack of knowledge can often be a hurdle in reaching our hard fought goals • By helping our clients through the three stages we have developed tools, techniques and strategies to speed up the transition process • See how you compare! Get a free scorecard assessment: www.cwcounsel.com/UDA Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    24. 24. The Dental Practitioner’s Scorecard www.cwcounsel.com/UDA Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    25. 25. Stage 1: Professional Adolescence Timeline •Time in Stage: 7-12 years •Target Age for Completion: 40 •Milestones: Decide on Career Path, Develop Hand speed. Locate, Evaluate, Negotiate/Finance Practice Purchase or Buy In, Set up “Best Practices” Operation. Set Personal and Business Comprehensive Goals, Outline Personal and Business Budgets, Develop Understanding of Business Operations, Upgrade Old Equipment and Systems in Practice, Solicit and Plan Personal and Business Tax Projections. Purchase Home. Reevaluate Personal Budget. Evaluate, Place and Regularly Have Reviewed; appropriate cost effective Risk Management in Auto, Homeowners, Personal Articles, Umbrella, Life, Disability, Health, BOP, Malpractice, and Theft Insurances. Complete Comprehensive Estate Planning Documents including; Wills, Trusts, POA, and Advanced Directives and Overcome Disagreements Regarding Guardianship of Minor Children. Evaluate and Regularly Fund Investments, Outline Comprehensive Retirement Plan including Staged Savings Amount and Optimal Location of Various Asset Classes. Negotiate for and Buy Building. Review, Set up, Fund and Monitor a Practice Retirement Plan. Increase Production and Collections while maintaining expense controls to move personal income into “Above Average Range”. Pay down student loans…interest is no longer deductible. If Married – Stay Happily Married while having last 1-2 children. Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    26. 26. Stage 1: Professional Adolescence Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions Beginning of phase End of phase Associate income $136,000 - $300,000 $136,000 - $300,000 Owner income $200,000 - $400,000 $250,000 - $400,000 Housing debt $450,000 $450,000 Student debt $390,000 (max) $202,000 (min.) Business debt (start-up) $450,000 $178,000 Business debt (buy-in) $600,000 $250,000 Business debt (purchase) $750,000 $280,000 Business debt (property) $400,000 $379,000 401k (GP) $0/year $25-$52,000 / year Additional savings $15,000 / year $15,000 - $45,000 / year
    27. 27. Professional Adolescence - Stage 1 Milestones •Review and set written personal and business goals •Review and benchmark progress regularly •Review personal and business borrowing for rate changes/terms •Review and upgrade your tax projections to minimize surprises and give time to make pre-year end adjustments(2X Year) •Review, design and execute an estate plan •Review, design, fund, and monitor retirement planning •Review, analyze, and select, cost effective- proper insurances in all areas Copyright 2014. All rights reserved.
    28. 28. Greed/Fear Copyright 2014. All rights reserved.
    29. 29. Stage 1: Professional Adolescence Key Strategies •Eliminate all undisclosed conflicts of interest •Have Fee-Only Fiduciary assemble an Expert Team that will collaborate well and is dedicated to your personal and business success: • Comprehensive wealth manager, corporate attorney, estate planning attorney, CPA, bookkeeper, seasoned insurance agency, third party custodian for investments Copyright 2014. All rights reserved.
    30. 30. Copyright 2014. All rights reserved. Stage 1: Professional Adolescence Key Strategies •Four key areas of focus in years 1-7 1. Manage spending 2. Avoid non-productive debt (debt for toys) 3. Focus on optimizing business / learning the ropes 4. Save and invest aggressively from early on •Common mistakes • Overspending: Pent up demand of dentist & spouse IS REAL • Over-buy on first house Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    31. 31. Stage 2: Professional Maturity Timeline •Years in Stage: 20-25 years •Target Ages in Stage: 35-60 •Milestones: Continue with review and monitoring of changing needs in the areas of personal and business goals. Personal and business budgets and benchmarks. This stage focuses on building on the Financial Foundation created in Stage 1. Laser focus on harnessing business cash flow to complete debt payoff of practice, equipment, and buildings and build personal wealth. Student loans are retired in this Stage. Investment Wealth will go from $1-4 Million in liquid assets as rigorous funding of the 401k plan and annual Taxable Investment Targets are reached. Practice revenue target is 3rd and 4th Quartile. GP Income Target $350-550k+. Specialists Income $400-750K. Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    32. 32. Stage 2: Professional Maturity Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions Beginning of phase End of phase Associate income $136,000 - $300,000 $150,000 - $350,000 Owner income $200,000 - $400,000 $350,000 - $650,000 Housing debt $450,000 $750,000 - $1,000,000 Student debt $309,000 (max) $0 Business debt (start-up) $124,000 $0 Business debt (buy-in) $150,000 $0 Business debt (purchase) $186,000 $0 Business debt (property) $367,000 $0 401k (GP) $25-52K/year + $17.5K $25-52K/year + $17.5K Additional savings $15,000 - $45,000 / year $30,000- $84,000 / year
    33. 33. Stage 2: Professional Maturity Milestones •Track business cash flow • Set annual investment and capital goals to harness cash to fund preset targets. As debt is paid off and more cash flows through both the business and personal accounts it becomes more crucial •Review, analyze and monitor areas of tax, insurance, estate planning, retirement projections and investments regularly Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    34. 34. Stage 3: Full Financial Freedom Timeline •Years in Stage: 25-35 years •Target Ages in Stage: 55-90 •Milestones: Wealth Harvesting and Preservation are the Milestones in Stage 3. Continue with review and monitoring of changing needs in the areas of personal and business goals. Personal and business budgets and benchmarks. This stage focuses on preparing the business for sale and maximizing the net after tax amount. The net proceeds of sale are then invested in the taxable investment accounts. The Investment portfolio is sizeable and the asset allocation is managed for Wealth Harvesting and Inflation hedge. Monte Carlo Retirement Modeling is used to regularly back check probabilities of success in retirement. Downsize house -pay off all debt. Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    35. 35. Stage 3: Full Freedom Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions Beginning of Phase Retirement Associate income $150,000 - $350,000 -- Owner income $400,000 - $650,000 -- Housing debt $400,000 Value: $1MM or less Student debt $0 $0 Business debt (start-up) $0 Value: $750k Business debt (buy-in) $0 Value: $750k Business debt (purchase) $0 Value: $925k Business debt (property) $0 Value: $475k - $1.5MM 401k (GP) $25-52K/year + $17.5K Value: $2.5 - $3.7MM Additional savings $30,000- $84,000 / year Value: $2.3 - $3.5MM
    36. 36. Copyright 2014. All rights reserved. Stage 3: Full Financial Freedom Key Strategy •Commercial Property Ownership/Practice Sale • 50-60% of practitioners own their office/building • Capital / Debt: $500k to $1 million • Purchase 5+ years into practice. Pay off within 15-20 years • Rent to buyer of practice for $3-6k per month after-tax • Practice Revenue of $1,250k = $937,000 Sales price. • Sales prices range from 0.70 to 1.0 + X gross revenues • The stronger / more profitable the practice the higher the multiple. • Location, stable patients, net income are key to value Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    37. 37. Copyright 2014. All rights reserved. The Dental Practitioner’s Scorecard www.cwcounsel.com/UDA Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    38. 38. A Word on Investments • Stage 1 – Stage 3: Investments play an increasingly important role • Retirement is about spending and monthly cash flow • Pillars of full financial freedom: 1. Investment accounts 2. Commercial real estate 3. Practice sale value Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    39. 39. Part 2. Client Case Studies Copyright 2014. All rights reserved.
    40. 40. Retirement • Timing: 25 to 35 years in practice • Annual Spending: $150k to $200k (after tax) • Housing: • No debt on house • Downsize at or in retirement • Business: • Sell practice • Work part-time • Investments: • $4 - $8 million in investment assets + commercial property Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    41. 41. Retirement Projection #1 Dr. Alfred B. New: Assumptions •Married, 35 years old, retirement at 65, live to age 90 •Retirement spending: $12k month ($144k annually) •Save $52k/year from age 35 until age 65 •Sell practice for $750k before taxes ($532,500 after taxes) •4 year college for 3 kids at $18k per year per child •Inflation: 3% •Pre-retirement returns: 8% •Post-retirement returns: 7% Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    42. 42. Retirement Projection #1 Monte Carlo Simulation Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    43. 43. Retirement Projection #1 Save Additional $30k in Taxable Account Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    44. 44. Retirement Projection #1 Dr. Alfred B. New: Results •Result in Monte Carlo Simulation: 64% success rate •To achieve 92% success Dr. New Must also save $30k per year in taxable investment accounts form now until retirement •Retirement is about monthly spending after work ends Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    45. 45. Retirement Projection #2 Dr. John R. Mature: Assumptions •Married, 46 years old, retire at 65, live to age 90 •Retirement spending: $15,833 per month ($190k annually) •$450K in retirement and wife has $89k • Saved $52k/year from age 46-65, plus $17.5k for spouse • Also saved $7k month ($84k annually) in taxable accounts •Sell practice for $937k before taxes ($66,5625 after taxes) •4 year college for 3 kids at $18k per year per child •Inflation: 3% •Pre-retirement returns: 8% •Post-retirement returns: 7% Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    46. 46. Monte Carlo Retirement Simulation Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    47. 47. Retirement Projection #2 Dr. John R. Mature: Results •Result in Monte Carlo Simulation 94% success rate Retirement is about monthly spend after work ends. Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    48. 48. Another Word on Investments • Investment returns in projections range from 7-8% • The most sure way to fail in retirement is to let greed and fear or lack of focus control your investment strategy. • We use institutional class mutual funds with • Very low costs • Tax efficient management • Patient long term performance focus Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    49. 49. Copyright 2014. All rights reserved.
    50. 50. Average Investor Results 20-Year Annualized Returns by Asset Class (1993 – 2012) Source: Dimensional Fund Advisors for Dimensional indices (DFA 60/40); The S&P data are provided by Standard & Poor's Index Services Group (S&P 500); Barclays indices copyright Barclays 2013 (Bonds); MSCI data copyright MSCI 2013, all rights reserved (EAFE); Debar, Inc. “Quantitative Analysis of Investor Behavior 2013,” www.dalbar.com (Average Investor); US long-term bonds, bills, inflation, and fixed income factor data © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). Indices are not available for direct investment; their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Copyright 2014. All rights reserved.
    51. 51. Cambridge Wealth Counsel WM=IC + AP + RM Wealth Mgmt. = Investment Consulting + Advanced Planning + RM • Investment Consulting – Fee-Only Fiduciary—No Conflicts of Interest • Advanced planning • Wealth enhancement • Wealth protection • Wealth transfer • Charitable gifting • Relationship management • Expert team / client relationship management Copyright 2014. All rights reserved. Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    52. 52. Copyright 2014. All rights reserved. Client Case Study #1 • 15 years in practice, $125k income per year • Single, male, early 40s, Southeast U.S. • Associate for first 10 years of practice • Poor location • Management issues • Overhead and staff costs too high • Very average marketing • Scheduling not optimized Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    53. 53. Copyright 2014. All rights reserved. Client Case Study #2 • 24 years in practice, $500k income per year • Married, age 56, West Coast • Owns building (paid off by retirement date) • Purchased practice 21 years ago • Tax optimized: • 401k $52k + $5.5k catch up + $23k spouse • Saves / invests $84k per year in taxable accounts • Vacation 6 weeks per year (one European vacation) • Ends work day at 4:30 P.M.-will retire at 62 Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    54. 54. Copyright 2014. All rights reserved. Client Case Study #3 • 14 years in practice, $430k income per year • Income $430k per year • Married, age 43, 3 kids, Southeast U.S. • Associated for 4-5 years – (10 years on own) • Business / Marketing undergraduate degree • Cold start-up; $1M gross revenue by year four • 401k plan: $52k per year • Purchased $1 million building • Works four days a week Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    55. 55. Copyright 2014. All rights reserved. Call to Action: www.cwcounsel.com/UDA Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
    56. 56. Conclusion • Dental Practice can be both rewarding and challenging. Working with the right Expert Team in the right way will help you move through the 3 Stages of the Dental Financial Life-Cycle in the most reasonable way - saving you time, frustration and money. Strong consistent progress brings peace of mind and a sense of satisfaction. • If you are interested in exploring a deeper working relationship with our Firm –visit www.cwcounsel/uda sign up and take our self-assessment. Copyright 2014. All rights reserved.
    57. 57. Copyright 2014. All rights reserved. Persistence “Nothing in the world can take the 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.” – Calvin Coolidge
    58. 58. Copyright 2014. All rights reserved. Cambridge Wealth Counsel Counsel. Plan. Prosper. Robert Hockett, CFP robert@cwcounsel.com www.cambridgewealthcounsel.com 801-783-2241 Offices in Atlanta and Salt Lake City - Serving Clients Nationwide -
    59. 59. Part 3. Audience Questions Copyright 2014. All rights reserved.
    60. 60. Copyright 2014. All rights reserved. The Dental Practitioner’s Scorecard www.cwcounsel.com/UDA Who we are » 1. Dental Financial Life-Cycle » 2. Client Case Studies » 3. Audience Questions
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