As a dentist, it’s very important to choose a financial management team who understands the intricate details of running a dental practice, and all the challenges that come with it. Ideally, the professionals managing your finances will have valuable experience in piecing together all the moving parts of a dental practice, selling a practice, and growing a dentist’s net worth. Dentists have unique needs, which require their financial management team to understand things such as equipment and real estate financing, practice transitions, profitability analysis, income tax budgeting, corporate and personal retirement plans, disability insurance, liability protection, and more.
With RSP and tax season around the corner we think it’s a great time to point out that one of the things we have learned over many years of working with our dentist clients, is the value of finding the right advice – combined with the benefits of working with a team. The key for you (the dentist) is to find financial professionals who understand your personal needs and goals as well as those of your dental practice; and this must be a team you can trust with your family’s financial security on a personal level, because family and finances can seldom be separated.
When searching for help with their financial management, most dentists tend to seek out a wide array of different professionals from different sectors: one for investing, one for tax and accounting, one for insurance, and another to do wills and incorporation. While all these people may be excellent at their individual specialties, how can you ensure that you get co-ordinated advice that combines all aspects of your practice and your family’s personal goals, in order to maximize results? Who will be your “quarterback” – the person who will bring all these efforts together in a streamlined manner, to help you reach your goals most efficiently?
Working with a coordinated team of qualified financial and legal professionals can help unify the moving parts of your personal/professional finances, save you time, and give you peace of mind. Selecting your financial management team is one of the most important decisions you will make; so, you’ll want to ensure your selection process is as diligent as possible.
Here are 9 questions you can ask, when selecting your financial management team (and its members), to make sure you’re in the right hands:
1. What Financial Services Do They Offer?
Some professionals only manage money, and don’t do comprehensive planning. Some do both – and some may focus on specific areas like tax planning, wealth management, insurance, or estate planning. Keep in mind that no one person can be an expert in every aspect of financial planning; so, if a candidate tells you that they can “do everything” on their own, be wary.
We recommend you find a team that:
- has extensive experience with those working in your field (Dentistry)
- is comprised of experts in each of these areas who can work together to coordinate your plan
- will work together to implement the plan for you, plus monitor its progress
Keep in mind that some professionals prefer to work with certain types of clients (such as business owners, teachers, retirees, widows/widowers, or divorcees) and have developed a certain expertise.
As a dental professional, you want to ensure that your financial team is focused on how to make the most of the opportunities available to dentists. You must ask yourself the question: how is this financial management team particularly qualified to handle my dental practice, and my family’s financial future?
2. Is There a Team Approach?
Some professionals work with their clients solo, and others use a team approach. Before you commit to anything, you should know your financial management team’s approach upfront, and have the chance to meet everyone you’ll be working with. If a financial professional is working on their own and not as part of a team, perhaps you can ask them how they can adequately provide advice on one part of your financial picture, without knowing all your personal/professional needs and goals (to consolidate the overall results). For example, will this single financial professional be able to co-ordinate your practice cash flow and your family’s short + long term needs?
3. How is Tax Planning Looked After?
Taking advantage of the significant tax planning opportunities available to a dental care professional can truly help ensure that you exceed your financial dreams. (For example, saving $50,000 in taxes each year can accumulate very quickly over time.)
You may want to ask your candidate about their knowledge of local tax rules and opportunities to reduce your tax bill. Do they have an in-house chartered accountant who will work closely with you? Is their team familiar with the particulars of the dental industry and the ways in which your dental practice can be used to reduce your taxes (helping you keep more of your hard-earned practice dollars)? You’ll want to seek out someone who has experience in working with dentists, and their practices.
4. What is the Their Approach to Investing?
Don’t gamble with your life savings when you invest. If you’re working with an investor, ask them if a Household Investment Policy Statement is used to guide their investment philosophy, to manage risk, and to rebalance your portfolio as the markets fluctuate, while maximizing tax efficiency for your practice as well as your family’s personal investments.
5. How Will You Pay for Their Services?
Although what you pay will depend on your unique set of needs, a financial management team should be able to provide you with a clear answer about the cost of their services once they have the information they need. Financial professionals can be paid in several ways:
- Fees based on an hourly rate
- Fees based on a flat rate, or a percentage of your assets
- Commissions paid by a third party for the products sold to you, to carry out financial planning recommendations
Seek out financial professionals who charge transparent, and understandable fees. Ask what portion of the costs you incur are tax deductible by your practice, and family members – and be sure to ask if your candidate will get paid using deferred sales charge mutual funds, because this could lock you in for up to 7 years with redemption fees to pull out.
6. Are There Any Conflicts of Interest You Should Know About?
A professional may have some business relationships or partnerships that could benefit them monetarily and affect their judgement when it comes to acting in your best interest. For example, those who sell certain types of mutual funds (or work for the big banks/brokerage houses) may have a compensation arrangement with the companies that provide these financial products. Several of these types are focused on selling their products with financial advice “included,” which lacks substance and value. Try to choose professionals such as RFPs, CFAs, or CAs, because they are bound by a strict code of professional conduct, and have an ethical obligation to put your needs above their own (also known as “fiduciary duty”).
7. Is a Written Financial Road Map Provided?
A written financial “road map” is more than a list of tactics. A comprehensive plan (or road map) should cover your dental practice cash flows, tax strategies for meeting your family’s lifestyle needs, investment strategy, education needs, retirement targets, plus your estate and insurance needs. These are all important points to consider when planning your professional/personal finances. Will your candidate help implement and monitor the progress of these strategies laid out by the written financial road map? If not, who will?
8. Can Testimonials and References be Provided?
An experienced financial team who has worked with dentists for a long time should have no problem providing references from existing clients who have used their services over the years. Can names and references be verified?
9. What is the Process for Regular Reporting and Progress Monitoring?
How frequent is the investment reporting process? Are these reports consolidated to look at the complete household, including the practice and personal accounts? Is there a process in place to tie in with the Investment Policy Statement being followed? Is there an independent custodian holding the investment funds? Who will be your main contact to help you deal with any issues? And how frequently are face to face meetings held, to monitor the progress of the financial road map in place?
The Bottom line:
Before you trust someone with your financial goals and dreams, it’s worth investing time and effort into making sure you choose the right team of people. To get the most out of your money, you need a team with the right expertise, experience, approach, and fee structure for your needs. Finding a financial management team who can understand your needs, and efficiently consolidate their efforts, can do wonders for your peace of mind – and for your financial future.
Selecting the Right Financial Management Team Can Change Your Life for The Better
If you’re already working with one – or several separate – professionals, it won’t hurt to get a second opinion. Call our team at TMFD Financial to set up an initial one hour, no obligation consultation. We’ll be happy to review your personal/professional financial circumstances (and of course, answer all 9 of the questions above).
*All Tax and Accounting services provided by TMFD Professional Corporation, Chartered Professional Accountants
Material in this newsletter is for educational purposes only. It is distributed with the understanding that neither the authors nor the publisher are rendering legal, accounting, tax, investment, or other professional services by publishing this newsletter. These publications are not a substitute for the advice of your financial advisor, or any of your other advisors, personal or professional. Certain employees of TMFD Financial maintain a relationship with Assante Financial Management Ltd. (“Assante”) through which they sell mutual funds and bonds. The relationship that they have with Assante does not include tax preparation and accounting services for which TMFD Professional Corporation, Chartered Professional Accountants is solely responsible. TMFD Financial is not associated in any way with Assante, and Assante has no responsibility for the services offered by TMFD Financial.