Have you considered what you'll really need to create true financial freedom?

In this episode of Beyond Bitewings, Lynne and Ash welcome Eric Miller, co-owner of a national financial planning company dedicated to serving the needs of healthcare owners. They discuss why it's so important for dental practice owners to think beyond just the month-to-month expenses and plan for their future.

Eric shares insights on managing finances for medical professionals and the importance of integrating the cash flow of a dental practice with personal finances. Plus, they talk about the roles dental practice owners should play as practitioners and investors. He emphasizes the need for owners to receive fair compensation from their practices and how they can use their business as a vehicle to create multiple income streams and build the life they desire. He also discusses the various investment opportunities, such as stocks, real estate, and insurance-based products, to help dental professionals secure their financial future.

To find out more and connect with Eric, you can find him at: www.econologicsfinancialadvisors.com

If you have specific questions about any of these topics for your practice, or if you'd like to have another question answered on a future podcast, please reach out to the Edwards & Associates team. Please also contact us to find out more about Ash's financial course.

Visit us at: https://EandAssociates.com

Episode Breakdown:

• Why it's important to understand your practice to improve personal finances
• How to find investments that benefit your household's finance
• How owner compensation should be linked to practice income but also more
• Getting out of the race of the practices needs to make more money to survive.
• Why moving money is the key to retiring wisely
• Diverse investments create multiple income sources for retirement
• Financial advisors help people plan for retirement

Welcome to Beyond by Wings, the business side of dentistry, brought to you by Edwards and Associates, PC. Join us as we discuss how to build your dental practice, optimize your income, and plan for your future. This podcast is distributed with the understanding that Edwards and Associates PC is not rendering legal, accounting, or professional advice. Listeners should consult with their business advisers before acting on any of the information that is shared. At Edwards and Associates, PC, our business is the business of dentistry. For help or more information, visit our website at enassociates.com. Hello, and welcome to another episode of Beyond Bitewings. In today's episode, we have a very special guest.

His name is Eric Miller, who's been a prominent financial advisor, business investor, and he has been working a lot with medical professionals. And he may be able to offer certain viewpoints and advice to our listeners and other medical professionals out there on what to do with their finances and how they could look into certain investment opportunities that they may not have thought of before. And within the studio to talk more about this matter, we have Lynn.

Hey. How's it going?

Hi. It's been a while. How's it been?

Been a while. I've been good.

Yeah. It's it's nice to have you back finally.

Thank you. It's nice to be in the studio. I like being in the studio.

Alright. So without further ado, Eric, how are you doing today?

I'm doing very well. It sounds like you guys are having a party there. So Right? Well, we're trying to get there. Live.

Oh, yeah. Yeah. That would have been nice. And speaking of that, I mean, where where are we, talking from today?

I am in Clearwater, Florida, and it has been voted best beach in Florida for, like, I don't know, like, 20 years in a row. So I must have done something right

Nice.

To pick this place.

Yeah. Oh, that is nice.

Yeah. We take it for granted sometimes because it's just so beautiful, you know, when we're looking at the ocean and all the sand and the hotels, and I forget I live in a vacation destination.

Oh my god.

Smack I gotta smack myself every once again.

I'm envious.

Yeah. Yeah.

I'm in a great place.

So, Eric, why don't you tell our listeners a little more about yourself and what you do?

Yeah. Sure. I guess to make a a this long story, you know, somewhat interesting Mhmm. We I began my career as a as most people, that are trying to get interested in the financial industry Mhmm. And I don't know most of your listeners, their experience with financial advisers in the past has has generally been, hey, you know, I have an advisor. He helps me with my investments. He looks at my portfolio once or twice a year, and he charges me a fee to do that. And that is the experience I think most people have with their financial adviser.

And, you know, that was just not something that I was super interested in, just that model. And I also when we decided to start our firm, which was back in 2,008, which was probably one of the worst years to start a financial firm. You guys remember back then?

Oh, yes.

Mhmm. So we but there there was a couple things that we knew we wanted to do. We wanted to work with, health care owners because I'm I come from a family of health care owners, and I saw firsthand just the cookie cutter financial advice that a lot of owners got. And and knowing most of them, you know, learned how to be practitioners. You know, they learned how to do something very, very well, but nobody really taught them about money. Mhmm. Nobody really taught them about, you know, how to manage money and and income and expenses and all the all those things. So we decided we wanted to work with, health care owners, and, I learned early on, and it was just kind of like one of those moments where I think we've all had them where you're just like there's the learning curve and then you get, like, kicked in the you know what.

Mhmm. That if I was gonna be any good at being a financial adviser for for health care owners and really trying to get their their personal finances in order. I had to know something about their biggest investment, and that's that's their practice. For most of them, that is the biggest investment that they have. It's where they spend most of their time. It's where they put invested so much money and energy. So we really had to immerse ourselves in understanding the business side of, you know, dentistry or or other other health care practices so that I could show them, you know, how to integrate the cash flow of the business because there's, you know, 1,000,000 of dollars that flows through a practice every single year. But making sure that it does it it it channels to the household so that they can, you know, create multiple income streams, get out of debt, and just build a a a life that they want to live.

And that's what we've been doing since 2008.

Wow. That's fantastic.

Yeah. That sounds It very spot on because that is their biggest investment, and yet it's often treated as like a a side thing. You've got your stocks and bonds and mutual funds. And then this other thing that you do most of your life is is sort of just set off to the side.

It in most cases, we we really try to and and it makes total sense because, look, you went to school for, what, 7 or 8 years to learn how to be a dentist, and that is your priority. How to be how do I become a great practitioner? But, really, the most successful owners that I've seen, at least financially speaking, they think more like owner investors and less less less like practitioners, if that makes sense.

Yeah. It it makes a lot of sense.

So when you and when you really adopt that owner, like, I am an owner investor. I'm also a practitioner, but I'm also an owner of this thing. It just changes the way that you look at your practice, changes the way that you handle money, and it makes you not treat your practice like a job, but rather an investment asset for the benefit of the household.

Now would you mind expanding on that? Like, how they can use the business as a vehicle?

Well, for sure. I think, you know, I usually go back to equating it to their household. Mhmm. Because, you know, in corporate America, and I'm I'm sure you guys have dealt with big corporations too, most of them, you know, have what's called a parent company.

Mhmm.

And you will see that all the time. I mean, like, I use Berkshire Hathaway, Warren Buffett's company. That's, like, the parent company, and then he owns, you know, hundreds of different companies, but it all is for the benefit of that parent company. And, when I look at a household, you know, the family unit, you know, that that is what owns the assets, whether it's your real estate, whether it's your 401 k, whether it's your bank account, or your practice. I mean, you own those things. Your household owns those. Mhmm. And everything that you do is, I mean, at the end of the day, isn't it for the the betterment of your household to live a better life, to have money and freedom and things that you wanna do? So we have to look at each of these these investments that you have and make sure that they are contributing somehow for the benefit of the parent company.

Mhmm. So that's typically and where I see practice owners fail in that is that most of them don't pay themselves near what they should for owning the practice and doing all the roles that they play. Mhmm. So I can dig a little deeper in that if you'd like me to, but that's that the basic concept that we operate with.

Mhmm. Yeah. That's a that's a thing that we have seen as well, that they aren't taking enough in wages. And we are looking at it from a a different reason, but we see it all the time that they're underpaying themselves and undervaluing the service that they provide. And they think they're saving in taxes, but it's really not a significant amount for the the upside that can be had when you're taking a higher wage. So I I would say that is a good place to dig into. What would you speak to that?

Yeah. Sure. I mean and, look, it's it's hard to make in, financial decisions, like, in a silo. I mean, you can make a one decision, but it's gonna have an effect on, you know, other areas of your life. So, you know, one of the things that we usually start with is, you know, how do you compensate yourself and how much should you? And I it gets a little controversial how much I I tell people to do, but, you know, look. You have 3 roles when you own a dental practice. You have your practitioner role. You have your executive role because I think most of them are are executives in some capacity, you know, managing, directing other people.

They should be at least.

Yeah. You hope. You hope so.

Right.

But then you also have the owner role. Like, the and this is one that people are like, what's my owner role? I go, well, I mean, let's take a look at that. You your job is to make sure that the the culture of the organization is good, that there's a vision, that everyone knows, like, what the purpose of the organization. That's part of your role. You're also there to make sure that the the value of this business is, continuing to increase. That's the job of an owner. It's like to look at the the value of your of your practice. And there's a number of things you can do to do that, but, I mean, you know, especially and you guys have seen this probably change over the course of the last, I don't know, 10 to 15 years where the values of these health care practices are are kinda skyrocketing in some cases.

Mhmm.

Private equity money has moved in, and it you know, what practices you you used to fetch forward maybe, what, you know, 75¢ on, a dollar of revenue. Wow. You know, they're they're going for a lot more than that. I mean, the good ones. So, obviously, ones that are, you know, profitable and and other structures are in place. So I think, you know, not only that though, but you also have to understand you're the person that took all the risk to put this practice there. And I think people forget about that, and they forget that it is a risky asset. That there's a 101 things that can go wrong every single day.

You can lose people, you can lose a an associate, something can happen to your health, you can get sued. I mean, there's all kind there's all kinds of things that can put the practice at risk. So you have to make sure that you're getting paid back for that. So all these different roles, we kinda feel have a compensation level to them. And, you know, the w 2 your practitioner is usually some kind of a w two salary because I think most of these people are, like, s corps or LLCs, taxes s corps.

Mhmm.

You know, your executive pay may be a percentage of the profits. But what what I've followed is that in corporate America, most of these companies that, like, the parent company owns pay, like, what's called a management fee up to the parent company of 10% of the practice revenue. So early on, I started having every practice owner incorporate that, you know, 10% of the practice revenue comes right off the top and that goes to you as your owner compensation. And that money isn't designed for you to buy bigger houses and cars and consumption items. It's designed for you to invest that money so that you can create other income sources so you're not dependent upon the practice for the rest of your life. So that's that's just kinda one of the things that we'll, that we'll try to help practice owners with so they they can, you know, figure that out. Wow.

This is actually interesting. So you're saying 10% off the top.

Yeah. About the top. That told you a little of controversially because I get a lot of pushback from, you know, CPAs. And, oh my gosh, you're gonna have a big tax liability. I'm like, I know. I'll let you guys figure that part out. Okay? My Yeah. My job's a little different.

But, but no. I mean, it's, you know, this is why I say you can't make, you know, financial decisions in a silo. I mean, it yeah. Does it increase your tax burden? Yeah. But, I mean, are there other things obviously that you that you all can do to help minimize their tax liability? Of course, you can. But I think that's a, that's a really key concept. And once once we get that in with a lot of owners, that it just it makes them feel more relaxed. Like, okay.

This I'm I'm not gonna have to do this and die with my boots on

Exactly. Well You know? That just goes back to something I was taught long ago that I don't see a lot of happening now because of various factors, but you pay yourself first. If you don't pay yourself first, then you might not get paid, and you have a family to support. You have a future to think about, a retirement to think about. And the the sooner you start setting that money aside, the better off you're gonna be because every year that you delay, it just requires so much more to make up what you have lost in the growth, the time period that would be sitting there. So that is really, really strong advice. Now I know some practices are struggling these days with higher salaries and they can't raise their fees because insurance is, you know, determining what fees they can charge. And so their profit margin is being cut drastically.

And that that is a a separate issue that needs to be solved by mostly going off of insurance. But it it's probably a harder battle now to get them to buy into that than it was even in the past, but it's a good concept for sure.

Well, I think most of them and and you have to do it very carefully. Like, I I the last thing I'd want is for anyone that's not doing that right now. Like, oh, yeah. I heard this guy on this podcast. I'm gonna start opening up a, you know, a a in a separate account. I'm gonna start paying myself 10%. I I would highly suggest that you don't start at that level because, you know, one thing that I've learned about business and income business expenses, really 2 kind of fundamental rules, and you guys can tell me if if if these resonate with you. But, you know, number 1, any business, it's gonna try to spend every dollar that it makes and then some.

And, you know, it just seems to be there's always a demand of money, in a practice, but it also will make what it thinks it needs to make to survive. And, you know, there's something called necessity. And, you know, when when we look at practices, you know, most of them are are operating on a certain make break number that they think that this is how much I need to bring in to kinda cover my my basic expenses. But they're missing some of these other key, you know, profit buckets, if you wanna call them, to make sure that the practice is solvent, that they have money to pay their taxes, and that that they can pay themselves that 10%. So a lot of what we do is just going in and just refiguring like, hey, guys. You know, you're you're operating on a $100,000 of make break, but you're actually need to be operating at, like, a 120,000, and and here's why. Mhmm. And that really changes the way that they look, and they start, oh, ma'am.

You're right. Mhmm. No No wonder we're struggling all the time. No wonder I don't have money to pay right now. No wonder I don't have. I'm like, yes. You see, this is you're underestimating how much your business actually needs to bring in for you to feel good about your financial situation.

Right.

So once you do that, they're like, you know, and, okay, they have to make up an extra 20,000, but that's they can do that. Let's just break down. I got 23 days in a month. How do I make up that difference? You know? I have to maybe do a couple more crowns here and there or or, you know, see a couple extra patients. You know? The you can figure it out. It's not as unconfrontable as a lot of people think.

Right. Right. And it's interesting you've mentioned this because, you know, of course, I was looking at it from an accountant standpoint about taking 10% out from the top end. But then I was also trying to look at it from the owner's perspective, the entrepreneur's perspective. Basically from a management perspective, you're saying that set aside a certain amount of money and try to find other forms of revenue. Whether it's directly through the business or when you pay it to yourself, you invest it. It's not for consumption, but it's for investment purposes. So essentially what you're doing is you're creating additional revenue streams for your parent company, which in this case would be the household.

Correct.

And as, as long as you know, your tax, whatever you're going to incur on those additional revenue streams is, less than whatever you're going to make, then it makes sense.

Yeah. And I think that, you know, is there does it increase the tax burden? Probably. Does it create a bigger benefit though down the road? I mean, that's kind of what you have to weigh.

Right.

And and see if if it's gonna, you know, allow them you know, one thing I know about money is that if if you leave it set in one place too long, it's gonna get spent, unfortunately. Yeah. And, you know, the only way that I've ever seen people accumulate reserves in retirement is that you have to, like, physically remove money out of one place and move it to another. That's why there's $6,000,000,000,000 in 401 k plans right now. Mhmm. Because people never took receipt of that money. It it got ripped out of their paychecks. Right? So that's we're we're trying to just accelerate the process for them to be able to, you know, retire and not just depend upon their quote, unquote 401 k plans Mhmm.

For their for the majority of their retirement income.

So what would be these other additional revenue streams our listeners could look into?

Yeah. So and I'm not advocating 1 or the other. Mhmm. There's generally 3 3 to 4 that we'll we'll look at, and these are categories. And Okay. And all alls we're trying to do is is make sure that you're allocating money into places that, number 1, can can pay you back at some point in time

Mhmm.

That will that will create cash flow. Maybe there's some tax benefits for doing for investing in these types of investments, and there is some level of protection from the money. So there's 3 buckets that that we'll typically look at. 1 would be just like traditional stocks and bonds. So maybe like a dividend or municipal bond portfolio of some kind. So I have the money, a 10% taken out. I have that set up in a in a separate account. We call it a wealth storage account, which is kind of a fancy name.

Right. Yeah. And the money will sit there, and then we get it in motion. Okay? We put a percentage in, you know, maybe a stock or a bond portfolio. Another bucket may go into a real estate bucket. And, you know, we can go into all kinds of different, you know, areas of that, But you real estate that you either buy by yourself or maybe you buy with a partner or maybe you a syndication or a private placement, but it's primarily gonna be in some kind of a real estate bucket. Okay. And then, we'll look at insurance based products.

This could be, like, cash value life insurance, annuities, if they're if they're appropriate for that person, because I get protection and and guaranteed income from there. I'm just not one of these advisors that that okay. It's just stocks and that's it. Or, hey. It's just real estate and that's it. Or it's a I I really as a fiduciary, I kinda think I have to look at all these. And do they have merit? Can they provide cash flow? Are they predictable? And, will they get their money back? And that's what I'm looking at. We're look when we're trying to, look at a portfolio for them.

I see. Okay. That's interesting. Yeah. There's this a wise person I know by the name of Michael Cordello, and he always says that, you know, to make money, you have to make sure that the money's constantly in motion. Yes. If it's not in motion, then it's not going to make any more money. And the other thing he would always say is that, you know, as as an entrepreneur, we're constantly trying to look for deductions so we can reduce our taxes.

But a good financial savvy person, someone who knows or wants to know more about his own money, will look at it from a top end that you speak of right now. So it's it's interesting that you're bringing up these points. And even though, you know, these vessels that you're talking about, whether it's real estate, stocks, bonds, securities, or even, you know, at the insurance route, They may be things that our listeners are aware of,

but

it's the utilization of it. Right? Like, and no 2 people will be the same depending on where they come from, how much time they can put into this. Someone like you or someone in this profession would be able to custom tailor a plan for them, and that will allow them to always keep that money in motion.

For sure. I mean, some people really like real estate, and I'll say, okay. Great. If maybe we allocate a little bit more of that 10% into the real estate bucket than than you typically would. It's all about what you feel comfortable with, what you know, what you love. And, you know, and some people are just super conservative. They don't wanna lose any money at all. Mhmm.

And so that's why we I I I just can't be pigeonholed into one classification of investments. And then there may be even, like, private deals that they can get into or, you know, other investments that align with their industry in some way. I I don't know. It's it could be a number of things. So I think the point is is that I just don't want them to be reliant on their oral one k's and the sale of their practice for the entirety of their retirement. And it's to create these other income sources while they own it. And then when they do sell the practice, whenever that time comes, it's cherry ant Right. So to speak.

Right. Well and they're not gonna be able to maintain because, generally, dentists maintain a a I would say above higher than average standard of living, and they're not gonna be able to maintain that with just their 401 k and their practice sale. It's gonna take, careful choices along the way of making the most of of what they have and and putting that in different vehicles that will provide them additional investment opportunity.

You're 100% correct. I think, they a lot of people underestimate how much their earn rate is Mhmm. And how much they're going to need, to live the ideal life. And I I we usually start there. It's like, say, how much do you need in income to live your ideal life? Which kinda throws a lot of people off. They're like, well, you know, I only need, you know, blank amount. Like, that's that's not the question I ask. How much would you need to live your ideal life?

Right.

And it's just once you do that, you can work backwards to figure out, okay. This is how much we're gonna need in in total assets, and this is how much I'm gonna need from the sale of the practice. This is how much I'm gonna need from your real estate. This is how much I'm gonna need from your Social Security and your retirement plans. We add all these things up, and let's hit your number.

Right. It's very calculable if you Yeah. Have the tools to do that. So there's no reason they need to be guessing at these things.

No. At all.

But it is often underestimated. Just, oh, you know, x amount will probably be fine. Well, will it? How do you know it will?

That that's right. I think the number now is, like, you know, 2 or $3,000,000. It seems like, oh, if I just have 2 or $3,000,000, and I'm like

Yeah. And it And the It very, yeah, very much depends on on how you're gonna live your life. So, yeah, you can you can make that work, but you may not be making it work the way that it's working now or the way you're hoping it will work.

This may not be as much fun as having, like, 5 or 7,000,000 in assets, then you have more fun.

Right. It's better to know the number. That's a much safer route to take.

Yes. I think to your point, of, like, how we how we help people figure out, like, what their make break number is, we do the same thing on their on their household side with, you know, how much they're gonna need in total assets. So I find most of our our job as financial advisors, which a lot of people just think is, like, managing investment portfolios, but there's a lot of planning that goes along in this. And just making people aware of the reality of of what they need. Yeah. And, that that seems to be something that we get a lot of feedback. Like, I just didn't know. Like, wow.

It really opened my eyes to this. Yeah.

And there's so many moving parts. I mean, like you like you said, there's all those vehicles, your 401 k, your Social Security, your real estate, all of these things. And if you change this one, it affects this one. And here's what how that's gonna play out if you sell this property here and invest that money in different things. So just so many scenarios that can be walked through, endless, if you're not careful. So, there's a lot to it on the planning side.

Very much so, which I always go back to. It's really important to work with financial professionals that have a lot of familiarity with your business. And I think that's really important.

Yes.

To work with people that understand how your business works.

We would we would concur with that, certainly. Obviously, we work with dentists, and we're, we love helping them with their business, but we see it on our side too. I mean, we work with people that work with CPA firms that that understand our industry, and that's just that's just a smart way to go. So we see the value in in have those strategic alliances.

Yeah. It it I think it it helps so much that people don't realize, because you get to see so many different dental practices, Patterns start to develop. You know, you see, okay, these are what the top echelon are doing. Mhmm. You can impart that knowledge and to people that, you know, maybe aren't there yet, and it just I think people under underestimate just how valuable that is. Yeah.

The 1% are making their money and keeping their money, feel free to reach out to our wonderful guest, Eric Miller. And to reach out to you, they would need to

well, they can just go to wealth for dentists.com. Wealth for dentists.com.

Perfect. Awesome.

Easy to remember. I like that.

Yes. Awesome.

It was great to talk to you and get to know you.

Yeah. You as well. Thank you guys for having me on.

Alright. It was a pleasure. Thanks, Eric. Thanks for listening today. Be sure to subscribe to Beyond by Wings on your favorite podcast platform. For more information, you can follow us on Facebook, Twitter, and LinkedIn, or reach out to us on our website. You can also shoot us an email at info at e and associates.com.