Why do dentists fail miserably at building financial legacy?

Busy profitable dentist business owners are wildly successful at creating profits from their business but they lack miserably in creating their future bank. Now what is a future bank? We define it as equity or net worth that will provide the basis for developing true financial freedom and one where we don’t depend on our business for income anymore. 

The first step in doing this is to determine what your freedom number is. Your freedom number is how much money you need per month to maintain a retirement lifestyle of your design. This means how much money do you need to pay all your bills, your taxes, your mortgage, and any other bills that currently keep you working for money. 

After that, it just comes down to a simple calculation of how much invested capital you need in order to produce the monthly cash flow that will provide you and your loved ones financial security. Investing your capital in the right assets provides a means of financial legacy. This is a way for you to pass on wealth to your heirs or to make significant charitable contributions. 

So what’s the problem? Why do even the best, most highly productive entrepreneurs in dentistry still fail miserably to build future bank? 

The problem is too much blind authority in our financial advisors. We abdicate the responsibilities of our investment arm of building our future bank to those that make less money than you or don’t participate in the very plans and services that they’re selling to you. In fact, their source of income is by selling you products which may or may not make you money. 

Great resets like recessions, depressions, pandemics, and times of vast inflation, these all put major downward pressure on things like 401(k) plans and other market based retirement schemes. Even if your portfolio goes down, those fund managers will continue to take their assets under management fees. They’ll still charge you fixed expense ratio fees and they will get paid even when the products that they sell you are not performing. 

This is a major misalignment of interest!  Ask yourself the question, even though we may need specific legal, tax, and accounting advice from these professionals, should we take wholesale financial advice from our accountant and lawyer or insurance broker or real estate attorney? The only way that you should take advice from these people is if they have created a “freedom lifestyle” that you desire. If they haven’t created a freedom lifestyle, then why should you wholeheartedly accept their advice and not question it no matter how well meaning they might be? 

At Walk of Wealth, we study what wealthy people do with their money.  How they are conserving their wealth as well as increasing it.  Wealthy people don’t invest in 401(k) plans. If you want to invest like average people you will get average results. If you want to become wealthy you have to invest like wealthy people do. You need to have a strategy to become wealthy. 

Some dentists wisely and prudently, create large nest eggs of savings from their booming businesses. Instead of investing they just save cash in their bank and when they reach a certain threshold of cash, that’s when they’ll decide to retire. This is fraught with risk.  What happens if inflation erodes away the spending power of your money? It’s what is happening right now, putting cash savers in a worse position. Most dentists have a goal of learning how to invest their money but are not taking the time to learn how to maximize their investments. Does this sound like you? Do you have an overall strategy of where you want to go? It’s better yet do you have clarity on where you want to go in terms of finance? 

So now that we’ve talked about investing in the right things, what should we invest in if it’s not the stock market, if it’s not 401(k) plans? Dentists and high net worth professionals are looking for ways to preserve capital, develop cash flows to live off of, as well as the ability to keep on building wealth.

The best answer, invest in cash flowing wealth building assets. Building multiple streams of income that you can replace needs of active income as well as keep risk at a very low level. This is a natural progression that is a reward for hard work in creating such a profitable business. 

The formula is simple, taking profits from a very profitable business and rolling it into cash flow, income producing and wealth building assets that will now create alternate sources of income decreasing your reliance on this busy practice.  That is what is called building a future bank. By focusing on your future bank with investments allowing a seamless transition from one of being an active, busy practice owner to one that has true freedom. From here you can focus on the five freedoms– freedom of finance, freedom of time, freedom of relationships, freedom of health, and freedom of purpose. If you’re not maximizing these financial freedoms, you’re not maximizing your human potential and human fulfillment.