The Millionaire Dentist Podcast
Episode 24: Why do Dentists Underachieve Financially? With Casey Hiers and Jason Ewers of Four Quadrants Advisory
On today’s episode of The Millionaire Dentist podcast, we'll discuss sensitive subject matter regarding money. Casey Hiers and Jason Ewers of Four Quadrants Advisory are dental CE experts who share their insights on why many dentists and specialists underachieve financially.
An ADA survey reveals incomes of dentists have increased 3.95% per year from 1990-2018. Listen to Casey and Jason explain why increasing incomes still don’t help dentists today reach their multi-million-dollar goals while saving money and retiring on their own terms.
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Speaker 1: Hello everyone. Welcome to the Millionaire Dentist podcast, brought to you by Four Quadrants Advisory. On this podcast we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised we do speak with an honest tongue and may not be safe for work.
Casey Hiers: Hello, everyone. Welcome to the Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised we do speak with an honest tongue and may not be safe for work.
Casey Hiers: Thank you for joining us today on the Millionaire Dentist Podcast. My name is Casey Hiers, and today's topic, why do so many dentists underachieve financially? I'm joined with Jason Ewers today. Jason and I travel the country, we deliver continuing education to dentists and specialists, and we get a real unique view from the peers of you, the listener, where we get to have these conversations offline, talking about the business side of dentistry, the financial aspects, and sometimes we hear the real ugly truth around this topic.
Casey Hiers: Jason, how do you think we should start today's podcast regarding underachieving financially?
Jason Ewers: Sure thing, Casey. I believe we should just give them the answers.
Casey Hiers: Let's let it rip.
Jason Ewers: Absolutely. So, significant debt early. You guys get out of school, I think the latest is $275,000 in debt when you graduated school, lack of training to run a million dollar practice. That encompasses everything, your staff, anything that has to do with just the day-to-day operations of a practice. You guys are all high achievers who want to solve problems. You solve problems every day with your patients, but you guys make it unnatural sometimes to go out and seek help.
Jason Ewers: We have seen in the past that dentists and specialists are high spenders. They like to spend money and there's absolutely nothing wrong with that. You earn it, you should be able to give yourself and pamper yourself with a new car or a nice house, but there's ways of going about doing that and not getting yourself into trouble.
Jason Ewers: And finally, is contentment. Just staying the way you are, keeping on that hamster wheel and not willing to change or be coachable to want to change. These are all things that we see. How does that sound, Casey? Good place to start?
Casey Hiers: I'll tell you what, those are about five or six really good components for us to now unwrap. I'll start with the first one that you mentioned, a significant debt early that dentists and specialists get. And you referenced it to $300,000 in student loan debt, then maybe they're an associate for a couple years, they're high achievers who want to go buy a practice, so maybe they'll buy a practice which costs them 600,000, 700,000, $800,000. You're in the seven digits of debt in your 30s. It's highly emotional. And what it can do is be a driver of bad decision making. And an example of that would be someone gets into that debt early, they've got their new practice, they go and accept every insurance under the sun because they want to be busy to help pay down debt and reward themselves with some income,` and that early debt can lead to poor decision making because it's a monkey on your back and it's emotional and you want to get it off as quickly as possible. And that really is one of the dots to connect on why some underachieve. It's because they've been saddled with this massive debt so early.
Jason Ewers: Well, you're right with that, and it has a lot to do with bringing on those extra insurances and getting burned out. They've been taught all the time, produce more to make more. Just because you're busy doesn't mean that you're making more money.
Casey Hiers: Well, that's right. And we were talking about this earlier, getting that debt, making bad decisions because of it. But then with your sole focus is getting rid of that debt, you just pay it down, pay it down, pay it down. Then you're in your 40s or, God forbid, your 50s, you've got no debt, you also have little to no retirement savings. And so you've sacrificed the future a little bit to get rid of that debt. Again, really the first dot in poor decision making financially for some dentists and specialists out there, absolutely.
Jason Ewers: Absolutely. I agree. But as our second one here, lack of training to run a million dollar practice and everything that that encompasses.
Casey Hiers: When we talk to dentists, how much training do they tell us they get in dental school in regards to business, to running a business, managing overhead, managing a payroll, things of that nature?
Jason Ewers: Does this count learning themselves on YouTube?
Casey Hiers: We have heard that before. Somebody has Googled, got on YouTube and tried to educate themselves on matters of business within the practice.
Jason Ewers: Absolutely. I would say, Casey, I think what we hear is they get six to eight weeks of business training in dental school.
Casey Hiers: Maybe.
Jason Ewers: Maybe, if any. Is that nearly enough to be handed the keys to a practice, a million dollar practice, and manage 4 to 14 people?
Casey Hiers: Well that's right. And when we travel around, we acknowledge you get riddled with debt and you don't receive the training to run a business. Boy, that's a bad setup for having payroll, having employees, and running a business. You don't have the training for it. There's a lot of dentists out there that can do okay, but there's a lot of dentists out there that aren't capturing everything and underachieve, and these first things, these first two items are really where it is. And it catapults into, listen, dentists are high achievers, they've been the best of the best their whole lives, they're now dentists, they got the bonus job of being a practice owner and all that that entails, and people come to them to solve their problems, to fix their teeth. It can be unnatural sometimes for a dentist to not be the one to figure it out or problem solve it. Does that make sense? Do we see that a lot out there?
Jason Ewers: Oh, we see it all the time. And I think, you mentioned debt early is probably the number one point, I would almost say that them being overwhelmed with running a practice and not knowing what to do and afraid of change being that contentment that we mentioned earlier is all that's unnatural for them to go out to go seek help.
Casey Hiers: You hit on something really important. They're unsure, and so they're busy 9:00 to 5:00, four days a week producing great dentistry. They're unsure what to do on the business side of it, and so what happens is they do get content sometimes. And before that, we mentioned high spenders. Listen, a lot of debt, a lot of schooling, a lot of hard work. You want your income to be reflected by your hard work and you want to enjoy the fruits of your labor. But what we typically see is, with all of these factors, they're underachieving financially, however they're living the lifestyle of a massively successful dentist or specialists, and that can get out of hand as well. That's just one additional dot that is hard for dentists to overcome sometimes.
Jason Ewers: Now, it's almost that saying of keeping up with the Joneses. They have a decent income, they buy a nice house, they live in a nice neighborhood, they see their neighbor driving a brand new Mercedes and they may want to go buy a brand new Mercedes, and really not having anybody to get advice from, if that's a smart decision, maybe a Honda would work for him, who knows. But it's understandable, everybody likes to spend money. It makes you feel better. I used to be in a mindset of I would always like to drive nice cars because it made me feel like I had to go to work to perform.
Casey Hiers: Yeah. It's almost a built-in motivation, which can be good. The last point I want to touch on is, as we wrap up, Jason, loyalty is a really good quality. And what we find is a lot of dentists are very loyal to not only their team and their staff, but also their external team, their accountant, financial planner, business advisor, investment person. A lot of times they can be neighbors, relatives, college friends. And what happens is they're loyal to that team.
Jason Ewers: Absolutely.
Casey Hiers: They're unsure if they're truly helping them maximize the profitability of their practice, and their content because they're doing better than people around them, so those two things also lead to mediocrity or being stagnant, and that can be really, really detrimental over the course of a career in terms of achieving financial freedom.
Jason Ewers: Yeah, it does. And when we go around and we speak across this country is I always ask the question to them, is ask yourself, is your current team, accountant, financial planner, doing everything you need out of them? Could you be doing better? And if so, what are you doing about it?
Casey Hiers: Well, and when times are good and everybody's fat and happy, people are more content. Events like we are experiencing here at the end of first quarter, beginning of second quarter, year 2020, this is going to magnify either people making good decisions, or it's going to magnify the areas that they're weak in, the areas that they need help with.
Casey Hiers: Let's wrap this up. What should a million or 1.1, 1.2 million dollar practice production, assuming their collection rate is 98, 99%, what benchmarks should dentists be achieving out there? Let's give them something that they can either say, "Yes, I'm in that range, I'm making good decisions," or, "Wow, I might be underachieving." What are some benchmarks that we can give our audience?
Jason Ewers: Yeah, absolutely, Casey. On average, our clients who collect million, 1.1, they're making 400, they're saving 100, their overhead's around 55%, but they're doing this all by only increasing production by around 1.7%.
Casey Hiers: Those are benchmarks for all of you really to do a self-test with and ask yourself where you're at. We went a mile wide and about an inch deep today. Our podcasts are intentionally going to be hopefully thought provoking, but we're not going to go down too many rabbit holes. If you would like to better understand what it takes to maximize the profitability of your practice or ask more specific questions to your specific situation, please reach out to us. We'd be happy to have those conversations.
Casey Hiers: That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information and thank you to you, the listener, for tuning in. The Millionaire Dentist Podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to FourQuadrantsAdvisory.com and see why year after year they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.