Financial Planning

Dentists with $6,000,000 Portfolios


Mark McNulty


September 13, 2013

September 13, 2013

One question I get consistently from new clients is, “How am I doing compared to other dentists my age?” My response to them is that this is the wrong benchmark to use. It doesn’t matter what you have. What matters is what you spend relative to what you have – what we call your burn rate.

However for interest’s sake, let me talk about the dentists I know with the most money. I only know nine dentists with savings of more than $6,000,000 – in other words, dentists with this amount of money liquid and available to fund their retirement. For this article, my team and I went through each of their files and tried to look for consistencies in the way they manage their finances.

Why is $6,000,000 Impressive?Despite what the general public thinks, most dentists are not rich. In order for me to maintain a small client base, our firm has a certain minimum of savings dentists must have in order for us to work with them. More often than not, the dentists we meet do not have this minimum. This means that our client base of dentists is likely more financially successful than the general population of dentists. Our average client retires at age 62 with $3.2 million in the bank, so the average dentist we work with is richer than most dentists and the $6 million dentist has 87.5 per cent more than our average client. To me this is impressive.

The following are some of the consistencies we found with the $6 million dentists:

One PhilosophyWe found they had their own philosophy when it comes to financial management, and they did not waiver. In other words, if they were investors in stocks they stayed with the stocks. They did not sell out or panic like many investors do. They consistently followed a ‘buy and buy more’ investment strategy, which means they didn’t panic and sell when markets were down – they bought more.

Hard WorkingNone of these dentists had solo practices; almost all had associates. This did not stop them, as the primary producers, from working longer than average hours.

Researched Financial PlanningMost dentists know very little about financial planning. Financial planning encompasses cash flow management, practice management, income taxes, investing, and insurance, along with other areas. While these dentists started out without much knowledge in these areas, I can tell you from experience they did a lot of reading on them and asked a lot of questions. They were never reluctant to ask any question, no matter how silly it might 


Spend less than they make – don’t drive fancy carsWhile this may be obvious, the fact is these dentists do not have extravagant lifestyles. They paid themselves a smaller than average income and had automatic savings set up for all other cash flows. They are also very aware of savings. They can usually tell you off the top of their heads how much they have saved year-to-date.

Avoid Bad DecisionsFor the most part, these dentists had avoided bad financial products and poor investment decisions. I suspect this is because, as I found, it is very hard to gain their trust – more so than average. However, because they are informed, when they do receive good advice they jump on it and do not waiver.

In ConclusionI realize none of these traits come as a surprise. The average dentist I know with over $6,000,000 in savings earned more money than the average dentist and spent less. However, there are some lessons to be learned from them. Do your research and stick to what works. Sounds simple? Only nine dentists I know have done it. PA