DMD Staff

, you’ll note that much of what we covered involves reviewing your priorities and setting fresh goals for 2017. The end of the year isn’t the only time to take stock, of course, but it is often a time of reflection and review. Maybe the year brought unexpected income, or surprising expenses, or some significant change in your financial goals. No matter what happened in 2016, you should take a few moments to consider where you are and where you’re going.

End of Year Strategies: Scheduled Financial Maintenance for 2017

It’s OK if that process is informal, and it doesn’t necessarily have to involve your partner or your 

, although it’s typically more helpful if others affected by your financial situation are included. Either way, here are a few things to consider when looking back and looking ahead.

Lifestyle creep is when our spending choices increase alongside our earnings. When you first graduated from dental school, you probably lived more modestly. Maybe you rented an apartment and wore cheaper duds. As your income grew, your lifestyle likely grew with it. This is perfectly natural; your lifestyle should improve as your income does. But one thing that can get lost in the shuffle is that lifestyle creep means that the extra income isn’t necessarily going to your future self. 

To find the balance between desirable lifestyle creep and putting funds aside, consider the difference in control most people have over two key components of their financial situation: earning and spending. Depending on your dental practice, and whether you work for a health system or own or share a partnership in a practice, your earnings likely fluctuate a bit from year to year. A typical dentist may be paying off debt for the first few years, buying into a partnership shortly after that, and earning significantly more in their late 40s or early 50s. 

Unless you’re in some sort of fee-for-service arrangement, you’re likely to have significantly more control over what you spend than on what you earn. Curbing spending in favor of saving is often a more promising avenue than simply trying to earn more.

Spending, all by itself, isn’t the enemy. Not spending at all can be discouraging and actually make it more difficult to sustain a good saving strategy. It’s only when spending goes beyond our means or prevents us from meeting our financial goals that it becomes a problem. Life is happening right now all around us, and living like a pauper now for some theoretical enjoyment once you’re retired doesn’t sound like a panacea. Consider this carefully when setting your 2017 goals.

If you run your own dental practice or are part of a partnership, what do you do with your income? Do you “save” it for retirement, or “re-invest” it in your practice, perhaps to upgrade equipment, hire additional staff, or seek other improvements. There are many variables to these decisions, and the decision will depend on your goals and circumstances. The key is to carefully analyze the risks and potential benefits in both approaches before making any impulsive decisions. Goal-setting is a big part of this process; fully defined objectives take the mystery out of what can otherwise be confusing decisions.

The key in all these decisions is to find the right balance for you. It won’t be simple. There are too many factors at play to simply plug numbers into a spreadsheet. To help find your balance, stick to the basics: Set your financial goals after a great deal of thought and planning; build a great budget and stick to it; and consider both short-term happiness and your future.

Articles

No matter what happened in 2016, you should take a few moments to consider where you are and where you're going.

End of Year Strategies: Set Your Current and Future Priorities

 In this video clip, he discusses how clear communication during the new patient examination process can lead to case acceptance.

For Dental Case Acceptance, Don't Underestimate the New Patient Exam

Jim McKee, DDS, is a dentist in private practice. He’s also a Visiting Faculty member with Piper Education and Research Center, where he teaches on subjects such as occlusion and the clinical referral process. In this video clip, he discusses how clear communication during the new patient examination process can lead to case acceptance.

Interview Transcript (slightly modified for readability)

“The new patient examination, I think, is the number one key in the practice. It’s the most important appointment in the practice and I believe that it’s really the appointment in the practice that dictates case acceptance. Many times patients come into our practice not having an understanding of what some of their problems may be. The primary purpose of the new patient examination is to educate the patient. Our examination has four different phases that we use. We use an initial consultation where we’ll spend time with the patient before we look in their mouth. We’ll get an idea of what their past dental experiences have been, what they’d like to do to possibly change anything in their mouth, what obstacles to treatment acceptance may be in terms of fear, in terms of financial insurance constraints, in terms of scheduling. But really, what we’re going to do is we’re going to make sure that we can get an idea of why the patient is there and what we can do to help them.”

Videos

Jim McKee, DDS, is a dentist in private practice. He's also a Visiting Faculty member with Piper Education and Research Center, where he teaches on subjects such as occlusion and the clinical referral process. In this video clip, he discusses how clear communication during the new patient examination process can lead to case acceptance.

You know there are financial matters you need to take care of throughout the year, but you may not know 

 you should be addressing them. For dentists who run their own practice or participate in a partnership, annual financial calendars should include business reviews as well as personal reviews. This brief guide will help you, over two parts.

Review 2016 portfolio performance and make necessary 2017 adjustments.

Even if your fiscal year for business purposes ends at a time other than December 31, it’s a good idea to use the end of the year to take a look at past performance and make adjustments. There are several reasons, though, why now is a good time to do it. Reviewing your portfolio and re-balancing your investments are like auto maintenance —always needed, entirely necessary, and easily forgotten or put off. As every dentist knows, many patients see regular maintenance as a “nice to have” rather than a “need to have.” Don’t fall into that same trap when it comes to meeting your financial goals.

Why are annual reviews so important? Because priorities change, and financial goals are not set in stone. Use this time to check your progress, verify the performance of any advisor you may be working with, and look at any needs for immediate liquidity.

By January 31, with a few minor exceptions, employers, financial institutions, and others who have documents related to your tax liability are required to send them to you. If you work for a dental system, you’ll have your full information by then. While you don’t have to do your taxes at that time, it’s a good idea to get all your paperwork to your tax professional as soon as possible. Or, if you do your taxes yourself through an online program, you can get an early sense of what your liability or refund may be. If you owe, you can wait until April to submit your taxes and payments, or later if you get an extension. (Don’t make the mistake, though, of thinking an extension allows you to 

 your taxes later; it does not!) If you’re expecting a refund, you’ll want to submit your tax returns sooner. Why? Because that’s your money that your Uncle Sam is earning interest on.

Consider this task a part of spring cleaning. Each year, you should look over your retirement plan documents, and discuss beneficiaries with your advisor and your partner and other family members to make sure nothing has changed and the money will go where it’s supposed to in the event of your untimely passing.

Why now? For the same reason you should review your portfolio performance now; because otherwise this may get pushed to the back burner, where it decidedly doesn’t belong. Life insurance is an obvious need, but depending on your age and overall health, you may also consider long-term care insurance, disability insurance, updating your malpractice coverage, and any other needs you should address.

When it comes to insuring your practice, there is a long list of variables, including new services you’re now offering, changes to Federal and State Laws regarding dental malpractice, and recent court decisions that could prompt a change in your malpractice coverage. Talk to your malpractice insurance provider to make sure you’re up to date.

It’s not as if this step is any less important than any of the tasks above, but the simplest way to become overwhelmed is to over-schedule the beginning of the year.

If you run your own practice, or if you simply have significant assets you’ve built up over time, it’s a good idea to consult an asset protection attorney to make sure you’ve minimized your personal and business liability. Make sure your 

is sufficient and up-to-date. Is your risk management plan as robust as it needs to be? An annual review can help make sure that it is.

Of course, there are many other steps you’ll need to take during 2016 to make sure you stay on track. Having a basic calendar in your head or on paper will help you navigate the new year. 

Even if your fiscal year for business purposes ends at a time other than December 31, it's a good idea to use the end of the year to take a look at past performance and make adjustments.

 In this video clip, he discusses a determining factor in increasing case acceptance.

One of the Keys to Dental Case Acceptance One of the Keys to Dental Case Acceptance

Jim McKee, DDS, is a dentist in private practice. He’s also a Visiting Faculty member with Piper Education and Research Center, where he teaches on subjects such as occlusion and the clinical referral process. In this video clip, he discusses a determining factor in increasing case acceptance.

Interview Transcript (slightly modified for readability) 

“After practicing for 32 years, one of the things that I’ve seen that leads to increased case acceptance is really having the clinical confidence in the material that you’re going to be discussing with the patient. I think the number one aspect of case acceptance is to be confident in what you’re going to be presenting and to understand both the upside and the downside of the potential treatment that you’ll be presenting to the patient.”

Jim McKee, DDS, is a dentist in private practice. He's also a Visiting Faculty member with Piper Education and Research Center, where he teaches on subjects such as occlusion and the clinical referral process. In this video clip, he discusses a determining factor in increasing case acceptance.

One of the Keys to Dental Case Acceptance

Last week, the Federal Reserve Board announced that it would raise interest rates just in time for the New Year and a new administration. Of greater interest was that the Fed hinted at the possibility of future rate hikes. Upon hearing news like this, many investors ask the simple question: What does this mean for me? So let’s tackle that one, as well as two other quick questions you might be wondering about, quick-hit style.

End of Year Strategies: Fix the Financial Missteps of 2016

First, though, if you’re feeling some anxiety about this … don’t. The hike and future hikes are a sign that the Fed, which keeps a close eye on economic indicators, believes that the economy is in good health.

What is the immediate impact on me as an investor?

In the short-term, not much will change. The answer to this depends, of course, on your investing window, the amounts and types of investments you have, and the overall effect on the market. But a shorter, simpler answer is: not much, particularly immediately.

When a rate increase is expected, the effect on the overall market is usually baked into stock prices already, at least partially. It’s reasonable to expect at least a bit of short-term stock market anxiety, so you may see a little higher market volatility. Don’t make significant changes to your portfolio based on it. Why? Consider what would have happened if you had panic-sold stock the day after the 2016 election. The intervening days saw a swift and dramatic market recovery. The interest rate hike shouldn’t have that same effect, but the strategy should be the same: Stick to your long-term investing goals.

What will be the impact for saving and credit rates?

Interest rates on savings accounts are unlikely to increase much in the short-term, although they may creep up a bit from their current lows. A Fed rate increase is only one of many factors banks consider when determining their savings interest rates, and it isn’t the most significant among them.

A bigger and more immediate impact is likely for your credit card interest rates, which typically rise and fall with the prime rate. The prime rate is, in fact, directly affected by the Fed’s move earlier this week. The good news is that the major credit providers have a lot of competition, and they know it. Dentists could easily shop around for a better rate. Just be sure you know what rate you’re paying and that you’re on alert for any increases. Yes, credit issuers generally have to inform you about rate increases, but there are some fuzzy exceptions for increases triggered by a hike in the prime rate. Review your credit card statements carefully for any sign of an increase.

What is the likely impact to my mortgage?

You may have noticed that 30-year fixed mortgage rates have been creeping up since the election, and this is likely to continue. This is likely to slow refinance rates and inch up your mortgage payment, depending on how much you owe

The bottom line: This is generally good news. Keep a close eye on the rate increase’s impact, but for most, immediate changes to your strategy are unwarranted.

In a nutshell, don't lose sleep over it. The hike and future hikes are a sign that the Fed, which keeps a close eye on economic indicators, believes that the economy is in good health.

What the Fed Rate Hike Means for Investors

If you watch any sports at all, you most likely appreciate the concept of momentum. In many contests in which a comeback is afoot, the team or player that is behind experienced some catalyst — an interception, a home run, a double-fault from the opponent – that started turning the tide. After that moment, everything seems to go right for the team on the rebound.

End of Year Strategies: Fresh Start for 2017

Not all comebacks are purely linear, of course, and they can’t all be chalked up to momentum. But the concept is important to all walks of life. Think about that time you were doing (insert unpleasant chore here), thought you’d never reach the end of it, and then found a second wind, or a rhythm, that changed your whole outlook and allowed you to finish much sooner than expected.

Even investing can have momentum swings and shifts. As we look to Part 2 of our series on how to avoid last year’s mistakes in 2017 (

), we’ll start with finding some momentum.

 You didn’t set or meet your yearly goals.

Legendary coach and motivator Vince Lombardi believed that players and teams created an environment for momentum through preparation and determination. The investor who meets 100% of their goals is a rare species, indeed. But setting ambitious goals is a huge first step toward meeting them. Putting a specific plan in place for 2017 may be enough, even if you don’t end up reaching all those goals by the end of 2017. In other words, just by engaging in the planning process, you’re a few steps ahead of the version of you that that just chose to fly by the seat of your pants in previous years.

If you have a deep history of setting goals but then failing to achieve them, talk to your advisor, partner, or a trusted friend about the range and scope of those goals. Are you trying to tackle more than you’re capable of? Are your goals realistic? Finding a balance between aggressive goals and those that you’re likely to meet is more art than science.

It seems strange that too many adjustments and too few adjustments could be investing ills. Both are signs of either a poor investing strategy, undefined goals, or poor follow-through. Making too many adjustments may mean you’re trying to “time the market.” That’s when an investor tries to sell right before a market downturn or buy right before a market recovery. Even experienced investors struggle with doing this successfully, because the markets are incredibly difficult to predict.

Too few adjustments could mean either that you’re falling into investor inertia, burying your head in the sand and assuming that everything is performing according to plan, or simply aren’t focused on making adjustments to your investment mix as your life situation or income changes. Talk to your advisor about the right level of changes for you, given your investment goals. Tinkering with your investment mix just to tinker with it can be counter-productive, so make sure any adjustments you are making really do fit with your long-term financial goals.

As with the fresh start that comes with any New Year, don’t let mistakes of the past inform the present. Doing so is called “sunk cost syndrome,” which we’ll discuss more in a future column. For now, let’s just say that any potholes blundered over in the past don’t have to be obstacles in 2017. The road ahead is clear.

Look to methods of capitalizing on momentum in your investing. Here are two common momentum-killers, and two ways of addressing them.

The end of the year holiday season can be filled with joy and anticipation, but it can also come with some financial stresses, even for dentists. For those on a budget, holiday expenses such as throwing a lavish gathering or giving your teenage child that brand new Lexus with a big red bow around it can play havoc with your financial plans. One way to reduce holiday-related stress is to have a holiday plan and stick to it. Here are some tips for holiday shopping that won’t get you off track.

Part of knowing where you’re going is knowing where you’ve been. Take a look at last year’s December credit card statements to get a better sense of what you actually spent, and compare it to what you plan to spend this year. Did last year’s Santa impersonation leave you cutting back on retirement savings or scrambling to pay off debt early in the New Year? Are there steps you can take this year to prevent the same?

Many budgets lose their effectiveness by leaving “miscellaneous” expenses lumped together into a confusing mess. Holiday spending isn’t exactly “miscellaneous,” though, is it? You do it every year, and you can quantify it. Measure it, estimate it, and incorporate it into your budget. If you’ve already finished your 2016 shopping, good for you! You can still measure what you spend and incorporate it into next year’s budget.

There is probably no shortage of gift ideas to consider for your loved ones. But it may also be a time to consider some more non-traditional gifts. No, I’m not referring to naming a star after that special someone; I’m referring to a starting a 529 College Savings Plan or a life insurance plan for a child or a grandchild. It’s a gift that won’t be played with right away, but it’s one that may make a huge difference in the recipient’s life. Most importantly, it’s a gift that, when the recipient is older, will be appreciated long after the hot new electronic gadget has been replaced by hotter, newer electronic gadgets. The gift of a savings account is timeless!

Another gift that can’t be quantified is a simple one: time with your loved ones. Many dentists take a few extra days around the holidays, but many others use the last few days of the year to squeeze in a lot of patients. It’s probably too late now to make drastic changes to your holiday scheduling, but consider any extra time you can carve out to be with the family as a gift to you and to them. If you can’t make it happen this year, consider it in your 2017 planning. Taking time to recharge is ultimately beneficial to you and your patients.

As always, taking on unexpected debt can not only lead to expenses that magnify through interest, but it can take funds away from investing for your retirement. If you already have a heavy debt load, consider scaling back the gift-giving season, starting the shopping early and paying only in cash, and adjusting your budget accordingly.

The holidays can be a hectic time, for sure. But staying the course through the silly season doesn’t have to be complicated. Focus on a few key areas, and you’ll be ready to hit the ground running come January.

One way to reduce holiday-related stress is to have a holiday plan and stick to it. Here are some tips for holiday shopping that won't get you off track.

End of Year Strategies: Stay the Financial Course through the Holiday Season

Derek Pearson is the VP of Business Development at Banyan, a company dedicated to improving social media performance for dentists. Here, he describes the right kind of content to post on social media to better engage with patients.

“There’s really only three types of content in my mind. There’s educational. There’s this manufactured, this fake, the memes, the jokes, however you want to say that. It’s just artificial content that anybody can post. It doesn’t set you apart. And then there’s real and personal. A lot of dentists and a lot of their staffs that run social media think, ‘How do I do this? I know how to do it personally, but I don’t know how to do it for a business. How do we stand out and what do we post?’

Ultimately, at the end of the day, you’ll start having success as a practice when your business Facebook page starts looking like a personal Facebook page. It’s just the real content. You don’t have to be super creative. If you have a patient that comes in and had no cavities, take a photo of that. Celebrate those moments. If you have a veteran come in, you have a police officer, you have patients that you just have great relationships with, take those photos and celebrate them online. We live in a culture where we love sharing. Your patients are part of that culture and they love sharing. Why not help them share these experiences?

Dentistry, you do it every day, so it makes complete sense. Maybe it’s a little mundane to you. But your patients, they come in to you once, maybe twice a year. Three times, maybe. This isn’t just a normal experience for them. So take that time to celebrate them. Build that relationship with them and share that online.”

Post the Right Kind of Content on Social Media for your Dental Practice

In recent columns, we’ve discussed the importance of looking back to look ahead, both in terms of 

 and in terms of identifying any performance, investment, or rebalancing issues you need to address. But what if you know for sure that you made an investing mistake in 2016? How can you make sure it doesn’t happen again? Let’s take a look at a few categories of mistakes and possible remedies, over two parts.

 Miscellaneous expenses were your undoing.

Every portfolio also needs it share of liquidity. For dentists running their own practice or sharing one with partners, there is always the temptation to skip a contingency fund in favor of expanding your practice, buying new equipment, or hiring additional staff. While those are all legitimate uses of “extra” money, there is sound financial reasoning for establishing and maintaining an emergency fund. There are any number of circumstances for which you may need quick cash, including an unexpected home repair, the sudden illness of a family member, an unexpected interruption in your practice, or any number of life’s little curveballs.

Your contingency fund can take the form of a savings account, a money market account, or even relatively liquid investments such as certificates of deposit. No matter what form it takes, having one in place will keep this pothole filled.

 An audit from the Internal Revenue Service (IRS).

Any taxpayer can be subject to an audit. Just because you were selected for one doesn’t mean you committed any malfeasance or broke the law. But there are some key red flags the IRS looks for. Chief among them are:

· Big swings in income year over year, positive or negative. Many dentists can’t help such swings, but the key is to accurately report income every single year.

· Being self-employed (as many dentists are). This is especially a factor if you claim home- or office-related costs as expenses.

· Inflating charitable deductions. This isn’t as common as many people think, nor is it high on the IRS’ list. But if something seems way out of norm, they’ll take a look.

· Not reporting all of your income. This typically happens as a result of a mistake, but take care to report everything you earn, especially if you have significant side income.

In part 2, we’ll look at a remedy for slow-starters, and one for the set-it-and-forget-it crowd. 

What if you know for sure that you made an investing mistake in 2016? How can you make sure it doesn't happen again? Here's a look at a few categories of mistakes and possible remedies.

End of Year Strategies: What Tripped You Up in 2016?

Derek Pearson is the VP of Business Development at Banyan, a company dedicated to improving social media performance for dentists. Here, he explains how dental practices can use social media to build relationships and trust with their patients.

“How I view success (on social media) is it’s totally engagement. It’s all about awareness. The more awareness you have, the more patients you’re going to get. And social media is not just about new patients. Now, it’s the only platform dentists have to communicate with their patients on a regular basis. Again, if I’m a healthy patient, and I come in every six months, that’s not enough to build this strong relationship of trust. Now, I can see you as a patient every week if you’re posting photos of you, your staff, and other patients, or maybe even personal photos. Maybe you’re out mountain biking, or went out to eat at a restaurant. You doing things that show me that you care and what type of person you really are will help me build that relationship of trust.”