I founded Aquire Advisors to establish a better precedent for financial advice. Like most thoughtful businesses I’d observed, we chose to specialize and dedicate time and resources to a niche market.  We chose dental practitioners as our focus because of your unique challenges regarding personal financial planning and business management. Our research and experience allow us to add significant value to each recommendation we provide and to bring clarity to the unique financial issues dentists face.

Few dental practitioners complete a useful financial plan. Many dentists assume they have a financial plan when they contribute to a 401(k), obtain some investment advice, or purchase other investment products. But none of these fully address clear financial planning. Real planning is a comprehensive, ongoing approach to managing all your personal and practice financial concerns. It takes into account your business overhead, your salary and distributions, estimated collections growth, business valuation, investments, and debt; furthermore, it involves attending to relevant short-term and long-term goals.  Such planning includes strategies for effectively paying off your practice debt or student loans, paying for your kids’ college, or retiring comfortably. Thoughtful planning also takes into account financial hazards such as disability, death, liability, and liquidity risks.  It considers business and personal income taxes and tries to minimize the impact they have on your overall strategy. Finally, it also takes into account the type of legacy you want to leave behind through addressing prudent estate planning.

Our unique approach helps you have confidence in your overall financial picture.  Research has shown that you can dramatically increase your long-term financial success by simply staying more organized and making your financial decisions within the context of a plan.

Which of the following fictional characters need life insurance the most: Spiderman, Batman, Fred Flintstone, Harry Potter, or Marge Simpson? The Life and Health Insurance Foundation asked 1,000 Americans this question; so I thought I would pass the same question along to my clients. Let’s find out which one of you has the best understanding of life insurance. The winner will receive two movie tickets, so good luck!

Take the survey now >>

The moral of this story is definitely quite clear.  If he says he’s a dentist, talks like a dentist, and uses tools like a dentist, there are no guarantees that he is actually a dentist. Well, maybe the moral wasn’t super clear.  But either way, don’t worry, I’m going to switch dentists now. That was the last straw. While it’s not likely that people will ask their dentist about his competency or licensing, it’s probably a good idea. While there are varying degrees of competency and licensure among dentists, there is an even greater disparity among financial planners.

Some of you have asked me what the CFP® marks are on my business card. I want to take a second to explain what is involved in this certification. If nothing else, knowing this information might help someone from running into a disaster in some “financial planners” basement.

Most people think that all financial planners are “certified,” but this isn’t true. Anyone can call himself or herself a “financial planner.” Only those who have fulfilled the certification and renewal requirements of the CFP Board can display the CFP® certification marks. When selecting a financial planner, you need to feel confident that the person you choose to help you plan for your future is competent and ethical. The CFP® certification provides that sense of security by allowing only those who meet the following requirements the right to use the CFP® certification marks.

Education: CFP® professionals must develop their theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university offering a financial planning curriculum approved by the CFP Board. Other options for satisfying the education component include submitting a transcript review or previous financial planning-related course work to the CFP Board for review and credit, or showing the attainment of certain professional designations or academic degrees.

Examination: CFP® practitioners must pass a comprehensive two-day, 10-hour CFP®Certification Examination that tests their ability to apply financial planning knowledge in an integrated format. Based on regular research of what planners do, the exam covers the financial planning process, tax planning, employee benefits and retirement planning, estate planning, investment management and insurance.

Experience: CFP® professionals must have three years minimum experience in the financial planning process prior to earning the right to use the CFP® certification marks. As a result, CFP® practitioners possess financial counseling skills in addition to financial planning knowledge.

Ethics: As a final step to certification, CFP® practitioners agree to abide by a strict code of professional conduct, known as the CFP Board’s Code of Ethics and Professional Responsibility,that sets forth their ethical responsibilities to the public, clients and employers. The CFP Board also performs a background check during this process, and each individual must disclose any investigations or legal proceedings related to their professional or business conduct.

How does the CFP Board’s Code of Ethics Benefit me as a client?

Through the Code of Ethics, CFP® practitioners agree to act fairly and diligently when providing you with financial planning advice and services, putting your interests first. The Code of Ethicsstates that CFP® practitioners are to act with integrity, offering you professional services that are objective and based on your needs. They are required to provide you with information about their sources of compensation and conflicts of interest in writing.

Ongoing Certification: Once certified, CFP® practitioners are required to maintain technical competence and fulfill ethical obligations. Every two years, they must complete a minimum 30 hours of continuing education to stay current with developments in the financial planning profession and better serve clients. Two of these hours are spent studying or discussing the CFP Board’s Code of Ethics or Practice Standards. In addition to the biennial continuing education requirement, all CFP® practitioners voluntarily disclose any public, civil, criminal or disciplinary actions that may have been taken against them during the previous two years as part of the renewal process. If you would like to learn more about the CFP designation, check out CFP.net.

While the mere obtaining of a professional credential like the CFP® does not automatically make someone a qualified advisor for your situation, it is one of the most widely respected credentials available in the industry. If you can interview and work with an advisor that holds the CFP® designation, you will likely avoid a few dark basements and rusty tools that result in some unpleasant recall visits.  Have a good week.

Lesson of the past

Ah, the glory days—many athletes wish they could go back to relive them, whatever they were. (In my case, it was high school soccer in Idaho, so maybe not quite so glorious.) It’s not uncommon to hear one say, “If I had a chance to go back and do it all over again, I would have made such better choices.” Just as I couldn’t predict where the goalie would jump, no one can predict the future. However, we can take lessons from our past, and not repeat the same mistakes. Lessons I learned in that single moment on the soccer field apply fittingly to today’s investment environment. Examine your surroundings, focus on a target, and eliminate all distractions.

How to make it work

Here’s the simple application – examining your surroundings requires you to make conscious choices about personal finance. It won’t take care of itself. Work with an advisor who tirelessly defends your best interest. What experience do they have that qualifies them to be an advisor to you and your practice? What educational background or professional credentials do they hold? What do their existing clients say? Take your time and make a good decision – don’t get sold a bunch of over-hyped financial products that overcompensate the advisor while under-compensating the client.
Focus on a target. Establish clear goals and stay focused on those concrete, tangible goals. Working with your advisor can help you stay focused and accountable to those goals.

Get focused

Finally, eliminate all the distractions. Desperate times call for desperate measures. And it’s no different this time around. Ever day there are powerful messages telling us to “buy” something, or “buy into” someone’s philosophy. Bad news sells. Good news doesn’t. Especially during this market cycle, these messages are designed to take advantage of our desperate times, to influence us to make very short-term, emotional decisions. . . ones not usually in our best interest. Chao amigos.

Most people only dream of playing par golf–it’s one of my dreams anyway, but I’m a long way from getting there. I have a membership at a local course; the second hole is a short par four, with a sharp dog-leg right. The fairway is narrow and protected by brush, trees, and water, especially on the right side of the fairway. You can play it safe by hitting an iron off the tee followed by a wedge into the green. Or, you can try to accomplish the unthinkable by whipping out the driver, cutting the corner, clearing the brush and the water, then landing your ball just in front of the green with a chance to roll on for an eagle putt. Here’s the best part. At least half of the golfers who I’ve played with this year will pull out their 450cc sasquatch mallet and attempt the unthinkable, trying to drive the green (forget the fact that they haven’t hit a straight drive with that club all year long). You can probably think of many reasons for why they do it (one of them being the triple bogey they took on hole number one). And you’ve undoubtedly seen similar situations. Maybe you’ve even played that hole with me this year. Of course, rather than hitting that perfect drive, their surprising, habitual slice sends the ball into the lake (“surprising” because of the quintessential cursing that follows the slice). They lose at least one ball, maybe two. And then, after all that anguish, they take the customary “drop” somewhere up in the middle of the fairway and lose any chance of getting to the green in two strokes. The overarching thought here is simple; as amateurs, instead of playing prudent golf and trying to consistently keep our score low, we’re always trying to shave off a few strokes from prior mistakes by trying to execute the near-impossible golf shot.

Investors have a tendency to make decisions in a similar fashion.

We try to cut corners. We take a little bit too much risk for where we’re at. We are rarely content with good (par) rates of return. We want better (birdie/eagle) rates of return. I understand the intrigue and the desire to maximize the usefulness of our hard-earned savings. But, at the end of the day, when we try and get to the green in one long drive, we run the risk of shanking it into the trees. At certain points in our life, it’s prudent to take calculated risks. It’s part of the American dream. I think a lot of dental practitioners do this every day when they decide to spend a decade in school, only to leave with a pile of debt and no assets to speak of. That’s risk. That’s entrepreneurial spirit. But there are some key differences here; you now have the intellectual capital to back up your risk-taking, it becomes calculated. It becomes prudent. I guess I’m saying that you better know what you’re doing if you try to take your driver over the trees and reach the green in one stroke.

The discipline and consistency required to play par golf will definitely impress your friends; and even though we all might have an occasional Tiger in our Woods, we would probably fare well trying to use our irons a bit more often, and our driver a little less.

Fifty economists from various investment and academic institutions regularly conduct a notable economic survey. They compile their findings and analyses in a review called the Blue Chip Economic Forecast®. For the purposes of this article, we will focus on information from the June 10 issue. In order to understand the current state of our economy, we will define and review four of these economists’ findings, which include gross domestic product, inflation, unemployment, and interest rates.

First, to understand the health of our economy, it is important to understand Gross Domestic Product (GDP). GDP measures all goods and services that a country makes within its borders during a year. It’s an important measuring tool that helps determine the health of a nation’s economy. It’s also a good measuring stick for our standard of living. For example, from 1973-2009, the U.S. economy grew, on average, 2.8% annually. Therefore, we can consider 2.8% growth as normal for our country. Of these 50 economists, even the most optimistic do not believe that we will be back to this rate of growth at the end of 2010. Some doubt that we will even reach 1% growth by the end of 2010. In short, a sizable group of experts is forecasting that the economy as a whole will grow quite slowly through 2010.

The second category to define and review is the Consumer Price Index. The CPI measures the cost of all the things we buy. This is important, especially in your business. When the CPI goes up, we call that inflation. If inflation goes up, so do your overhead expenses (supplies, labs, etc). Lately, there has been a lot of talk about inflation, and how the endless amounts of cash that the administration has pumped into the economy is going to send inflation through the roof. The majority of respondents to the survey disagree. Of the 50 economists that forecast inflation, none of them believes that inflation is a short-term threat. Inflation occurs when all prices of goods and services rise, and usually happens when the economy is growing at a faster rate than normal. Do you recall how the economists do not expect GDP to grow through 2010? If people are not buying stuff, we’re not going to see higher prices. This doesn’t mean they don’t see problems out in 2011, however. Prices are likely to rise eventually, the speed of which depends on how quickly the economy grows, and how the administration deals with that growth.

The next category is interest rates. Interest rates can be measured in many ways, but one of the most common is by forecasting the 10-year Treasury note. Since the 50 economists expect economic growth over the next 18 months to be quite slow, and inflation to be minimal, they do not expect to see interest rates to raise significantly either. The pessimists of the group anticipate a lowered treasury note to 3.43% and the optimists expect that rate to be just over 4%. If we see a lot of economic growth, or if we see inflation take off, these rates could be higher, but remember, neither of those two scenarios looks likely to the 50 respondents.

The last category we’ll discuss is unemployment. Unemployment rates trend upwards, even after a recession is over. That’s because employers don’t usually start laying people off until well into a recession. If their businesses are struggling, they’ll first look at improving their marketing campaigns, sales, etc. Early in a recession, people don’t realize they are actually in one. After a recession is over, employers typically don’t hire people until they have had some stable growth for a while. The most optimistic forecasters see unemployment at 9.4% at the end of 2010, but it could also be much worse—25% of responders see unemployment over 10% by the end of 2010.

Some conclusions to draw

At the end of the day, there are several different economic scenarios we could experience. Investors (as well as financial advisors) don’t know with absolute certainty what to expect. It could be a more moderate, middle-of-the-road prediction that wins out in the end. Assuming this group’s consensus means something, then we can arrive at some concrete conclusions.

First, it doesn’t make sense to “inflation-proof” your portfolio too quickly (e.g. don’t go out and load up on gold just because someone on the radio says you should).
Second, returns to the safest assets (like the 10-year treasury note) are not likely to see much reward unless the more pessimistic scenarios end up on top. A flight to safety at this point isn’t likely to be heavily rewarded. Don’t completely abandon asset classes that may benefit from strong domestic and foreign economic activity.
Third, focus on your target. Running a dental practice can be very time consuming. Docs don’t often take the time to create a solid investment strategy. A solid investment strategy is more than just owning securities. It’s important to understand your objectives, your time horizon, the costs of each investment, and how your investments will fluctuate in different environments.
If you can remain focused on your long-term financial strategy, you will dramatically improve your chances of reaching your financial goals. Just remember to take in the information around you, focus on a target, and don’t let any distractions get in your way.

Ah, the glory days—many athletes wish they could go back to relive them, whatever they were. (In my case, it was high school soccer in Idaho, so maybe not quite so glorious.) It’s not uncommon to hear one say, “If I had a chance to go back and do it all over again, I would have made such better choices.” Just as I couldn’t predict where the goalie would jump, no one can predict the future. However, we can take lessons from our past, and not repeat the same mistakes. Lessons I learned in that single moment on the soccer field apply fittingly to today’s investment environment. Examine your surroundings, focus on a target, and eliminate all distractions.

Let’s examine our surroundings.

What is a recession? How can looking at past recessions give context to where we’re at today? The National Bureau of Economic Research officially determines the beginning and the end of recessions. In December of 2008, they announced that the current recession officially began in December of 2007. Notice how they weren’t able to identify exactly where the recession began until twelve months after it started. Historically, the committee has been able to identify a recession’s beginning and ending points between 8 and 12 months afterwards. So even if we’re headed out of it right now, we won’t know for sure until 2010. The longest “recession” ever was the Great Depression, which lasted 43 months, from 1929 to 1933. Since then, America has had 12 recessions, the longest of these being the 16-month recessions of 1973-1975 and 1981-1982. If the recession ended this fall, it will have lasted somewhere between 20-22 months. We’ll have to wait and see what the committee says, but it’s worthy to note that we be passing through the longest recession since the Great Depression.

Many of you are probably familiar with a few dental professionals who are well-intended, but may not live up to this standard of prudence.

The same is found in financial services. I wish that more financial professionals would adopt this philosophy. Many insurance companies and investment institutions develop financial products and perpetuate philosophies that put their clients in a worse position than they would have been in had they done nothing at all.

Just because a financial product is available, doesn’t mean it’s beneficial. It’s important to make decisions in the context of your financial plan. Investments made out of the context of your plan are accidents waiting to happen. If you screw something up today, it’s going to get worse later.