Q&A With Steven M. Lugar, CFP®, North Texas Dentistry

September 1, 2011

What's the difference between a fee-only and a fee-based advisor?

In a word, huge! The vast majority of dentists, and other professionals as well, probably don't appreciate the difference and what it means to them. In short, in addition to an asset-based percentage fee, a fee-based advisor can also receive other compensation, such as commissions, from selling financial products and insurance policies. This additional compensation can create conflicts of interest that are not easily discerned by a client. Conversely, fee-only advisors accept no compensation or commissions from the products or services that they use to implement the client's financial plan. 

 

When should a dentist consult a financial advisor?

Ideally, the day they graduate from dental school. While the tendency may be to defer that consultation for a few years until they are somewhat established, that decision can result in tens, or even hundreds of thousands, of wasted dollars. The decisions that are made in the early years of a career, i.e., whether to buy an existing practice or start your own, evaluating what rate to pay down debt vs. save for retirement, what kind of retirement plan to establish, and determining how much house to buy, are really important. They have a material impact on lifetime wealth accumulation. After almost 30 years in the business, I can say with conviction that the people who get good advice early in their careers have a huge jump on those who wait. There is simply no way to overstate the importance of avoiding mistakes that have negative repercussions for many years to follow. Most individuals find that they make better financial decisions when they tap into the expertise, experience and discipline provided by a fee-only financial advisor. 

 

What experience do you have working with dentists specifically? 

For more than 15 years, Beaird Harris has worked with dental practices of all sizes and specialties. They include recent graduates working as associates prior to their "buy-in", sole practitioners as they launch their practice and large dental groups with multiple owners. We provide expertise and objective advice in the myriad of subject that dental school did not equip them to deal with. This includes making correct decisions in the areas of life and disability insurance, business entity structure, proper choice and design of their company retirement plan, and tax-efficient strategies for building a substantial net worth, separate and apart from their dental practice. 

 

Do you serve your clients in a fiduciary capacity? 

Yes, and simply put, "fiduciary' is a legal term meaning to put the clients' interests ahead of our own. However, in the financial services industry, true fiduciaries are difficult to identify. Most financial advisors adhere to the "suitability" standard - meaning that they only have to document why their investment advice was "reasonably justified" for you. A financial officer operating under the standard could still win an incentive prize for selling you a particular "suitable" investment. The line is blurred between functioning as a fiduciary and almost functioning in a fiduciary capacity. Lesson learned? Don't expect financial gurus or salespeople to act in your best interest. Ask your financial advisor to put in writing whether he or she upholds the fiduciary standards. 

 

How are you compensated?

Beaird Harris a fee-only financial planning and wealth management firm. This independence allows us to remain totally impartial and deliver objective fiduciary advice to clients. 

Press Coverage Author 
Steven M. Lugar
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