Expert advice from national leader and transitions specialist Henry Schein PPT
In the past, we have discussed the roles of Financial Planners, Accountants, and Money Managers as it relates to their expertise and impact on the dental practice transition process as well as their impact on dental practice management. As a refresher:
Accountants (CPAs) keep track of money. They do accounting, auditing, tax, and consulting work. Generally they provide tax advice, profit-and-loss statements, and prepare tax returns. They will also represent you should the IRS challenge your tax return. They are generally paid a fee for their professional time.
Money Managers either take a commission for each transaction, take a percentage of the money being managed, or are paid a flat fee. In any case, they benefit you by taking a long-term perspective on the management of your money with the goal of growing or preserving your wealth.
Financial Planners evaluate your assets, your liabilities, and your income to project the amount of money you will need for retirement and the amount of money you will have when you retire. Financial Planners make money by charging by the hour or by charging a fee for preparing a financial plan. Actuaries review the increase or decrease of assets in the financial plan each year and re-project, using actuarial data, how the plan is tracking. After new projections are determined, the financial planner comes back into the picture to adjust investment strategy to meet the financial plan goals.
Evaluating Dental Practice Transition Expertise
This is all important as increasingly we are seeing financial planners and accountants acting as money managers and “Transitions Experts.” A number of large, well-known nationwide firms, as well as more local ones, have entered the transitions business, for any number of reasons, with the further intent to manage the proceeds of the sale. In some cases, claims have been made that the right structure allows taxes to be avoided or deferred to a future date. While we all would like to pay less, taxes cannot be avoided! They may be deferred, but ultimately you will pay the taxes.
Further, when considering dental practice value, either as a seller or a purchaser, it is important to review our previous articles on valuations such as “When Is a Valuation Not a Valuation? Why It’s Important to Know the Difference.” Even though any of these advisors may understand financial matters and tell you they have “a lot of local dental clients,” they may not be well versed in dental practice valuation methodology and/or may not have a real feel for market pricing and other factors or specifics in practice transitions.
Choosing the Right Team
To be clear, the right financial team is important in your transition, whether you are selling your dental practice or buying one. It is necessary to understand the role of these key professionals in your transition and financial planning in order to choose the right advisors at the right time in the process.
Most knowledgeable attorneys advise that being both the financial planner and the money manager is a conflict of interest. Attempting to provide all four services within one firm—accounting, money management, financial planning, and transition expertise—seriously exposes your dental practice transition and retirement plan to prejudicial advice. Using separate entities for each, affords you an automatic check-and-balance system which is ultimately in your best fiscal interest.
As in all transactions, “Caveat Emptor” or “Buyer Beware.” We strongly recommend that you find a knowledgeable accountant, a good financial planner who will usually refer you to an actuary (working at arm’s length), a list of money managers (arm’s length) with whom they have worked and are comfortable, and finally, of course, an ethical dental practice transitions expert. This grants you the protections offered by diversity and separation.
Henry Schein Professional Practice Transitions, Inc. is a national leader in dental practice transitions. A subsidiary of Henry Schein, Inc. they provide expert guidance for selling and buying dental practices, assessing partnership and associateship opportunities, and performing dental practice appraisals and valuations.