Dental Management

Posted: 24 February 2011

Practice Finance The Financial Check Up

Author: David Croser

Going to a financial adviser should be like a pain-free visit to the dentist, says David Croser, who has been so impressed by one firm that he wanted to share his experience

When a new patient comes to see you there are a few essential preliminaries to go through before you can even start to treatment. This six-stage process starts in your reception before the clinician has even seen the patient.

Planning the treatment

1: Registration This process is an opportunity for the clinician to obtain the basic data about the new patient that will inform future treatment decisions.

2. Wishes Before even looking into the patient’s mouth the dentist is likely to ask why they have come to see them in order to establish their needs and possibly more importantly their level of expectation.

3. Inventory and assessment The clinician’s examination of the mouth is documented within the patient’s record and provides an inventory of the oral tissues together with a record of its condition. tests may also be required before a diagnosis can be made.

4. Options and risks A conversation with the patient is now required during which the risks and benefits of the different treatment options are discussed and the patient’s comments and wishes recorded.

5. Costing the chosen plan Once the patient has been given sufficient time to think things over, a treatment plan can be formulated and the associated costs can be agreed. however, if the patient’s problems are complex it may be necessary to break down the treatment into a series of stages that are reviewed in the light of the initial outcomes. indeed a provisional treatment may be required until the most suitable outcome can be determined.

6. Reviews Suitable intervals are then established for the ongoing maintenance of the work.

Good Pratice

Such a sequence is not peculiar to dentistry; it is used by many other professionals. There is a very good reason for this. The six stages described allow the professional and the client to develop a sound understanding about any services that will be provided along the way. The dialogue is essential for trust to develop between the parties.

By ensuring that adequate time is allocated to those conversations, sufficient trust can be developed so that the ongoing professional relationship is friendly and relaxed. This is very important when the case is particularly significant or complex. Indeed when it comes to personal income, investment portfolios and pensions the level of complexity and significance can be quite extreme.

Looking for sound advice

Most dentists employ an accountant but whilst they are happy to sort out your tax position, investment advice seems to be beyond their scope of practice. Looking for a new financial adviser can be as difficult as picking out a new dentist from the Yellow Pages. I found myself in that situation a few years ago, well before the latest banking crisis. There was probably nothing wrong with the adviser that I had been using but they didn’t seem particularly pro-active in communicating with me and I really wanted a better understanding of my situation. In addition, I was banking online and thought it would be very helpful if I could see my investment portfolio in a similar way.

I have always valued independent professional advice, so I asked my friends where they sought financial guidance. In this way I was introduced to Barnett Ravenscroft, a firm based in Birmingham. They offer a bespoke advisory service using a web-based platform which stores all your diverse personal savings, investments and self invested pension arrangements in a single place held by a third party custodian. Naturally, they are also regulated by the Financial Services Authority.

The benefit of having this secure one stop shop is that the client can see the composition and the value of the various elements within their portfolio any time of day or night and from anywhere in the world. It is also possible to make personal stock market trades using the platform if you want to play the market, but that’s the subject of a very different article.

Even better, because the process of keeping your funds on the digital platform involves very few people, the annual service charge is less than for the paper-based service provided by many other financial institutions. Likewise, the cost of buying and selling assets is also reduced because the trading is done between computers. These savings are essential if you wish to optimise your investments and are particularly significant when the percentage return on most investments is low, as it is at the time of writing.

A combination of elevated inflation and high management costs can significantly erode the buying power of your savings over the years; all the more so later in life when you are living on a pension.

Agreeing to take on a new client

Just as I would have done in my own practice when seeing a new patient, Barnett Ravenscroft took a very detailed history about me after my preliminary enquiries. We then set up a meeting to find out my particular needs and expectations - it was the first of several meetings that year. Although I had provided them with an inventory of my existing investments they were not prepared to take me on as a client until they could check to see that I was not laundering funds and that I had understood their approach to financial management. Their service is very detailed and is probably best suited to dentists in the second half of their career. Their financial plans are regularly updated and amended to reflect any change in circumstances, making them particularly helpful for those planning retirement.

But no detailed advice was going to be provided until the company had clarified the risk associated with different investment options and the basis for the company’s charges. This process involves a little reading and for those with an enquiring mind there is no shortage of detail provided. Just as a well-informed patient can become an active participant in their own care, their financial team are keen to have their clients actively involved in their own financial planning.

Sorting The Risc

Risk profiling is not something that we do in dentistry even though we recognise that there can be an element of risk with all forms of active treatment. It’s the same in the financial world it seems, where there is no such thing as ‘no risk investment’, only greater or lesser degrees of risk – and the older you get the less risk you can tolerate.

Once my risk profile had been established using a psychometric modelling tool, a number of different options were suggested for my own situation.

The likely returns were calculated after all costs had been taken into account - the adviser’s fees and the platform monthly wrapper fee together with fund charges and trading fees. A baseline was created against which future performance could then be measured.

Reviewing The Situation

Because of internet fraud, there is something a little disconcerting about placing a large chunk of your hard-earned assets into a global custody account that sits online, but as you might expect the security measures are commensurately robust and at the end of the day there is no greater security in holding a piece of paper - as the pensioners with Equitable Life found out. Once you master the security protocol there is total transparency online.

Every trade is documented, as are the investment returns and associated taxes, and the administration fees. The website has a wealth of information that allows the client to see exactly how their portfolio is doing at any given moment. There is also a direct link to the adviser at Barnett Ravenscroft who is alerted whenever the spread of investments needs to be rebalanced. Rebalancing is an essential risk management activity to optimise the security of the investment by spreading the risk. Every time this is done there is a small cost implication but trading investments has never before been so economic; the low costs previously only accessible to large institutions.

In addition to these regular reviews I meet with my adviser twice a year so that we can agree any changes that might be required to release capital or to increase returns by accepting a higher level of risk.

After four years with the new team I can honestly say I have never felt so confident about financial advice and I am really sorry not to have been introduced to them at an earlier stage.

Still, like most of the patients who eventually make their way to your surgery, personal recommendation is undoubtedly the best form of referral. If you are as confused by the financial advice in the columns of the national press as I was and would like to make sense of your hard-earned fees you might want to ask Barnett Ravenscroft if they can work with you.