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Preventative Automation

To whomever is reading this blog post: Welcome back! I am assuming that you have already read my first blog post on dental practice / financial planning practice analogies and were so consumed by the content that you came back for more. This installment discusses the value of preventative care in both dentistry and financial planning.  

Dentists and their hygienists’ greatest value is often the preventive care that they provide. Through the fundamental schedule of cleanings and monitoring of tooth decay, plaque buildup, and gum health, they often can assess and correct problematic health situations before they grow into something far more catastrophic. Often times the diagnosis of a decline of gum or tooth health is a precursor to more grave health issues that may not be seen by a doctor or the medical professional until far later. There are over 2 million Emergency Room visits due to dental pain in the US (annually), most of which are preventable dental issues such as tooth decay. Hence why it is critical for dentists to track the percentage of patients that accept and follow through on recommended treatments. Furthermore, from a financial perspective, why tracking the dollar value of treatment recommended vs. the dollar value invoiced vs. the dollar value collected. Not every patient follows through on a recommended treatment!

I see a similar phenomenon in financial planning. Most of the people that I work with place an emphasis on advice-- that’s why they hired me. However, there have been times in my career where I make a recommendation to a client (which I believe to be in their best interest) and the recommendation never gets deployed. Advice not taken can have lasting impact whether it is in the form of a patient’s long term health or a client’s long term financial health. Establishing a sound foundation with regular reviews is critical for our clients’ financial lives. Implementing a financial plan and having it monitored will help avoid catastrophic outcomes down the road (e.g. running out of money). For financial planners, systems should automatically flag them for semi-annual / annual reviews with clients (at a minimum), 401(k) or 529 rebalancing, etc. These systems are in place to back the underlying belief that having a cadence will encourage positive client outcomes. On the investor side, one of the simplest yet most effective ways to save is utilizing the “pay yourself first” concept. This means automating savings towards the most appropriate and potentially tax advantageous vehicle possible. When a contribution to an IRA is automated, it takes the temptation away to spend that money.

Mitch DeWitt