Fall 2015

HUMAN AND FINANCIAL CAPITAL OPTIMIZER A Context for CWA Case Study

ain Watters and Associates (CWA) has had For others, harnessing what we have to maximize opportunity to present a dozen plus case stud- our earnings is a conscious act—a given. These are Cies outlining various strategies and solutions to the people that strive to be the best they can be, not effectively guide the business and financial endeavors just in earning money, but in all aspects of life. An of dentists. ebb and flow develops as areas of human potential strengthen. But growth is not necessarily about the We thought we would take a break from case stud- financial results. As a matter of fact, CWA’s most ies and talk conceptually about the thought process successful clients tend to focus their pursuits on ex- behind our systematic approach to helping our cli- cellence in service and quality of work, which inevita- ents overcome financial challenges to reach a place bly leads to monetary gain when combined with good of financial peace and security, which is the goal for financial and operational management. our clients and helps define success. HUMAN CAPITAL OPTIMIZERS THE HUMAN TO FINANCIAL AND THE DENTIST CAPITAL CONVERSION CWA is privileged to have more than 30 years of The CWA process is based in two overarching ideas: experience in the field of dentistry. Our process and methodologies were developed from immersive work 1. Each person possesses human capital that and study and a frontline position within our clients’ can and should be optimized for achieving full practice and personal finances. The financial results potential. our clients achieve are not because they’re lucky, the 2. Human capital converts to financial capital in CWA approach is time-tested and proven. But let’s the form of money when a solid plan with con- get specific. CAIN WATTERS & ASSOCIATES PLLC sistent execution is in place. The road to becoming a licensed dentist typically Keep in mind—money is only one measure of suc- means 30 or more years of life are spent prepar- cess and security. By no means is it the only way ing—it’s an investment in you. Getting the education to determine whether we’ve reached our full human and taking all the clinical steps to gain and hone the potential. skillset is an intense process. Our team is always amazed at how much multitasking is required by our No matter your age, your most valuable asset is you. clients to not only be a good dentist, but also a good If we were to take all the future earnings you plan to CEO of their business. create and determine the present value of that earn- ings stream in today’s dollars, what you will find is Over the years, we’ve found the ones who do it well that you are the most valuable asset on your balance will typically reach a level of financial success that sheet. Unfortunately, many of us do not realize the also can be traced back to a certain set of “optimiz- value and potential value we bring to the equation. ers.” Our clients are coached in how to develop these 30 areas, which we know convert financially. What does human capital optimization look like for a dentist? Like human capital optimizers, financial capital op- Think about it as what you gain from activities like timizers vary in scope and requirements. But as brainstorming sessions with Seattle Study Club® col- human capital value lies within the dentist, financial leagues, continuing education opportunities, explor- capital optimization can be viewed as a set of tools ing and developing interdisciplinary treatment plans and blueprints that can be accessed through various or from establishing a brain-trust by partnering with means and vehicles to build your desired financial practice management consultants. Optimizing your future. human capital is gaining emotional intelligence and soft skills while threading passion, commitment and These optimizers include debt structuring, budgeting, integrity into your work every day. It is what helps restructuring assets and cash flow, pension planning to build relationships and trust among your patients, and strategies, tax strategies, estate planning, bring- team and community. It also means thinking collab- ing in associates, partnerships, practice transitions, oratively with suppliers and vendors to create solu- investing, asset allocations, and various cost control tions and foster innovation or new modes of delivery measures. Financial capital optimizers are typically of your service. It is leveraging technology to spur measurable. We’re able to assess our clients’ effi- fresh ideas and challenge convention. ciency in using these tools to assist in maximizing results. This is what human capital optimization looks like, but finding the time to make it happen and maintain- RISK MANAGEMENT ing balance is daunting to say the least, which is why AND THE UNKNOWN so many dentists are successful in reaching their hu- When converting human capital value into financial man potential, but not very successful in converting resources we consider the unknown risks and plan their earnings into economic security. accordingly. What would happen if your human capi- tal became impaired and how would that impact your FINANCIAL CAPITAL OPTIMIZERS finances and loved ones? Life insurance, disability A review of CWA’s Seattle Study Club case studies coverage, property and casualty insurance are com- shows a recurring theme of how we assist our clients ponents of a well thought out risk management plan. in transferring human capital earnings to impact their financial capital. First, we teach basic principles— Identifying issues and tracking progress is critical to how money compounds and how to make decisions success. In the coming months, CWA will share more that result in the most money growth in the most on this topic and offer a thought-provoking question- efficient manner. However, it is the financial capital naire to assist in taking financial inventory as well as optimizers that, when implemented, enable the client assessing and tracking your progress in maximizing to take available cash flow and make it grow. This is your value for long-term gain. Taking inventory at the wealth accumulation and the path our clients take to start allows you to set base-line measurements and the ultimate goal of financial freedom. establish an actionable plan for converting your hu- man potential to personal and financial success.

Cain, Watters & Associates, P.L.L.C. (CWA) is a national CPA firm providing doctors with comprehensive financial planning advice. CWA has transitioned hundreds of dental practices of all specialties as well as multi-specialty practices. The scope of CWA’s advice includes, but is not limited to, cash flow and debt evaluation, tax strategies for doctors, implementation of pension plans and practice transition strategies. This article is not intended to be used for personal investment advice. 31