Meet Ryan Derousseau, the financial advisor with a knack for helping therapists navigate the wild terrain of money. He’s here to reveal that your therapy practice isn’t just a job; it’s a golden goose that can lay those financial security eggs! From therapists struggling to see their practice as anything more than a room with a comfy chair to the importance of professional wills and contingency plans, we’ve got you covered. And if you’re wondering how to pass the therapy torch gracefully, Ryan’s got the scoop on finding a partner or successor. We’ll also tackle the thrilling world of retirement savings and why it’s the real MVP for your financial future. Get ready to learn how to secure your therapeutic legacy!
Meet Ryan Derousseau
Ryan Derousseau, CFP®, is a fee-only financial planner who specializes in working with therapists and private practitioners, enabling them to thrive financially so they can focus on clients. He’s taken his years of experience working for himself and his deep knowledge of the financial space to build a process to help clients shape their business with their goals, family and future at the forefront. He shares this process with clients at United Financial Planning Group, based in Long Island.
Why Your Therapy Practice is More Than Just a Job
In the realm of financial advising, it is common for advisors to view their practice as a valuable asset. This perspective is not limited to financial advisors but can also be applied to various professions, including therapists. Realizing that a practice can be seen as an asset is essential for long-term planning and financial security. Ryan Derousseau, a financial advisor specializing in working with therapists, talks about viewing a practice as an asset. DeRusso emphasizes the importance of therapists considering their practice as a valuable asset and taking steps to protect it.
Therapists, Assets, and Long-Term Success
Derousseau emphasizes the need for therapists to plan for the future and protect their assets. While lawyers and accountants often sell their businesses when they step away, therapists tend to struggle with this due to the personal nature of their relationships with clients. However, Derousseau argues that therapists should not let this hold them back from considering their practice as an asset that can continue beyond their involvement. Therapists should not view their practice as worthless without their presence. Instead, they should take steps to ensure that their business can thrive even when they are no longer actively involved.
The Importance of Future Planning for Therapists
Derousseau suggests that therapists can add protection and long-term security to their practice by planning for the future. This planning can involve considering retirement or pursuing new goals and ensuring that the practice can continue without them. Derousseau stresses the importance of recognizing the value of the practice that therapists have built over their entire lives. Derousseau also mentions therapists’ need for professional wills and contingency plans. He highlights the potential negative consequences of not having these plans, such as clients being left without a therapist or financial difficulties for the therapist’s family. Derousseau emphasizes the importance of thinking ahead and preparing for unexpected events that could impact the practice.
Securing the Future of Your Therapy Practice Through Partnerships
One strategy discussed in this episode is finding a partner or successor who can continue the practice. Derousseau explains that there is a growing group of new therapists entering the workforce who could benefit from mentorship and guidance. This presents an opportunity for therapists to find someone who can provide similar care to their clients and ensure the continuity of the practice. Derousseau and Brewer suggest setting up buy-sell agreements with the partner to transfer ownership and ensure a smooth transition when the therapist is ready to retire.
The Essential Role of Retirement Savings for Therapists
One of the key takeaways from this episode is the significance of saving for retirement. Although many therapists may shy away from looking at their numbers, they must prioritize saving for retirement; this is one of the most essential things therapists can do for their financial well-being. Even if therapists plan to work forever or retire at a younger age, saving for retirement can provide financial security and comfort. Long-term savings allow therapists to weather slow periods in their practice and continue investing in their business growth. Lastly, therapists should not put all their eggs in one basket and explore various avenues for gaining income in the long term. This can include investing in retirement accounts, real estate, or other investments. By diversifying their income sources, therapists can protect themselves against financial risks and create a more stable financial future.
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Yeah, I'm looking forward to this conversation. Because I think it's something that a lot of folks don't really maybe think about. And that's just kind of thinking about their practice long term. And in particular, just a know is when you contacted me, it was just thinking about your practice as an asset. So I'm looking forward to this conversation. But Ryan is a start with everyone. Why don't you tell folks a little more about yourself and how you've landed where you've landed?
Or, yeah, so I actually came this, or went this route many different ways. So I started as a writer, I was a journalist, I've written for many publications, and one of my first jobs was actually at Money Magazine, where I was covering financial advisors. And so I learned a lot about like, what was good and what was bad, and what was actually good for consumers and what was bad for consumers in how the financial advising world work. But as I was a writer, for the most part, I worked for myself, I worked as a self employed writer. And so I learned a ton of things through that process about like how to, you know, save our bill cashflow, but also protect cash flow, how to save on taxes, how to invest and those sorts of things. And I always was in the, like, financial, personal finance realm of writing. So I knew a lot of the X's and O's, but then also learned a lot of the, you know, like, less known stuff for the self employed folks. And then, you know, after like, COVID, like so many of us, we kind of reevaluated things, and I really wanted to start working with people one on one. And so that's when I decided to shift towards financial advising, it really focusing on the self employed. And one group that I found, like really, I connected with, they connected with me, I saw a need for it was in the therapy space. And since they're often, you know, private practice owners, obviously self employed and whatnot, it became like a very natural group to connect with and, you know, join working with them. So yeah, yeah, that's why I'm here.
Well, it's a good it's a good thing, because I think, as people have heard on this podcast several times before, and and I think it's one reason that people listen to this particular podcast is we really don't learn any of the business side of running a practice in graduate school, or any of that sort of thing. And so we have to learn a lot of it on our own. And, and I think, reaching out to others and having folks like you to, to kind of help us navigate all of that is really important. Absolutely. Yeah. So it just thinking about this topic of having a practice is thinking of your practice as an asset. Do you want to say more about that?
Yeah. So I really came to this realization, I was working with someone who was in his early 70s, I believe, and he believed that he was going to work, you know, forever, like he was going to work until he was in 80s or 90s. And I find that that's fair, very common in the therapy space, because, you know, it makes sense you, you're used to caring about others, so you know how to help others so why not continue working as long as you can. The problem is when you're like on my side of things, you don't know what's going to happen for the many years like prior to, you know, actually passing away or anything like that you could be come disabled. How have issues could rise up and whatnot. Meanwhile, this person really hadn't done a lot of things in his life to protect his business, or his his personal finances. And so this left him at a very dangerous spot where, you know, if something like from a health standpoint where to happen, it could really put him at a disadvantage, long term in retirement. And what when I was looking at it, what I realized is if if he could sell his business for say, to like, let's just say $200,000, which was less than he was making about 140,000 a year. And so it's less than two times his annual salary, let's just say that that was the possible, his potential for protection long term went up by like 30 percentage points. So it goes from like, when we're doing our software, it shows like, oh, this person has about a 50% chance of running out of money. And suddenly, he's now 80% chance of running out of money. And so this got me thinking about other professions, like in the financial advisor space, when advisor steps away, they often sell their book of business, when lawyers step away, they often sell their business, when accountants step away, they often sell their business, but that doesn't happen a lot in the therapy space. And I know, you know, some of the practical reasons why, right, because it's such a personal relationship with the clients and whatnot. But I don't believe that that should hold someone back from looking at their asset, something they've built their entire life, I might add as zero if you're no longer there. And so in order to get past that sort of notion of, you know, these are my clients, and they only work with me, you know, you have to take some steps to ensure that the business can live beyond you. But doing so can add so much protection, you know, long term when we're talking about, you know, whether your financial, you want to step away, because you want to a luxurious retirement, or you want to pursue something new, or whatever your your goals are,
right, right. Yeah, not it's, it's interesting, because this has been on my radar here lately, I've kind of shared, I'm nearing retirement age, I know, it's a shock to people to think that I'm that old, but but, yeah, so really thinking about okay, what is what is the value of your practice? And if you were to, if you were to just close, close shop, that would not be what, number one, it wouldn't necessarily be great for your clients. But also, you know, over the years, as you've worked to build a practice work to build a clientele, you know, we do have those personal relationships with our clients. And so, thinking about that, you know, you reminded me, you know, we were talking about this in my mastermind group, my focus group, which is for group practice owners, and this, this whole topic came up of, okay, if, if something were to happen to you tomorrow, what would happen with your practice, right? And so being able to think about professional wills, just thinking about, okay, you know, who's going to do what, and how's that going to transfer and all of that sort of thing, is something we all need to be thinking about?
Absolutely. You know, I've told this story a few times, in my writing, and then also, you know, on other platforms, but like, and so if you've heard this, you know, that I'm sorry, but I'll share it anyways, my wife right before COVID was seeing a therapist, and had seen her for many, many years. And it's, tragically, she was diagnosed with pancreatic cancer. But unfortunately, like, her finances were such a state that she had to work all the way up till the end. And she worked up to like a week or two before she passed away. And then after we know that her family had to, like sell their house and move because of the financial blow. I mean, it's truly tragic for them. And on a much smaller scale, like, my wife took years before finding another therapist. And I know therapists care about that type of stuff. And so I share that just as a worst case scenario situation, you don't want to put yourself in that scenario. The beauty about like looking at your practice, on that long term perspective, is you can actually set up plans while you're in a position of strength, right? So one of the best ways that I like talk to people that I encourage people to at least think about this, and I think appeals to most like solo practitioners in particular, is thinking about out a partner. So when we're, when you look at just sort of the dynamics of the US, right, people are getting older, and there's this huge group coming into the workforce. And so there's this huge group that needs like mentorship, guidance, and things of that nature. Meanwhile, there's this huge group that needs to pass wants to pass down their knowledge, but also wants to ensure that their practices continue after they're gone. And so it creates a real good opportunity to find the right person that matches your personality that you believe can treat your patients with the same type of care. And you know, it's not gonna be one to one, but it's going to be similar to how you do so. And in doing so you can actually set up what's called like, buy sell agreements. And you know, I'm not a lawyer, I'm a financial advisor. So I advise on sort of the impacts of these things. But nonetheless, these Buy Sell agreements, you can actually negotiate with this, this partner that you're bringing on to the practice, you're getting people used to seeing their faces, and whatnot. So when you're ready to retire, you have this Buy Sell agreement in place, that they're going to take over your portion of ownership of the practice in a certain way. And now, it's not, you know, I'm no longer able to work. And so I have to scramble to hope to find someone who can take care of it. Instead, you already have planned that out, and you already know that your patients are in good hands, as you've never way.
Right. Right. Yeah. And I think it's, you know, I think we think about retirement, but also, you know, you know, contingency plans should something happen, where you're like, like the example you gave of the therapist that all of a sudden she's diagnosed with a terminal illness, and, you know, wasn't really prepared for that. And, you know, people hear from me all the time, you know, the time to start planning for retirement was yesterday. So, yeah, and so being able to think ahead in that way. And I think one of the difficulties, I think, for a lot of us that are in this therapy world, is we kind of shy away from looking at our numbers, but I think it's one of the most important things that we can do.
Oh, absolutely. I, you know, I'd add on, you know, the saving for retirement yesterday type of thing like, that's for anyone, no matter what stage in their practice growth is, I always say that saving for retirement, and I put retirement in air quotes, which you can see on the podcast, but is it whether you, you want to work forever, or you want to work till you're 50, whatever it is, saving for retirement is like the best thing you can do. It's the creates basically, a secondary income stream that yeah, you're not going to tap for a long time. But let me tell you, when there is nothing better than when things are a little slow. And you look at your your overall net worth, and it is still looking very strong, because you've done the things to set aside for long term savings. It can give you not only comfort when things get slow, but it can give you comfort to invest in your business as you're growing, and whatnot, because a you know, worst case scenario, you have protection for yourself in the long term. And so I look at it as almost like a beautiful income stream that really kind of turns your fighting financial picture from just you and your business to also you and your business and this. And then now maybe you have a house. And so you have all these different things that are working for your complete financial picture.
Right, right. Yeah. And it's, yeah, it's it's a matter of diversifying things which, for folks that Lorena in your field, just learning about investing in that sort of thing, it's so important to have a lot of don't put all your eggs in one basket, as they say, and have lots of different ways to gain income in the long term.
Yeah, you know, it's hard. It really depends on where you are in in that journey of yours, right? Because, you know, I'll talk to people who just started their private practice, well, you can't expect you can't expect, like, when you start a private practice, so much of your focus could be on that practice. And so much of your financial future is gonna be based on that practice. And there's not much you can do about that because you're, you're still building your income. And then once you've built a sort of layer, then you can start, you know, diversifying, as you say, into these other avenues. The good news is even as you're building that practice, you can actually strengthen the practice or the financial viability of the practice by like doing things like investing in retire I mean, because you're creating tax savings, so you're keeping more money in hand, and things of that nature. So it is a way to kind of ensure you're keeping more of that so called revenue, you know, as things are getting started as well,
right, right. So, Ryan, what, what would you say are some tips you would give people to be able to kind of think about this and this this way? You know, I know we were chatting a little bit before we started recording just about cash flow, because I was thinking about, you know, your, your practice as an asset. And something that I have to remind myself is that, and I think a lot of us in the field do this is that, particularly like, if you've got a group practice, you do payroll, and when you do payroll, you're your bank account, takes a big hit, because that's usually the most expensive part of running a practice is what you pay your people. But being able to recognize that that cash is going to continue to come in. And that's because we've built a good network of referral sources and all of that sort of thing. So anyway, I don't, I got off track there. But as you think about getting people to think about, okay, how do I think about my practice as an asset? And what do I need to do to start this process of really, preparing for retirement, preparing for succession, all of those kinds of things?
Yeah, I can talk a little bit about the cash flow aspect. If that works. Like, I know, when I was reaching out to you, I had just listened to the profit first podcast that you had done. And that's like, a really good, you know, it's, I've heard that concept before, it's a really good behavioral kind of finance tactic to take to make sure that you are bringing in money to yourself and, you know, fully encouraged that I wouldn't, I would say you also put your retirement savings in that mix, having the retirement set aside saying, Okay, well, this $1,000, this month is going to that, and we know that it's I mean, you know, it's a key to making sure that that doesn't get lost in all the shuffle that we have to build, you have to have to deal with. And so then managing expenses after that fact, is really important. The other thing about cash flow is, one, make sure that you not only have a, an emergency fund for your personal finances, make sure you have an emergency fund for your business. And you know, it gets a little bit more complicated with a group practices as they get very large, because then yeah, the payroll can be very large. But the concepts the same, like having three to six months of expenses in a business account is going to be really important along with having three to six months in your savings account, because you don't want the need for a new roof to impact what you're doing on the business side. And you don't want the you know, investment in, let's just say a new website, or something like that impact what you're bringing home that month for, you know, to cover your life expenses and whatnot. And then, in order to build that like three to six months, what you need to do is take a look at the personal finance side, figure out what your expenses are, these are the non negotiable expenses, you know, this is the food, this is if you have own a house, mortgage, or rent, and other expenses that you just can't get rid of, you don't want to get rid of. That's, that's what you need to cover. Whatever you make here in your business, that's your salary, the salary that you give yourself is what covers all those expenses, you have a good month, you give yourself that same salary. Because when you have a good month, what you're doing is you're funneling it back into your business, creating that safety net, only after you've created that safety net, and you feel like you're, you're in a good place, then you can kind of kind of start giving yourself raises on good months. But you really delay doing that for a good amount of time. Just just because you want that business to succeed, that's gonna be that's your, that's your bread and butter. You know, that's what you're gonna build a lifetime building and you don't want to SAP it too early, just so you know, you can get a little nicer car or whatever, is sort of on your mind.
Right, right. I couldn't agree more. And that's something that folks hear from me. There's a course that I did with a friend Julie Harris, who that's probably the I know that's the episode you're referring to. Yeah, so Julie. Julie is a good friend. And one of the things that we both talk about is exactly what you said is having a buffer of at least three to six months of all your salary all your expenses and everything is set aside. So that when you hit those slow periods in your practice, which we all do, you know, work here in the summer months, usually things kind of slow down a little bit because people are in vacations and that sort of thing. And then being able to, to cover everything. You don't have all of that anxiety about, okay, how am I going to make payroll? Or how am I going to pay my building lease or, you know, the electric bill and all that sort of thing? Because I don't know about where you are Ryan, but it's been pretty hot. So my, my electric bills gone up quite a bit. Yeah. So. So being being prepared for those kinds of things, and being able to have that buffer just takes. And I think if you can, the other thing, too, is just be consistent with that. In other words, make sure that you're doing that every month, setting that money aside, that sort of thing is is really important.
Yeah, one thing I would add on that it because one time something I say this is not unique to therapists, this is this is every, every person who owns a business, like a small business of any kind is they treat the business account like this free expense tool. And so they'll buy stuff and say, Oh, I can just write that off taxes. And then at the end of the year, they wonder why they're in debt. And they're not even if they've had a good year, they're in debt. But they can't figure out why. It's because they're spending so much on stuff through the business lunches, technology, whatever. Like you should always invest in the things that's going to build your business that way. But you cannot treat it like your own personal spending account. Because the way I put it is yes, you can write that off on taxes. But that's like getting going to the store and getting 25% discount off of what you purchase. It's not a one to one, the you know, IRS is not saying okay, well, you spent it you get 100% off your taxes. They're saying, Okay, you get the 25% off, that you've essentially put towards your taxes. So being careful about that is really, really important.
Right, right. Yeah. Boy, this is good stuff. I think it's a lot for folks to think about. I know we've got a bit I got to be respectful of your time, Ryan, but tell folks how they can get in touch with you if they want to find out more about what you do and what you offer, or just say more about that?
Sure. So I think maybe if just a real quick, I'll give a little explanation of like, the difference between fi only and other types of financial advisors that you see, and then I'll explain where I find me. So you know, one thing I learned, while I was like looking at the financial advising space is just how many different types of business models there were, you know, you've probably experienced that a little bit in therapy between those who work with the health care groups and those who are on their own and whatnot. But in the financial space, it's gotten a bad rap, because there's so many people that charge kind of underhandedly they say that they're a life that life insurance for that says, hey, come, I'm gonna give you a financial plan for free, when in fact, they're putting you in really bad life insurance, or, you know, a mutual fund group saying, Hey, we're gonna give you a financial plan, but they're actually giving you a really bad mutual fund that's paying them commissions to do so. So what fee only means is they don't We don't do that. You're our client, then that's it, you're the one paying us and we're not giving you insurance advice based on how much money I'm going to make from the insurance company. So that's a big aspect of feel only and so if people are curious about like financial planning, and whatnot, make sure to look out for that there's two different things. It's fee only, and there's one that's fee based fee based is going to be that commission. fee only is no commission so so look out for that term. And so when I decided to go to financial advising, I'm the only I work out of Long Island, New York, and I can work with people all across the nation, and do so and you can find me at thinking cap financial.com I've actually put a checklist on there that you can download at thinking cap financial.com/checklist
Awesome, awesome. Well, we'll have links here in the show notes in the show summary for people to access that easily. Well, Ryan, are there any product parting thoughts or wisdom you want to give us before we close out?
No, I think I think we covered it but I do appreciate the time. Gordon, I love your podcast. It's always good information. So I I'm the fact that I'm on here is an honor.
Well, thanks. Thanks. You're very kind. So when Yeah, hopefully we'll be able to have this conversation again. Anytime.
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Meet Gordon Brewer, MEd, LMFT
Gordon is the person behind The Practice of Therapy Podcast & Blog. He is also President and Founder of Kingsport Counseling Associates, PLLC. He is a therapist, consultant, business mentor, trainer, and writer. PLEASE Subscribe to The Practice of Therapy Podcast wherever you listen to it. Follow us on Instagram @tpotpodcast, and “Like” us on Facebook.