Episode 248 | Turning Private Practice Income into Wealth with Ryan Derousseau

Ryan Derousseau 00:00:00  It’s so hard to remove yourself from the chair if you’re the one that clients are really coming to. And so what that has done is created an income stream for yourself. But wealth is about investing that money in some way to expand that wealth. So when you’re looking to take a vacation, you’re not worried that your income suddenly going to drop just because you know, you’re taking two weeks off.

 

Welcome to the Group Practice Exchange podcast, where we talk about all things related to group practice ownership. I’m your host Maureen Werrbach. 

 

Maureen Werrbach (00:00:20) This episode is sponsored by Therapy Notes. Therapy notes is my favorite EHR, and it’s one that I’ve been using in my own group practice since 2014. They’ve got everything you need to be successful in your group practice, and they’re constantly making updates and have live support. If you want two free months of therapy notes, go to therapynotes.com/r/thegrouppracticeexchange. 

 

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Maureen Werrbach 00:01:17 Hey everyone! Welcome back to another episode of the Group Practice Exchange podcast. Today I have Ryan Derousseau from the Private Practice Advisor on. And I’m super excited because we’re going to be talking about how to turn private practice income into wealth. Hi. Nice to meet you. Yeah, you as well.

 

Ryan Derousseau 00:01:45  I’m glad I’m on. It’s a privilege. So I’m excited to be here.

 

Maureen Werrbach 00:01:49  So this is your first time on my podcast? Can you share with the audience a little bit about you and how this topic is within your arena?

 

Ryan Derousseau 00:01:59  Yeah, so I had a roundabout way of getting here, but essentially I used to work as a journalist, so I was a writer for fortune magazine, money magazine, places like that. And one of my first jobs was actually covering personal financial advisers like the people that I am now. And in doing so, I learned sort of the right and wrong ways that this business should operate, but also the things that people should be doing on a regular basis.

 

Ryan Derousseau 00:02:25  And I did that for a number of years. And in that time I always worked for myself as well. And so I was like the self-employed writer. A few years ago, I was like, you know, I want to work one on one with people. I could basically cite what a source was going to say to me or something like that, and like, I can do this myself. And so I got certified and whatnot, and I started working with the self-employed. And what ended up happening was a group that I saw a real desire, a need, and I really just connected with because of my own like therapy journey were therapists, private practice owners and group practitioners. And so I took note of that, and I was just like, okay, let’s focus on this because I’m happy doing this. I’m doing some real good here. And so about 90% of my clientele now are private or group practitioners.

 

Maureen Werrbach 00:03:11  Awesome. That’s a very roundabout way of getting there. I know I’m really excited to talk about this topic.

 

Maureen Werrbach 00:03:17  So tell me. I know I feel like some people are going to have this question, which is, what’s the difference between generating income and building wealth? Because I feel like a lot of people will just kind of combine those as one.

 

Ryan Derousseau 00:03:31  Thing, right?

 

Ryan Derousseau 00:03:33  It’s a common issue that people go through as they kind of transition into private practice, because, you know, that first year it’s all about sort of generating income, being able to pay the mortgage bills, all that sort of thing.

 

Ryan Derousseau 00:03:45  Right?

 

Ryan Derousseau 00:03:46  That second year, they might see an income jump, you know, they might start seeing some real success in this and they might really enjoy that. But by the third, fourth, fifth year depends on the person. What they start to realize is that all their time in the chair is how they make their money, and without that time in the chair. They can’t grow their business, they can’t expand their business. And in the group practice arena, that can still happen even if you’re starting to hire, because it’s so hard to remove yourself from the chair.

 

Ryan Derousseau 00:04:13  If you’re the highest, you know rate and the one that clients are really coming to. And so even in the group practice, it can be really difficult to remove yourself from that. And so what that has done is created an income stream for yourself. But   So, you know, when you’re looking to take a vacation, you’re not worried that your income suddenly going to drop just because, you know, you’re taking two weeks off or something like that, right?

 

Maureen Werrbach 00:04:44  So what are some tactics or ideas that private practice owners or group practice owners specifically my audience, could use to like, begin their investing process or investing their income in that sort of wise way, I should say. Yeah.

 

Ryan Derousseau 00:05:01  And, you know, I always say there’s three ways to invest in America. You’re investing in the markets. You’re investing in real estate, or you’re investing in business or businesses and group practice owners have started to take steps to invest in one of those three, right? Because they’re trying to expand their business.

 

Ryan Derousseau 00:05:19  They’re trying to grow the business beyond them. But it depends on how they’re growing. So they really need to sort of analyze one. Are we hiring for the right reasons, are rehiring in ways that can move me from, you know, the day to day therapist to the day to day operator or the day to day CEO of the company. And if not, then really need to sort of focus on that. And those are the types of investments that you really need to start making. And then, you know, that’s going to be a sort of personal decision for each and individual person, because how you want to operate throughout the day is going to be different for everyone, you know. And so you need to kind of think about what you want to be doing throughout the day. And if that’s going to help your business, that’s great. If that leaves holes in your business elsewhere, then that’s where you really hire. And then in the other ways, I mean, there’s a numerous ways because there’s retirement plans and, you know, just regular investing.

 

Ryan Derousseau 00:06:14  But there’s also like using your practice as a commercial space as well, and things of that nature. So it’s really understanding, you know, I always kind of start with the goals of where someone wants to go and then figuring out based off their risk tolerance, their capacity to invest, figuring out what to do in order to reach whatever goal that is. So we really start with the goals there.

 

Maureen Werrbach 00:06:38  Why do you think the most practice owners are operating their businesses more in like a income business way versus like a wealth building way?

 

Ryan Derousseau 00:06:49  Yeah, it’s.

 

Ryan Derousseau 00:06:49  Really unable to get themselves out of that chair, I really think, and it’s so difficult because when you start building your practice, right, the one thing you have to do is remove the most expensive therapist from that chair, which is you. And that’s really difficult because then you see your income drop a little bit, and that really worries people and that, you know, scares people back into that chair or prevents them from ever testing the waters outside of it.

 

Ryan Derousseau 00:07:14  And so, running the analysis, I was talking to, one of my clients the other day, and we were running analysis for like, her first hire. And, you know, I did an analysis in terms of like what the total cost of the hire would be and what that would mean for her and whatnot. And she was like, here, let me show you something that I did. And this is very rare, but kind of the process that you need to go through. She had taken every insurance panel that she was on, every cost that she typically gets from them, what various different costs for the hires would be and what her eventual profits would be. And it was very detailed. And, you know, I was like a almost like a proud papa, almost. I was like, this is amazing. This is fantastic. I’m so happy you did this. Please send it to me so I can dig deeper into this for you, because I don’t have this level of detail typically.

 

Ryan Derousseau 00:08:03  But that’s required because eventually what’s going to happen is she’s going to step back and suddenly that low rate therapist is going to have to have higher rates, or they’re going to have to hire someone to bring in that revenue. And she’s already starting to think about that. And so taking the steps to really think about that is going to be really important to remove yourself from that, because, yeah, you’re going to have a little bit of it’s not a straight line like, you know, when you’re a W-2 employee or something like that.

 

Maureen Werrbach 00:08:28  So your suggestion or your first suggestion I’m hearing in terms of generating wealth versus income is to sort of step back from the client facing or one on one and into more of the business ownership space so that you can create space for more therapists.

 

Ryan Derousseau 00:08:48  Yeah, it’s going to be really important. Like I recently did like a LinkedIn live with a fractional CFO in the space. And we were talking about sort of how you set up your business for a cell down the line. And one way to think about your business is to eventually sell it one day, even if you have no intention of selling it one day.

 

Ryan Derousseau 00:09:10  But if you’re doing that, then you have to think of a way to remove yourself from the day to day operations so that business can operate without you. Because if it can’t operate without you, then you will never be able to sell. You know, the organization. and if you’re thinking that way, it can actually help you build that business now for your betterment, because you’re now thinking of ways to step back a little bit, empower other people in your organization so it can operate when you’re gone.

 

Maureen Werrbach 00:09:41  Yeah. So I know a lot of practice owners are in that space of trying to remove themselves sort of from that like day to day, whether it’s through seeing clients or, you know, the putting out a fires and are trying to get to that space where they’re more on the operational level or, you know, CEO level work. What’s like some practical advice you might have for group practice owners that are trying to, like, manage their finances so that they can actually support the building of.

 

Ryan Derousseau 00:10:10  Wealth, right.

 

Ryan Derousseau 00:10:11  And so one thing they can do is start really thinking about building an emergency fund in the business. What happens often is a group practitioner will still have access to insurance panels in order to feed enough clients to the other practitioners. And if those insurance panels are slow to pay and those are W2 employees, well, the group owner has to pay the employees no matter what, and then they open up credit lines, they open up credit cards, whatever to kind of cover the cost. But by the time the insurances pay, they’re now in a hole and they can never kind of get out of it. And so they return themselves to the chair and whatnot. And so having that sort of buffer in place is going to be a key aspect to this. So you don’t not like backsliding as soon as there’s like a hiccup or something. And then the other thing is really sort of just thinking about the processes of management and how you want your company to operate on a day to day basis. So how you want your therapist to interact with clients, respond to prospects, that sort of thing.

 

Ryan Derousseau 00:11:17  The more that you can kind of guide that, the more it can run with your oversight as opposed to, you know, just like worrying about every little thing you can just instead, like, empower the team to kind of operate how you want to operate. And by doing so, you’re going to be basically having versions of you with different personalities interacting with clients. That’s going to be really powerful down the line.

 

Maureen Werrbach 00:11:40  So I have a financial planner. I’ve had one for ever, and I find having a financial planner to be one of the more important things that I have, both personally and in business. But I noticed that a lot of group practice owners don’t have like an accountant, but they don’t have a financial advisor or financial planner. Can you share how you support group practice owners in this realm, and why it might be important to have a financial advisor?

 

Ryan Derousseau 00:12:07  Yeah, I mean, it’s really important, particularly for group practitioners, because as they’re growing, they’re also adding benefits to the company and any benefit that they are adding for themselves also trickles down to their employees and understanding.

 

Ryan Derousseau 00:12:23  If you’re, you know, doing things like saving enough or investing in the company in a way that’s going to like help you reach your long term goals and advisor’s going to be able to help with that. And so, like, that’s a really important sort of step when you get to group, practice owners, especially as your income is really building because while like a SAP IRA is good for a very small group practice, it may not be the ideal, you know, as you get a little bit larger and a little bit larger. And so understanding sort of those rules, around 401 case and whatnot, that’s really where an advisor is going to help also with sort of how you’re investing, ensuring you’re investing safely, cheaply and effectively really to be important. And then any other thing like, you know, we talk about sort of these long term goals, but it’s also about protecting like your risks that you face and things of that nature, both in the business and outside the business in the personal life.

 

Ryan Derousseau 00:13:19  And so a financial advisor can do that as well. I’m always an advocate of like, looking for what’s called a fee only financial advisor. So that means they only have your benefit at heart because they’re only getting paid by you. They’re not getting paid by an insurance company, a brokerage firm or something like that. But with the right advice, they can cover your life and your goals, both from the personal side and the business side.

 

Maureen Werrbach 00:13:43  Thanks for that. If people wanted to reach out to you, where can they find you?

 

Ryan Derousseau 00:13:47  Yes, I’m compliance under a company called United Financial Planning Group, but I mark it under a thinking cap financial. Com and I believe Maureen has a link to my free e-book. Turning income into Wealth How private practice owners can build security in their practice. Something like that. It’s free, you can download it and the link I believe will be in the show notes.

 

Maureen Werrbach 00:14:10  Awesome. Well, I appreciate you coming on and giving a sort of intro into financial planning and how to build wealth versus just income.

 

Maureen Werrbach 00:14:19  And for those who are looking for a financial planner, they can reach out to you and I’ll have your info in the show notes as well.

 

Ryan Derousseau 00:14:26  That’s amazing.

 

Maureen Werrbach 00:14:27  Awesome. It was nice to meet you.

 

Ryan Derousseau 00:14:28  Yeah, you as well.

 

Maureen Werrbach 00:14:31  Thanks for listening. Give us five stars on whatever podcast streaming service you use, and I’ll see you next week.