Financial Planning for Physicians
Overview
Physicians are not your average working professional
- They have immense upfront educational costs before being able to practice
- They start careers later in life and have less ‘working’ years to accumulate income producing assets to sustain their lifestyle and beyond
- They consider themselves ‘time-poor’ i.e. intense professional training which transitions to around the clock patient care when becoming an attending doesn’t typically allow for focused time to develop personal finance skills
Best Practices for Physician Financial Planning
Pragmatic, time-efficient & fiduciary first
If a physician chooses to enlist the help of a financial professional, they should insist on working with a team who serves them with the same unwavering integrity they bring to their patients and practice: a fiduciary financial advisor.
A fiduciary financial advisor is one legally bound to act ethically and in a client’s best interest above their own.
For more than 30 years, CERTIFIED FINANCIAL PLANNER™ certification has been the gold standard for financial planners. CFP® professionals have met extensive training and experience requirements, and commit to CFP® Board’s ethical standards that require them to put their clients’ interests first.
In addition to acting in a physician’s best interest, a CFP® professional can also help prevent physician burnout, reduce stress and free up time through delegation; acting as a physician’s ‘back-office’ and executing on behalf of their needs and wishes.
This allows the physician to spend more time on either high-leverage work or more well-deserved leisure or personal / family time.
Aligned with career lifecycle and desired lifestyle
Generally speaking, a younger physician will require an emphasis on foundational risk management and cash / debt management tactics with an accelerated accumulation phase to make up for time lost i.e. achieving ‘high income’ in their mid to late 30s.
Generally speaking, more tenured physicians require a focus on conservation and distribution / decumulation with an emphasis on estate planning and risk management tactics.
In addition, more physically demanding specialties that rely on one part of the body (i.e. hands to perform surgeries) should have risk management and insurance planning that addresses mitigating potential loss of earnings due to over-reliance.
Specialists make a significant portion of their income via performing surgeries and procedures. If their hands can no longer perform surgery or procedures due to severe arthritis or carpal tunnel, for instance, this creates a significant decrease in income that is oftentimes difficult if not impossible to replicate.
Physicians who choose to go into business for themselves also face unique challenges addressed through business structure and employee retention strategies, business transfer strategies, succession planning and beyond.
Integrated with other elements of a holistic financial plan
In our estimation, a financial plan is only as successful as 1) its ability to anticipate, evolve, and account for the natural ebbs and flows of life 2) its synergy with other tactics of financial planning.
Because physicians have the potential to create larger ‘lifestyles’ over time, there is a ‘downstream’ effect: investment management, insurance planning and risk management, as well as estate planning and tax mitigation planning also becomes correlated in terms of necessity and sophistication
Comprehensive Approach
The Process of Physician Financial Planning
Physician financial planning is a process where our team of fiduciary financial planners conceive a holistic, integrated plan that allows physicians to gain a complete picture of their finances and take control of their lifestyle.
This proprietary financial planning process is designed to empower physicians to make better informed decisions by:
- Factoring in existing supplemental benefits and emotive aspirations
- Assigning opportunity cost to the financial decisions they make now
- Creating a shared roadmap for achieving a lifestyle they want from residency through retirement
Benefits of Financial Planning for Physicians
- 360 Degree Decision Making
- Protect Your Hard-Earned Lifestyle
- Confidently Navigate Your Financial Affairs
Strategy
Strategy: Financial Planning
a plan, blueprint or otherwise roadmap that will qualitatively assess where you are today, where you envision yourself and your family throughout the years and (through sophisticated financial modeling) ‘back-into’ the quantitative elements required to achieve those goals.
CFP® professionals perform detailed ‘fact-finding’ which is essentially information gathering via financial documents, ongoing conversations regarding emotive or familial goals, etc. in order to create a baseline of a physician’s financial health.
Tactics: Financial Planning
Cash and Debt Management i.e. Personal Profit & Loss (P&L)
Optimizing cash flow via systematic balance between inflows (i.e. active income, asset producing income, etc.) and outflows (cost of living expenses, loans, mortgage, etc.)
Tax Planning
Comprehensive analysis of all financial strategies and tactics to ensure a concerted effort to pay the least amount of taxes legally allowable
Retirement Planning
Investment Management
The management of the accumulation, conservation and decumulation of financial assets and other investments along a continuum of time horizon to achieve desired goals
Also known as money management, portfolio management, or wealth management
Estate Planning
Retaining control in the face of potential adversity (health care events, incapacitation, etc.) via techniques to preserve, manage and distribute any level of assets
Risk Management & Insurance Planning
Establishing safeguards to minimize the potential loss associated with risk to your tangible and most importantly, intangible assets i.e. health, earning potential, etc.