Creating Wealth

Creating wealth...for physicians.

FOR

PHYSICIANS

Remember those long days and nights in medical school and residency when one of the things that kept you going late at night was the thought that someday you would be rewarded for your dedication and hard work? You knew that in addition to the reward of providing quality medical care to your patients, the field of medicine would provide financial rewards and security for you and your family. Unfortunately, along came decreasing reimbursement, skyrocketing malpractice rates and then a volatile stock market–just when you were ready to accumulate some wealth.

Fortunately in spite of these challenges, wealth creation is still an obtainable goal for all physicians. Proper planning leads to sound investment decisions, insurance protection, tax planning, asset protection and estate planning as the cornerstones of wealth creation and security for the physician and their family. What is Most Important to You?

As a result of aggressive “Tech” investing in the late nineies, many physicians’ portfolios were devastated by the bear market and they have been excessively cautious ever since. Others keep putting off a structured investment program in order to satisfy twenty years of delayed gratification during training and the subsequent large education loan obligations. The power of compounding richly rewards the investor who starts early. Appropriate asset class diversification may help reduce risk in your investment program. We encourage clients to identify their investment goals for retirement and education funding. A cash management program serves as the core planning tool. Retirement funding is a complex field. Expert advice can make a great difference in the quality and duration of your retirement years. Likewise, in this era of ever-increasing tuition, accumulating adequate funds for our children’s education requires dedicated planning.

We have worked hard to earn what we have.

Losing it to the government is unnecessary.

Family protection is a critical area for all physicians - with malpractice protection being the first step. Disability coverage is also a critical component–you are five times more likely to suffer a long term disability than death during your working years. Life, health and long term care insurance are all important considerations. Dynamic product innovations now make coverage in these areas more flexible. For example, modern life insurance products can provide an excellent combination of protection and wealth accumulation if structured properly–offering an asset that may be both tax-advantaged and protected from judgements.

Asset protection for the medical practice is a critical issue in our litigious environment. There are multi-layered financial and estate planning opportunities available to keep medical professionals’ assets available to benefit their families. Some of these are particularly applicable to Florida residents. For example, the practice’s accounts receivables often represent a large, unprotected asset that may merit special attention. Lawyers specializing in this area warn us that once a claim occurs, it is often too late to take financial planning steps if one expects to avoid abrogating laws against fraudulent transfer.

Estate planning is an often overlooked but a critically important area in your over-all financial health. We all have a tendency to avoid the unpleasant. None of us wants to contemplate our own passing. Yet the cost of inadequate planning can be devastating for the surviving family. Losing our earned income would be difficult enough - yet hundreds of thousands of dollars may be unnecessarily lost to taxation if we do not take advantage of appropriate trusts. Many think that this is a cumbersome and costly process needed only by the “rich.” Most physicians will benefit by the use of a bypass trust and should incorporate other valuable tools in their planning. We have worked hard to earn what we have. Losing it to the government is unnecessary. Finally, through additional planning, we also encourage clients to consider leaving assets in such a way as to create economic incentives for our children to become productive adults. Wealth creation is still very accessible to all physicians. Like all endeavors, this activity requires proper planning, coordination and many years of continued monitoring. Let us continue this conversation with you in future issues of MD Lifestyles as we discuss each area of Advanced Financial Planning for Successful Physicians in greater detail. Jeffrey S. Allen, M.D., Board Certified in Emergency Medicine and Internal Medicine, has earned a Masters in Medical Management and the Certified Financial Planner designation. He specializes in advanced financial planning for successful physicians at Advisor’s Trust in Naples, FL. He may be reached at 239.434.7500 or JAllen@AdvisorsTrust.com to further discuss these issues.