Dolf Dunn Wealth Management, LLCDolf Dunn, CPA/PFS,CFP®,CPWA®,CDFA
Private Wealth Manager11330 Vanstory Drive
Suite 101Huntersville, NC 28078
Medical Professionals: A Prescription for Your FinancialHealth
October 21, 2013
The demands on medical practitioners today canseem overwhelming. It's no secret that health-caredelivery is changing, and those changes are reflectedin the financial issues that health-care professionalsface every day. You must continually educate yourselfabout new research in your chosen specialty, staycurrent on the latest technology that is transforminghealth care, and pay attention to businessconsiderations, including ever-changing state andfederal insurance regulations.
Like many, you may have transitioned from medicalschool and residency to being on your own with littleformal preparation for the substantial financial issuesyou now face. Even the day-to-day concerns thataffect most people--paying college tuition bills orstudent loans, planning for retirement, buying a home,insuring yourself and your business--may becomplicated by the challenges and rewards of amedical practice. It's no wonder that many medicalpractitioners look forward to the day when they canrelax and enjoy the fruits of their labors.
Unfortunately, substantial demands on your time canmake it difficult for you to accurately evaluate yourfinancial plan, or monitor changes that can affect it.That's especially true given ongoing health carereform efforts that will affect the future of the industryas a whole. Just as patients need periodic checkups,you may need to work with a financial professional tomake sure your finances receive the proper care.
Maximizing your personal assetsMuch like medicine, the field of finance has been thesubject of much scientific research and data, andshould be approached with the same level ofdiscipline and thoughtfulness. Making the most ofyour earning years requires a plan for addressing thefollowing issues.
Retirement
Your years of advanced training and perhaps theadditional costs of launching and building a practicemay have put you behind your peers outside the
health-care field by a decade or more in starting tosave and invest for retirement. You may have foundyourself struggling with debt from years of college,internship, and residency; later, there's the ongoingjuggling act between making mortgage payments,caring for your parents, paying for weddings andtuition for your children, and maybe trying to squeezein a vacation here and there. Because starting to saveearly is such a powerful ally when it comes to buildinga nest egg, you may face a real challenge in assuringyour own retirement. A solid financial plan can help.
Investments
Getting a late start on saving for retirement can createother problems. For example, you might be temptedto try to make up for lost time by making investmentchoices that carry an inappropriate level or type ofrisk for you. Speculating with money you will need inthe next year or two could leave you short when youneed that money. And once your earnings improve,you may be tempted to overspend on luxuries youwere denied during the lean years. One of thebenefits of a long-range financial plan is that it canhelp you protect your assets--and your future--frominappropriate choices.
Tuition
Many medical professionals not only must pay offstudent loans, but also have a strong desire to helptheir children with college costs, precisely becausethey began their own careers saddled with largedebts.
Tax considerations
Once the lean years are behind you, your successmeans you probably need to pay more attention totax-aware investing strategies that help you keepmore of what you earn.
Using preventive careThe nature of your profession requires that you payspecial attention to making sure you are protectedboth personally and professionally from the financial
Much like medicine, thefield of finance has beenthe subject of muchscientific research anddata, and should beapproached with thesame level of disciplineand thoughtfulness.
Page 1 of 2, see disclaimer on final page
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2013
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for anyindividual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performancereferenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
The tax information provided is not intended to be a substitute for specific individualized tax planning advice. We suggest that you consult with aqualified tax advisor.
Securities offered through LPL Financial, Member FINRA/SIPC
consequences of legal action, a medical emergencyof your own, and business difficulties. Having awell-defined protection plan can give you confidencethat you can practice your chosen profession withoutputting your family or future in jeopardy.
Liability insurance
Medical professionals are caught financially betweenrising premiums for malpractice insurance and fixedreimbursements from managed-care programs, andyou may find yourself evaluating a variety ofapproaches to providing that protection. Somephysicians also carry insurance that protects themagainst unintentional billing errors or omissions.Remember that in addition to potential malpracticeclaims, you also face the same potential liabilities asother business owners. You might consider anumbrella policy as well as coverage that protects youagainst business-related exposures such as fire, theft,employee dishonesty, or business interruption.
Disability insurance
Your income depends on your ability to function,especially if you're a solo practitioner, and you mayhave fixed overhead costs that would need to becovered if your ability to work were impaired. Onechoice you'll face is how early in your career topurchase disability insurance. Age plays a role indetermining premiums, and you may qualify for lowerpremiums if you are relatively young. Whenevaluating disability income policies, medicalprofessionals should pay special attention to how thepolicy defines disability. Look for a liberal definitionsuch as "own occupation," which can help ensure thatyou're covered in case you can't practice in yourchosen specialty.
To protect your business if you become disabled,consider business overhead expense insurance thatwill cover routine expenses such as payroll, utilities,and equipment rental. An insurance professional canhelp evaluate your needs.
Practice management and businessplanningIs a group practice more advantageous thanoperating solo, taking in a junior colleague, or workingfor a managed-care network? If you have anindependent practice, should you own or rent your
office space? What are the pros and cons of takingover an existing practice compared to starting onefrom scratch? If you're part of a group practice, is thepractice structured financially to accommodate theneeds of all partners? Does running a "concierge" orretainer practice appeal to you? If you're consideringexpansion, how should you finance it?
Questions like these are rarely simple and should bedone in the context of an overall financial plan thattakes into account both your personal andprofessional goals.
Many physicians have created processes andproducts for their own practices, and have thenlicensed their creations to a corporation. If you areamong them, you may need help with legal andfinancial concerns related to patents, royalties, andthe like. And if you have your own practice, you mayfind that cash flow management, maximizing returnon working capital, hiring and managing employees,and financing equipment purchases and maintenancebecome increasingly complex issues as your practicedevelops.
Practice valuationYou may have to make tradeoffs between maximizingcurrent income from your practice and maximizing itsvalue as an asset for eventual sale. Also, timing thesale of a practice and minimizing taxes on itsproceeds can be complex. If you're planning abusiness succession, or considering changingpractices or even careers, you might benefit from helpwith evaluating the financial consequences of thosedecisions.
Estate planningEstate planning, which can both minimize taxes andfurther your personal and philanthropic goals,probably will become important to you at some point.Options you might consider include:
• Life insurance• Buy-sell agreements for your practice• Charitable trusts
You've spent a long time acquiring and maintainingexpertise in your field, and your patients rely on yourspecialized knowledge. Doesn't it make sense to treatyour finances with the same level of care?
Feeling the pain
The average debt burdenfor a physician graduatingfrom a medical school in2011 was roughly$161,000.
Source: Association ofAmerican Medical Colleges,2011
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