Wealth Planning for Doctors

By Alexandria | Hightower on December 6, 2022

As some of the nation’s top earners, it could be easy to assume that doctors are inherently well-prepared for financial planning. However, while most medical professionals are particularly knowledgeable in their fields, an understanding of finances is not always intrinsic to a physician’s core skill set. Hammering down debt, planning for retirement, and gaining financial balance can present challenges for many healthcare practitioners.

The U.S. Physicians’ Financial Preparedness report has found that one in five doctors are behind on their financial planning and are reportedly concerned about their retirement. No matter which stage of your medical career you are currently in, taking the time to consider your financial ambitions and current positioning will make it easier to plan for the future and achieve your long-term goals.

As you begin to map out your own financial strategy, the following overview can help you learn about the fundamentals of wealth planning as a doctor, as you partner with an advisor that can take your plan to new heights.

Unique Challenges to Consider

A health care provider’s career can be characterized by three key themes: transition, challenge and reward. After years of schooling, it suddenly feels as though the ability to pursue your personal dreams and financial goals has become a reality. However, financial freedom is not a given promise, as long hours and student loan repayments quickly set in.

The unique nature of the health care industry can come with significant challenges no matter where your career path takes you. The high cost of medical school loans weighs heavily on doctors for many years following graduation, with one survey from

Weatherby Healthcare Medical reporting that nearly two-thirds of respondents (65%) are still carrying debt from medical school.

As a busy medical professional, you face significant pressure on a day-to-day basis to ensure your patients are well-cared for and that you are meeting their needs as they evolve. Often, it can feel difficult—if not impossible—to create time in your hectic schedule for your own personal wealth plan. However, neglecting this important task could make your eventual retirement an ever-moving target.

Financial Mistakes Physicians Can Make

Many medical professionals understand the importance of financial planning, but are unable to give it their full attention due to the demands of their work, as well as the complexity of the process itself. With this in mind, it is essential to become familiar with the financial mistakes physicians frequently make so that you can plan accordingly.

The American Medical Association (AMA) has outlined six of the most common wealth planning mistakes you should strive to avoid in your own career:

1. Failing to take a “wellness approach” to financial planning: Review your finances at least once a year or, better yet, do so on a quarterly basis. This can help you maintain diversification and better manage risk.

• Reacting to day-to-day market news: Responding to market trends without a complete understanding of the bigger picture could lead to losses in the long run.

• Forgetting to include your spouse: It’s important that both you and your spouse create shared objectives and stick to a budget that will help you accomplish your goals.

• Not working with a professional: AMA likens physicians handling their own money to performing surgery on themselves. While this characterization is a bit extreme, financial professionals often have years of experience to rely on that an average person may not have. That experience can serve as a useful resource, potentially helping you adjust your plan as circumstances change and keep better track of your financial needs. Plus, it doesn’t hurt to get a second opinion.

• Selecting an advisor based solely on a recommendation: Glowing reviews from friends and family are a positive indicator, but they shouldn’t be the only thing you rely on when making your decision. These recommendations can be colored by personal bias, so it’s important to do your own research, interview several advisors, and identify which one is most likely to help you address your individual needs.

• Not knowing how to access retirement funds: Building up sufficient funds for your life after your career is only half the battle. You also need to understand the best way to minimize losses when it comes time to take those funds out.

Financial freedom does not happen overnight. Rather, it takes time, consistent energy, and strategic partnerships to help you reach your goals. Fortunately, losing time to any of the mistakes outlined above is entirely avoidable.

How Leveraging a Financial Advisor Can Help Doctors Overcome These Challenges

Given the time requirements and complexities involved in developing a wealth plan, a financial advisor can serve as an important resource for doctors in every medical field. You can think of a potential advisor as a second opinion on an especially difficult case.

You are all too familiar with your own schedule and know how difficult it can be to take on additional tasks. In fact, according to a 2019 survey featured in Medical Economics, the average doctor works a 51-hour week and can see up to 20 patients a day. Given this workload, there is little time to do additional research on market trends and potential investments, let alone the comprehensive planning required to yield the most profitable long-term results.

By working with a financial advisor, you can move forward with confidence knowing that you have a dedicated professional who is not only following market changes, but is also deeply experienced when it comes to taxes, health care regulations, trust and estates options, and insurance.

Additionally, a financial advisor can help you manage expenses that are unique to your field, such as lingering medical school debt and malpractice insurance. Regardless of

how your salary changes throughout your career, a well-crafted budget that aligns with your long-term goals can be a useful tool to stay on track. And, as your income and expenses change, such as in retirement, your advisor can work with you to manage your funds and access them in the most tax-efficient manner possible.

Like your chosen field, financial planning comes with its own unique complexities and considerations. A financial advisor can work with you to navigate these obstacles and help ensure that you are positioned for long-term financial health as you continue on in your career.

Start Preparing for Your Own Future

Consider your own field for a moment: can you imagine operating outside of your discipline? Developing a well-devised wealth plan is a complex, time-intensive process that requires significant attention and continuous review. By working with a financial advisor, you can help ensure that your future is in just as capable hands as your patients are.

If you are ready to create a wealth plan of your own, or have any lingering questions about your current financial plan, reach out to our team for additional information. One of our financial advisors can help you identify and realize your goals.

References:

Brancato, P. C. (2020, November 12). 10 reasons physicians need a good financial planner. Medical Economics. Retrieved March 9, 2022, from https://www.medicaleconomics.com/view/10-reasons-physicians-need-good-financi al-planner

Farouk, A. (2016, February 9). 6 top financial planning mistakes physicians make.

American Medical Association. Retrieved March 9, 2022, from

https://www.ama-assn.org/practice-management/career-development/6-top-financi al-planning-mistakes-physicians-make

Saley, C. (2019, August 6). Medical School Debt Report 2019: Weatherby Healthcare. Weatherby Healthcare Medical School Debt Report 2019. Retrieved March 9, 2022, from

US Bank. (2020, November 19). Financial Planning for doctors: U.S. bank. Financial Planning for Doctors | U.S. Bank. Retrieved March 9, 2022, from https://www.usbank.com/wealth-management/private-wealth-management/financia l-planning-for-doctors.html