Providing Specialist advice to the Specialist
The medical field is an enigma when it comes to financial prosperity and wellbeing.
On average, specialists like yourselves do not cash in their first real cheque until 10 years after graduating high school, and despite the capacity to earn a high income, this handicap coupled with copious amounts of student debt, can become a detriment to your financial welfare. Personally, we have found that without a sound and thorough plan this is almost a certainty.
So, how do you create the life you have trained so hard for and do all the things that are important to you?
The first step involves understanding your financial goals and the lifestyle you and your family desire. This could be:
- Purchasing a dream home
- Providing your children with the best education possible. This could also include support throughout undergraduate and postgraduate studies.
- International holidays or the purchasing a “get-away” retreat.
- Understanding the concept of “how much is enough”.
- Estate planning and the importance of education and intergenerational discussions
- Asset protection of your hard-earned family assets, therefore minimising the risk from litigation or life’s unexpected turns.
- Risk management – understanding what risks need to be managed so that all the outcomes you want are achieved.
Developing your goals with the help of a financial adviser will help you grasp an understanding of the level of risk needed to take, giving you an indication of what your next medical steps could be to achieve these goals, as examples:
- Being employed in the public health system or private practice will give you stability, flexibility, and an income, without all the added pressures of running your own business.
- Establishing your own private practice, will add complexities to your situation, starting with capital outlay, bookkeeping, asset protection and management of staff. However, if managed correctly, could significantly increase your earnings.
- A combination of both private and public systems, may work for you and is often determined by the field you specialized in. However, sometimes juggling both does not lead to the desired outcome you had hoped for.
Once you have decided about your direction, have put in place the other plans that are important to you, the next step is to start curating a plan that helps to give you the best probability of achieving your goals.
A large part of this plan is accumulating and investing your wealth. As with all professions there are challenges to building wealth, those specific to the medical field include:
- Time – this is a combination of reduced time spent earning, due to significant training requirements, and the long hours spent working each week. Depending on the field you specialize in, will also determine how long you have in your career. For example, some surgeons may find themselves with a “use by date”, unable to perform the same number of surgeries, as they get older. Other areas are aware of their high “burnout” rate, which could lead to earlier retirement. Regardless, time plays an important factor for you when building wealth.
- As a specialist you and your income are your family’s biggest asset. The cashflow you generate is the main asset of your private practice. Simply put, the value of you as an asset, is determined by how much you require for lifestyle spending and what is left over to invest. This means money needs to be put aside and invested for the future.
- Complacency and overconfidence – while these are opposites, most medical specialists fall into one of these camps. The long-time spent training, which has led to finally earning a high income, has left you thinking life is great and I do not need to worry about anything. You are making up for “lost time” by overspending, coupled with keeping up with “The Joneses”. On the other hand, because you are well educated and extremely smart, this leads to the belief, that you should be more than capable of managing your own money and investments. In our experience, this often points to making hasty decisions, a strong skew towards tax-driven investments and get rich quick schemes.
- Risk aversion – academic research has found that investors are more troubled by losses than they are by the equivalent gain. This is particularly familiar to doctors who must evaluate the risk for their patients daily and may prefer to err on the side of caution.
- Lack of financial understanding – as mentioned above as a doctor you are well educated, an evidence-based specialist, with a high income. This means you could be forgiven for having greater financial understanding and capacity than reality. If you think about how much time you have devoted to your craft, compared to how much free time you have available to spend educating yourself around investing. Is it possible you have all the knowledge required to invest for your future?
All of this points to the importance of getting good “specialist” advice.
We understand that you want to enjoy your life now and have a choice of when you want to retire. Good wealth management advice takes all this into account to create a plan that works for you, gives you your lifestyle goals, based on your desired time horizons, all while ensuring you are protected and can retire when you are ready.
Every client who has walked into my office, has come out wishing they came earlier. Live life without regrets, live life with financial freedom, book in a free first consultation so that the future of your dreams can be realised.