Gold Medical Marketing CEO, Daniel Goldberg recently sat down with Shane Tenny, CFP® and partner of Spaugh Dameron Tenny, LLC to discuss some of the common financial planning mistakes Orthopedic, Spine and Neurosurgeons often make – and how they can avoid them.
- Statistically, Orthopedic and Neurosurgeons earn one of the highest compensations of any medical professionals. Are there financial strategies higher earning physicians should be utilizing to ensure financial stability?
- Automate savings – Physicians with higher incomes often have trouble keeping track of the money and knowing where it all goes. With higher cash flow it is harder to know if money is washing down the spending stream. Using automatic drafts to contribute to college accounts, investment portfolios, or accelerating loan payoffs helps ensure that you’re paying yourself first and can facilitate guilt-free spending.
- Pay attention to future taxes, not just current income taxes – physicians often sign up for all of the pre-tax savings options through their practice to reduce their tax bill today. But just like investment diversification is important to manage market volatility, tax diversification is important for long term success. Remember, a $4,000,0000 may only result in $2,000,000 of withdrawals after the income taxes are paid on the money in retirement. Get advice on where to build savings that can be used with minimal tax impact in the future.
- Have a written financial plan – To paraphrase the line from Spiderman, “with great talent, comes great responsibility”. While high income can help mask a lot of financial missteps, it also creates a tremendous opportunity to impact your lives, your family and your community with proper planning. A relationship with a financial planner experienced in working with physicians can yield far greater confidence in your strategy and financial progress than trying to navigate on your own. Remember, the risk in complex decisions is not what you don’t know – it’s what you don’t know that you don’t know that can really cause frustrations or set back.
- What are some of the financial considerations physicians should make when opening a private practice?
- There are three main financial considerations physicians should make when opening a private practice. It is important for physician practice owners to hire competent counsel to review lease and vendor agreements. Credentialing must be completed in a timely manner prior to closing, to ensure establishment of qualifications of licensed medical professionals and assess their background and legitimacy. When opening a practice, physicians often avoid spending the time (and sometimes the money) to find a competent office administrator or CEO, which makes a practice run smoothly and allows physicians to focus on providing care to their patients.
- What are some of the most common mistakes physicians make in terms of financial planning?
- Mistaking an investment advisor for financial planner – Make sure to look for someone with the CFP designation. Ask how many financial plans they actually prepare each year? Understand how much specialization and experience they have working with physicians? Understand that many insurance or investment advisors may offer quality products in their area of focus, but most do not have extensive experience with building and quarterbacking a wholistic financial plan.
- Getting too busy to follow through – Financial planning is not about having smart information, it’s about making smart decisions to impact your future. Don’t get caught up in the busyness of life or paralysis by analysis. Also, even though you may not perceive much change in your situation each year, make sure to schedule your annual review meeting with your planner.
Answers by: Shane Tenny, CFP® and partner of Spaugh Dameron Tenny, LLC
About Spaugh Dameron Tenny
Spaugh Dameron Tenny, LLC started in 1957 to help families of physicians and dentists reach their financial goals, through a comprehensive process involving questions, dreams, and plenty of laughs. The boutique financial planning firm strives to help clients feel secure, free, and inspire a legacy of generosity and stewardship.
Securities, investment advisory and financial planning services offered through qualified Registered Representatives of MML Investors Services, LLC. Member SIPC. Supervisory office: 4350 Congress Street, Suite 300, Charlotte, NC 28209, (704) 557-9600. Spaugh Dameron Tenny is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies (CRN202012-241114).