Building a Wealth Plan

Most physicians’ lost wealth potential is not caused primarily by poor investment choices. Rather, it is a lack of coordination across all areas of their financial lives that cause most doctors to give up their greatest potential. There are nine important planning areas that every doctor must address in order to build and implement a properly balanced and coordinated wealth plan.

Areas to Address in a Coordinated Wealth Plan

  1. Cash Flow
  2. Risk Management
  3. Debt
  4. Retirement
  5. Education
  6. Tax Planning
  7. Practice Management
  8. Estate Planning
  9. Asset Protection

A good financial advisor specializes in working with your other professional advisors to put each of these pieces together into one comprehensive and well-managed plan. Physicians often demonstrate that this coordination can literally mean the difference between hundreds of thousands–to millions–of dollars of additional wealth over their lifetimes.

Take for example many clients who have a large balance in their 401(k) or 403(b) plan through their practice. It astounds us that many of these investors have no idea that along with their account balance, their tax burden is also compounding throughout their working years. Without coordinating their future tax situation with their investment decisions today, they could face disaster when they reach their retirement years. We liken this financial coordination to a big jigsaw puzzle. If you correctly place all of the pieces, you can usually get a great outcome, but if just one piece of the puzzle is missing, everything else will get distorted.

In Summary

Our goal is to help you realize that you can go in one of two directions with your family’s financial future.

You can devote a significant amount of your time on a regular basis to stay abreast of financial issues and continue to manage your family’s financial playbook on your own. If you follow this path, do so with extreme caution. Physicians face a “crisis of overconfidence” as it relates to their own financial abilities. Consistent studies document that the more confidence a physician has in his or her own financial expertise, the less likely he or she is to actually be correct in this assessment. (5) (6)

Alternatively, you can delegate this work to a specialized professional so that you can spend your time following your passions, rather than worrying about how to finance them. At the end of the day, our hope is that every physician is being properly served when it comes to his or her financial life–either through his or her own efforts, or through those of an advisor or team of advisors. We want your financial life to be an area of peace for your family, not a source of stress. That outcome will only occur when your financial decisions are properly aligned with the core values you share for your family and when each piece of your financial life is working together in harmony with all of the other pieces.

5) Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments. Dunning, David and Justin, Kruger. Washington, D.C. : American Psychological Association, 1999, Vol. 77. 6) Montier, James. The Folly of Forecasting: Ignore All Economists, Strategists, and Analysts. London, England : DrKW Macro Research, 2005.

Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.