5 Critical Financial Strategies for Physicians
As a physician, you understand your medical specialty inside and out, but at the same time, you also need to be able to handle the financial challenges associated with your industry. That may include juggling a lot of student and professional debt, running your own clinic, saving for the future, and creating contingency plans for disabilities or medical liability issues. Ideally, physicians should keep the following essentials in mind:
1. Consider Both Professional and Personal Goals
Physicians need to take a holistic look at their finances. If you exclusively focus on either side of this equation, you may end up suffering in one area. You need financial strategies that help you foster your professional goals, while also preserving your personal needs.
2. Focus on Comprehensive Risk Analysis
Financial planning helps you prepare for your desired future, but at the same time, your strategy also needs to include contingency plans in case something goes wrong. While you should never panic, you have to devote some time to thinking about the risks in your industry, and you need to balance your financial strategies accordingly. Should I pay off my student loans or invest in my business? What happens if I get injured? Do I have a business continuity plan that addresses everything from cyberthreats to economic downturns? How much life insurance do I need? Is my spouse adequately insured? Should I prioritize my retirement or my children’s education? You should ask yourself these types of questions.
3. Diversify Your portfolio
Don’t just rely on your clinic or your income to secure your future. Make sure that you are constantly investing and have a diverse portfolio. Consult with a financial professional regularly to adjust your portfolio as needed.
4. Invest in Disability Protection and Liability Coverage
In addition to proactive investing, you also need to take steps to preserve your assets. In particular, you need to help prepare yourself for medical malpractice suits with liability coverage, and you should consider disability insurance. Although a shift is underway, the majority of physicians are small business owners and independent contractors. Even physicians who are employed may change employers relatively frequently through their careers.
As a business owner or independent contractor, you are usually not covered by an employer’s plan or disability coverage in your state, and to help prepare yourself financially, you should consider a disability policy. Your livelihood relies on your ability to work — If you lose a thumb, for example, you cannot be a surgeon. Even if you’re employed, you need a policy that completely replaces your income, and most state disability policies don’t offer that luxury. You also should look into portability so that if you switch employers you can continue to rely on the same benefits.
5. Work with Financial Professionals Who Understand Your Industry
One-size-fits-all financial advice is not right for physicians. To ensure you make decisions that optimize your situation, you need to work with a professional who understands the challenges of your industry. Your financial professional should have experience guiding professionals in the medical industry, and they should be able to customize their advice to meet your objectives.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.
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