Hugh F. Doherty, DDS, CFP
There is more personal wealth in America today than ever before. With this increasing wealth comes increasing complexity, such as when it comes to managing one`s financial assets. Dentists, in particular, have experienced this increase in personal wealth along with the overwhelming complexities. More than ever before, doctors must ensure they obtain the correct advice, since the wrong advice can be so costly.
Doctors with high net worth need honest and skilled financial advisers who can steer them through not only investing, but also the intricate morass of retirement, funding college for their children, tax issues, protection of assets, and estate planning. This is paramount for those who wish to maximize wealth over their entire lifetime and build an estate to pass down to their heirs.
The planning must be customized to fit the particular needs of each doctor and spouse. High-net worth doctors are not all alike. They do not fit a single mold. The key here is to avoid a one-size-fits-all approach.
Everyone has different personal, financial, and business goals. A good financial planner pinpoints what the client needs to accomplish in terms of personal and professional goals. For example, a serious issue for older doctors is practice transition. The goal to sell their practice must be addressed now more than ever, since there is a shortage of new dentists interested in buying an existing practice.
Such financial plans must be comprehensive in nature. The planning is done best in a "one-stop shop" environment. Retaining a fee-only planner who can offer such "one-stop" services with unbiased recommendations is a must. The planner should have a working knowledge of how a dental practice works efficiently, effectively, productively, and profitably. They must understand that the practice is a business of a professional person and must be treated as such.
Only then can the planner - supplemented by the expertise of attorneys, retirement-planning specialists, and a good accountant - help implement wealth preservation and transfer strategies prudently and successfully for the doctor and his/her family.
Coupled with developing a financial plan, many doctors need to look for ways to manage their money more conveniently. Many are confused about how to invest their hard-earned money.
Realistically, you must learn how to invest on your own. Reading the book Asset Allocation by Gibson (Irwin Press) and the Investor`s Business Daily would be a great help. An asset allocation portfolio with a money market fund can be a very effective way to combine short-term and long-term money. The fund gives you ready access to your money when needed. What`s more, it gives you the opportunity to earn more on idle cash.
Your basic investment strategy is to overcome the two dangers to investing - inflation and volatility. Understanding time horizon is the key to overcoming both. If history repeats itself, your investment policy decision is to invest in solid long-term investments (stocks) when you have a time horizon (hold) of eight to 10 years (or more) and bonds when you have four to five years (or less).
Either full- or discount-brokerage services that provide good statements greatly help to facilitate your monitoring of investments. Having your checking activity, brokerage transactions, and investment portfolio all in one account is not only convenient, it is also very effective in helping you understand where your assets are allocated on an ongoing basis.
In summary, doctors fortunately are accumulating more wealth than ever before. With increasing wealth comes increasing complexity. You can benefit greatly from proper planning and implementation of the plan and periodically evaluating your decisions.
Hugh F. Doherty, DDS, CFP, is a certified financial planner, national lecturer, financial adviser to the health-care profession, as well as CEO of Doctor`s Financial Network. Dr. Doherty is also director of The Doctors Financial "Boot Camp." For more information on lectures, consultations, or study club workshops, call (800) 544-9653 or visit his Web site www.dr.hughdoherty.com.
