A physician’s career is characterized by transition, challenge, and reward. Seemingly overnight one’s income leaps and the ability to begin actively pursuing personal dreams and financial goals becomes a reality. However, this point is the culmination of a tireless pursuit which includes years filled with long hours, low pay, and mounting student loans. Many physicians will find themselves in the top 10% of wage earners, paying higher tax rates, and running into challenges with fully realizing credits and claiming deductions. Financial freedom doesn’t happen overnight – it takes time, consistent energy, and methodical effort. For a physician, losing time to a poorly devised financial plan is avoidable. Working with an advisor who specializes in financial planning for doctors can help navigate these waters and save you time.

Should an individual own or partner in a practice, integrating personal and business taxes presents an added challenge. Physicians are at greater risk of lawsuit, necessitating the introduction of asset protection strategies within the scope of the overall strategy.

A financial plan can help alleviate these risks, though given the uniqueness of a physician’s career, it should also be anything but typical. Goals should be properly designed and formulated with the same care and effort as the credentials one has earned. An individual’s financial plan will be thoughtfully aligned with their objectives, thus giving the confidence that one’s financial ambitions are achievable. At Blackbear Capital, our team is well versed in financial planning for physicians in all stages of their career.

Let’s start with the most important part first— your primary goal while in residency or fellowship should be to become an exceptional doctor. The kicker is that you also have to devote some time and energy to your finances and not completely neglect them. We understand that finances may not be the first thing on your mind after working 80+ hours a week, but having healthy financial habits is nearly as important as keeping your patients healthy.

If you don’t have student loans, lucky you. However, the unfortunate reality is that most medical residents and fellows are burdened with student debt – and lots of it. Our professional advice is to get your student loans organized as an intern/PGY-1, if possible. This is arguably one of the most important financial tasks a newly minted physician can do.

In becoming a physician, the path first starts with education. At Blackbear Capital, we believe that the development of a sound financial plan should start with these same principles. During training, physicians are often confronted with retirement plans and benefits packages, both of which require informed decision making. Residents and fellows will need to begin charting a path for loan repayment, determining whether public repayment, loan forgiveness or private consolidation platforms are the best match for their intended career path. Exploring options for near-term savings goals, disability coverage, life insurance, and IRAs are all planning areas that every resident and fellow should begin considering. Building a relationship with a financial advisor for physicians, who understands financial planning for medical residents, is a great starting point to addressing the unique decisions at this stage.

As an attending physician, financial plans truly begin to take shape as concept and strategy are put to work. Assets grow, obligations are eliminated, and plans work towards meeting the stated goals.

At the same time, professional and personal demands remain and the time frame for meeting goals becomes limited. As early efforts begin to see traction, it’s natural to see plans change too. It becomes all the more important to involve professional financial, tax, and legal advice along the way to make sure efforts stay on course.

With a proper savings plan established, planning shifts to ongoing portfolio monitoring. It’s important to complete regular reviews of the asset and account mix to make sure investments remain properly diversified and aligned with overall timelines. This holds true for educational savings accounts should they have been introduced to the plan.

It’s also at this stage where it makes sense to meet with an attorney to ensure legal documents are in proper order. This may compel changes to the insurance portfolio. It is advisable to add coverage where necessary when exposure remains or begin to shift the insurance portfolio to address risks as they change. For example, it may be time to move from disability coverage to a long-term care policy to better preserve assets through retirement, or fold in additional life insurance coverage to meet estate, charitable, or tax planning needs.

For those physicians that have the opportunity to own or partner within a practice, an already unique situation is compounded by additional levels of complexity. In addition to managing and planning for one’s household and family, a practice owner will be faced with assuming and paying the debts associated with the business, as well as determining the growth and direction for the practice. Owners will be tasked with developing a benefits package and establishing retirement plans. Planning for the tax structure of the practice, and integrating this with personal tax filings, while also taking strides to properly separate personal assets from practice and business-related liability, takes thoughtful planning.

Working with Blackbear Capital, we’ll create a consistent map for the direction of your business, coordinating and complimenting the efforts of your tax and legal team. Your time is freed up to focus on what really matters as you attend to the needs of your patients, while also growing your business, which is a substantial piece of your financial portfolio.