Two experienced financial planners share their combined wisdom and knowledge in this handbook that focuses on helping doctors grow and protect wealth. As a specialty doctor, you shouldn't always follow the rules that others adhere to when it comes to finances. Your high income, subsequent high taxes, and significant exposure to litigation all require you to pay even closer attention to your financial goals than the average person. By using this essential wealth management and preservation handbook, you can learn Strategies to diversify your tax risk; Methods to lessen the impact of litigation; Qualities to look for when seeking professional advice; Spend more time doing the things you enjoy with the people you love. This guide includes examples, diagrams, and more to make it easy to understand your financial options and the impact of the decisions you make. Navigating this financial world isn't easy, but taking an active approach will put you well on your way to Optimal Financial Health.

OPTIMAL FINANCIAL HEALTH

The Doctor's Essential Wealth Management and Preservation HandbookBy Anthony C. Williams Marc E. Ortega

iUniverse, Inc.

Copyright © 2012 Anthony C. Williams and Marc E. Ortega
All right reserved.
ISBN: 978-1-4759-2523-4

Contents

1. Introduction.................................................................32. Why Now?.....................................................................53. What is Luck?................................................................74. Budgeting....................................................................125. Planning Considerations......................................................156. Does Debt Have You Down?.....................................................177. Entering Practice............................................................228. The 20% Guideline............................................................419. A New Way to Look at Debt....................................................4410. Investment Strategies and Suitability.......................................4911. Tax Efficiency and Growing Your Wealth......................................5512. Debunking Three Common Tax Myths............................................6113. Scary Math..................................................................6314. The Tax Train Is Coming.....................................................6715. Life Insurance Tax Planning.................................................7016. All about IRAs..............................................................7817. Active vs. Passive Portfolio Management.....................................8318. Asset Protection Considerations.............................................8919. Disability Insurance Coverage...............................................10120. Life Insurance Coverage.....................................................10621. Equity Indexed Universal Life...............................................11722. Other Insurance Coverage....................................................12423. Retirement Income: The Transition into Retirement...........................13324. Enjoy It!...................................................................14925. Should You Meet with a Financial Adviser? A Checklist.......................15326. Financial Planners—Qualities to Seek..................................15527. Final Thoughts..............................................................157APPENDIX A......................................................................163APPENDIX B: Wrap Accounts.......................................................166APPENDIX C: Legal Documents to Consider.........................................169APPENDIX D: Mutual Fund Basics..................................................171APPENDIX E: Alternative Asset Classes...........................................178APPENDIX F: Traditional Investments.............................................184APPENDIX G: Separately Managed And Unified Managed Accounts.....................186APPENDIX H......................................................................192APPENDIX I......................................................................197About the Authors...............................................................201Contributing Authors............................................................205

Chapter One

Introduction

If you are like most doctors, your time is at a premium. You have spent the majority of your young adult life in school and in training. After eight to twelve years of learning your specialty, the time has come to enter the professional workforce and enjoy the fruits of your labor.

Your future income will provide great opportunity but also some significant challenges. In our experience, the time our clients have spent in their medical training often leaves them ill-equipped to deal with personal and professional financial situations. These challenges generally lead clients down the path of anxiety, agitation, and playing catch up; all too often those emotions cross over into their personal lives as well. Most of our clients have asked questions pertaining to these challenges such as:

1. Is my family protected from a personal and/or a professional lawsuit?

2. What happens if I can no longer earn an income?

3. How much money do I need to retire?

4. When should I start saving or investing?

5. What is the best way to develop a savings/investing plan?

6. What should I know about with regard to my employer benefits?

7. Whom should I look to for advice?

8. How can I think about these issues while shouldering massive student loan debt?

9. I rotated with an attending who says he will never retire. What can I do so that won't happen to me?

10. How much should I spend on a home?

11. How do I minimize my tax burden?

12. I've heard I should protect my income. What are the key issues to consider?

13. What investments are most appropriate for me at this stage of my career?

14. What are the most common mistakes doctors make?

15. What is the value in evaluating financial issues while in training?

16. I've heard I should pay my home off as quickly as possible. Is this accurate?

17. Do I need life insurance? If so, what type best fits for me?

18. What issues should I consider when evaluating employment contracts?

19. How do I evaluate the differences among different practice environments?

20. How can I avoid the financial challenges my parents and colleagues face?

21. What asset protection measures should I evaluate?

These are only a few of the questions we have been asked; there are far too many to list here. The purpose of this book is to provide general guidance as a resource for doctors as they seek financial independence.

The question then becomes, "Are you one of the lucky ones?" Yes! We feel you can become lucky with deliberate forward-thinking and planning. You can sleep well at night knowing that you have taken steps to protect yourself and your family if tragedy strikes. You will know you are on the path towards achieving your financial objectives.

Now, begin your journey towards Optimal Financial Health and being Lucky.

Chapter Two

Why Now?

A. Over the past nineteen years of our professional practice along with research and consultation with many doctors, we came to one dramatic conclusion: many of our clients suffer from IDILS. Unfortunately, there is no pill for "I'll Do It Later Syndrome". Often, depending on the individuals' personal or professional status, we hear the following:

1. "I'm in training now; I'll start looking at these issues closer to the end of my training."

2. "I'm too busy finishing training and interviewing. I'll start evaluating these issues when I get into practice and have money."

3. "I just started practice and have too much going on now; once I become a partner will be a better time."

4. "I'm single; these issues are irrelevant to me until I get married."

5. "We just got married and are too busy; we can wait to address these issues until we have children."

B. If people wait until they are several years into practice to begin the planning process (especially after partnership is achieved) the following things will happen:

1. They will continue to put off planning.

2. They will constantly feel behind.

3. They will increase their standard of living to meet or exceed their income ceiling.

4. The likelihood of achieving their goals decreases.

5. They may not achieve peace...