Healthcare Professionals and Personal Financial Goals – Part 2

Did you miss Part 1? Learn about the financial planning challenges facing busy healthcare professionals.

Nate Wenner, CFP®, CPA, PFS, CIMA® has been advising individual clients and small business owners for over 15 years. Nate advises numerous physicians and dentists and has earned a reputation in his field for his work serving this portion of the population. So, I sat down with Nate to ask him what he has learned in working with these professionals over the years.

What are the biggest challenges you see facing your dentist and physician clients?

At present, it is the uncertainty about their future income given healthcare reform, not only healthcare reform in terms of the Affordable Care Act and all that goes along with that, but also with the trend toward more consolidation in healthcare organizations (more physician practices being bought out or merged with others, becoming part of larger organizations). The uncertainty this brings around income, their future career paths, and the structure of their practice increases the importance of running different possible scenarios of how their financial futures may play out. We use our interactive planning tool to help us visually explore various possible outcomes given different assumptions for what might happen in the coming years.

Physicians and dentists can also have certain cash flow challenges. Early to mid-career physicians and dentists are often facing the challenges that come along with having a lot of debt from their schooling or from buying into a practice. Many such professionals don’t have the time or the interest in understanding and managing what spending and saving amounts are necessary or advised given their current and future income and goals. They may get associated with a lifestyle of spending that is difficult to sustain after they retire if they don’t adequately save along the way.

What do your dentist and physician clients do well, financially?

They’re generally very confident. They are often very goal-oriented and that helps in terms of setting benchmarks for their earnings and savings, which can make our job easier in terms of not having to convince them of what might be necessary. They also understand first-hand that planning for their own healthcare costs post-retirement is important.

They understand the importance of higher education including graduate or professional schooling and they want their children to have the same opportunities in their life and career that they’ve had. So they are generally well-focused on planning for that goal as well.

Many of them maximize their primary retirement savings plans through their clinic, so they’re building a good base upon which we can further help them by advising on additional tax-preferred savings vehicles or Plans (cash balance or defined benefit pensions, deferred compensations plans, etc.).

Any other common themes you notice regularly with your dentist and physician clients?

Many of them have a healthy income, so tax planning is a big part of how we help them. As mentioned above, we explore ways to reduce their taxable income through supplemental retirement savings plans. We work closely with their CPA tax advisors doing tax projections and looking for ways to integrate strategies like Roth IRA or Roth 401(k) conversions, tax-loss harvesting (strategically selling securities at a loss to offset other capital gains or income tax liabilities), etc. We’re working closely with clients’ CPAs to brainstorm and strategize about additional ways to save on taxes in light of recent tax increases.

Confidence was mentioned above as a positive, but we also sometimes see physicians and dentists inadvertently being over-confident. Of course, they need to have confidence to be successful in their careers; however, sometimes when translated into their financial lives this can lead to them getting “pitched” investment opportunities with unrealistic performance expectations. So, part of our job here is to guide them or be a sounding board regarding realistic opportunities to keep them grounded on the fundamentals of investing and their long-term financial health (just as they do with their own patients).

Lastly, their medical or dental training in school doesn’t necessarily prepare them well for managing a healthcare business and all of the related financial issues, including any personal financial issues that may be part of that. So, for those who own or co-own their practices, we’re able to help them focus on the relationship between their business finances and their personal finances, assisted by their CPA, to help them marry those two sides and keep their overall financial picture in focus.



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Jordan Lochner Mills

CFP® | Senior Financial Advisor

Jordan Lochner Mills, CFP®, is a Senior Financial Advisor for Wipfli Financial Advisors in Minneapolis, MN. Jordan focuses on personal financial planning and investment management for individuals and families, and also specializes in planning matters related to women investors and retirees.

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Healthcare Professionals and Personal Financial Goals – Part 2

time to read: 3 min