Balancing Act: Physicians and Wealth Management

By Martin J. Swiecki, CFP®, CLU

The demanding world of medicine often leaves doctors facing a special financial dilemma: striking a balance between the demands of their expanding practice and their goals to accumulate personal wealth. This delicate act requires meticulous planning and a thorough analysis of the unique wealth management challenges which medical professionals face. 

In this article, I examine the factors physicians should consider when attempting to find this elusive middle ground. I also share insight into reinvesting in their practice, implementing tax-efficient strategies, and building a strong financial safety net.

Reinvesting in Your Medical Practice vs. Personal Savings: A Strategic Approach

Physicians’ long-term financial stability requires a thriving medical practice. However, finding a happy medium between putting money into personal savings and reinvesting profit back into the business is a complex decision. 

Consider these approaches:

• Putting money back into the practice: To help your practice develop and become more valuable, you could add more employees, create new technologies, enlarge buildings, or upgrade equipment. These expenses could result in better patient care, enhanced productivity, and eventually more income.

• Prioritizing personal savings: Even though reinvesting in the practice is crucial, ignoring personal savings can significantly compromise your future financial stability. You can realize personal goals like retirement, your children's education, or property ownership by accumulating a strong personal financial portfolio.

• Striking the right balance: Promoting your practice while also building your personal wealth typically includes creating a thorough financial plan that details your short- and long-term goals. 

Tax-Efficient Strategies for High-Earning Medical Professionals

Physicians typically rank among the most lucrative earners, which puts them in a high tax bracket. Therefore, utilizing tax-efficient strategies like the ones listed below is a significant part of wealth management.  

• State and local taxes: Keep in mind that local taxes have a big influence on your overall tax obligation. Think about ways to reduce these taxes, such as moving to a location with lower taxes or investing in tax-exempt municipal bonds.

• Deductions and credits: Utilize all the deductions and credits available, such as those for professional liability insurance, company costs, and continuing education. To verify you’re claiming all your eligible deductions, keep thorough records of all your costs. 

• Tax-loss harvesting: Selling investments at a loss to reduce capital gains taxes, this strategy can be a valuable tool for controlling your tax liability. But before using it, it’s vital that you fully understand its restrictions and guidelines.

• Retirement planning: Increase your contributions to defined-benefit plans, profit-sharing plans, and tax-advantaged retirement accounts like 401(k)s. Your assets can grow tax-deferred thanks to these programs’ substantial tax incentives. Additionally, consider looking into options like Roth IRAs, which offer tax-free withdrawals in retirement.  

Creating a Financial Safety Net in a High-Liability Profession

Liability risks are everywhere in the medical profession. That means keeping your personal assets safe from legal action is crucial to your financial stability.

These are some of the safeguards most physicians should have in place:  

• Disability insurance: Used to safeguard your earnings, disability insurance helps you meet your financial commitments by providing a stream of income in the event you become disabled and are unable to work.

• Professional liability insurance: Keep up-to-date professional liability insurance to safeguard your assets against future settlements and litigation costs. Verify that your coverage meets your needs by reviewing it on a regular basis.

• Umbrella insurance: In addition to your professional liability insurance, an umbrella insurance policy offers an extra layer of liability safety. This can be a valuable shield against large judgments or settlements. 

• Emergency fund: A robust emergency fund can cover unforeseen costs like medical bills or losing your job, so it’s wise to make setting one up a top priority. Your emergency fund should cover at least three to six months’ worth of living expenses.

• Asset safety techniques: To shield your personal assets from creditors, think about putting asset safety strategies into place, such as incorporating your practice or creating trusts. 

The Bottom Line

It takes a proactive and strategic approach to strike a balance between practice growth and personal wealth. Physicians can succeed both professionally and financially by carefully evaluating reinvestment possibilities, implementing tax-efficient strategies, and building a robust safety net.

Remember that having a clear financial strategy is about more than just building wealth; it’s about safeguarding your future so you can concentrate on what really counts: providing excellent patient care.

Get Started Today

As a physician navigating a complex financial landscape, you need more than just a generic plan—you need a financial blueprint tailored to your unique needs and aspirations. Partnering with a financial advisor who specializes in working with medical professionals provides the strategic wealth management advice necessary to progress toward your ideal financial future.

At The Valletta Group, we believe in coming together to help you realize your goals and aspirations. With nearly two decades of experience, we specialize in guiding medical professionals, business owners, and those in the automotive industry through life’s transitions. Pursuing “A Better Way,” we’ve integrated multi disciplined teams across aligned organizations, bringing fresh perspectives and tailored solutions to every client relationship. Our diverse team is united by mutual respect, shared values, and a commitment to consistently delivering results that align with your vision.

Ready to take the next step? Schedule a meeting by calling (248) 720-1780 or emailing mswiecki@vallettagroup.com.

About Martin

Martin Swiecki is the Founder and CEO at The Valletta Group, a wealth management firm based in Northville, Michigan, with a quarter century of experience helping individuals and their families navigate life’s transitions. Working closely with business owners and entrepreneurs in the medical, legal, and automotive industries as they pursue their aspirations, Martin leads a team focused on delivering tailored capabilities and services. He loves making a difference in clients’ lives by helping them reach their goals with proper planning and providing comfort and peace that someone is looking out for them.

Since starting his career in 2003, Martin has been focused on listening to his clients, seeking to gain deep insight into who they are and aspire to be—apart from their investments. He founded The Valletta Group to pursue what he believes is “A Better Way” to serve his clients.

The name of the firm, Valletta, holds special significance. Valletta is the capital city of Malta, a small island off the coast of Sicily. When Martin envisioned creating his own firm, he struggled with finding the right name. He didn’t want to use his own name or anything generic. His mother, who moved from Malta to the U.S. in her early 20s, inspired the name. Growing up, Martin and his family would visit Malta every other summer, maintaining a close connection with their heritage. In 2019, Martin took his wife, Jessica, and their two young children, Evelyn and George, to Malta, where they stayed in Valletta. It was during this trip that his wife suggested naming the firm The Valletta Group. The name not only honors Martin’s mother’s perseverance in starting a new life in the U.S. but also serves as a meaningful family tribute and a conversation starter.

Martin holds a bachelor’s degree in engineering graphics and design from Western Michigan University. He earned his CERTIFIED FINANCIAL PLANNER®, CFP® designation in 2011 and became a Chartered Life Underwriter (CLU) in 2006. Outside of work, Martin enjoys spending time with his family, pursuing outdoor activities such as golfing, boating, and fishing. To learn more about Martin, connect with him on LinkedIn.