The Ultimate Guide: Wealth Management for Surgeons

Wealth Management for Surgeons

As a surgical professional, your days are more than likely filled with multiple demands that leave little time to handle other tasks and spend with family. Add the need to make increasingly complex financial decisions, and you can see how quickly it can get out of hand.

It’s possible that you may not have the time or interest to manage your wealth, given how busy you are. If you need assistance managing your wealth but are unsure where to turn, this Quick Guide is for you. As trusted financial advisors, our team has over 200 years of combined experience providing high-end wealth management solutions for surgeons

In this Guide, we will touch on six unique wealth management considerations for surgeons that you should know about if you seek assistance from a financial advisory firm.  

Chapter 1: Risk Management Solutions for Surgeons

Chapter 2: Tax-Efficient Investing Strategies Surgeons

Chapter 3: Asset Location: Beyond the Operating Room

Chapter 4: Retirement and Estate Planning for Surgeons

Chapter 5: Employee Benefit Plans for Your Practice

Chapter 6: Finding the Right Financial Advisor 

Listen to our financial planning for surgeons interview with Dr. Michael Wang.

Chapter 1

Risk Management Solutions for Surgeons

Successful surgeons use risk management strategies to safeguard their assets and financial well-being. 

Here are several strategies that surgeons utilize to protect their assets, both from a tax and risk management perspective:

  1. Start by engaging a financial advisor specializing in wealth management for medical professionals. They can provide tailored guidance on investment options, tax planning, and insurance coverages for specific types of risks.
  2. Conduct a comprehensive risk assessment to identify potential financial vulnerabilities. This includes evaluating the risks associated with malpractice lawsuits, disability, and other practice-specific risks.
  3. Consider structuring assets in a way that shields them from potential legal claims. Trusts and other legal entities can help protect personal and professional assets.
  4. Adequate insurance coverage is crucial to your well-being as a surgeon.  Here are five insurance-based solutions to consider using as a way to shield your wealth from various risks:  

a.  Malpractice insurance is paramount for surgeons. It shields you from lawsuits and financial ruin in case of medical errors or frivolous negligence claims.

b.  You should also have disability insurance to protect your income if you cannot practice due to injury or illness. This ensures a steady income stream during the recovery period.

c.  Life insurance can provide financial support for your loved ones in the event of your untimely demise. It's a responsible way to secure your family's financial security.

d.  Business overhead expense insurance covers any ongoing expenses of your practice if you are temporarily unable to work due to a disability. It helps maintain the business's stability during your absence.

e.  In today's digital age, you should also consider how to safeguard your patient data and practice from cyber threats. Cyber liability insurance helps cover the costs associated with data breaches and cyberattacks, including legal expenses and notification to affected patients.

Chapter 2

Tax-Efficient Investing Strategies Surgeons

Several financial strategies may help you maximize your wealth during your working years. 

  1. Maximize contributions to tax-advantaged retirement accounts like 401(k)s or IRAs. These accounts offer tax-deductible contributions and tax-deferred growth.
  2. Building a diversified investment portfolio that includes stocks, bonds, ETFs, and real estate that can increase your wealth over time. Diversification is your top strategy for reducing your risk of large financial losses. 
  3. If you have a high-deductible health plan, contributing to an HSA allows for tax-free contributions, growth, and withdrawal for qualified medical expenses.
  4. Investing in real estate directly or through real estate investment trusts (REITs) can provide passive income and tax advantages like depreciation and mortgage interest deductions.
  5. Implementing tax-efficient investing strategies, such as holding investments in tax-advantaged accounts and utilizing tax-loss harvesting, can minimize your future tax liabilities.
Chapter 3

Asset Location: Beyond the Operating Room

Asset location for surgeons involves strategically placing different types of investments in tax-efficient accounts to maximize their net returns while minimizing tax liabilities. It's an important investment strategy for surgeons.

Here's how it works:

Asset location focuses on placing investments in taxable or tax-advantaged accounts to take advantage of various opportunities in the tax code. For instance, investments with lower tax implications, like tax-efficient index funds, can be placed in taxable accounts. In contrast, tax-inefficient investments, such as portfolios of bonds, are better suited for tax-advantaged accounts like IRAs or 401(k)s.

The goal is to maximize your after-tax returns. Using the strategic placement of investments, you can reduce your tax burden and keep more of your hard-earned assets. For example, you can minimize the tax impact on interest income by sheltering high-yield bonds in tax-advantaged accounts. Asset location should also consider your unique financial situation, risk tolerance, and investment objectives.

For example, let's say you have a diversified investment portfolio of stocks and bonds. Your wealth management advisor determines that stocks are expected to generate long-term capital gains taxed lower than ordinary income. On the other hand, bonds produce interest income taxed at higher rates.

The advisor recommends placing the stocks in a taxable brokerage account to use asset location to take advantage of lower, long-term capital gains tax rates. Simultaneously, they advise you to allocate bonds to tax-advantaged accounts like an IRA, where the interest income can grow tax-deferred. This strategy aims to maximize your after-tax returns, which can accelerate the growth of your assets.

Chapter 4

Retirement and Estate Planning for Surgeons

Retirement and estate planning are pivotal aspects of surgeons' pursuit of financial independence later in life. 

Retirement Planning for Surgeons

While in your prime working years, you may not think about life after the operating room. But planning for retirement should be a high priority so you have a clear path for achieving your post-practice goals.  

Retirement planning should include specific goals and a comprehensive tax planning strategy that addresses your tax situation pre and post-retirement. 

You may have a goal of retiring at a certain age, which requires smart investment choices, considering factors such as risk tolerance, investment horizon, and your anticipated expenses during retirement.

Estate Planning for Surgeons

Estate planning is equally important for surgeons because it involves safeguarding and distributing assets efficiently to heirs and beneficiaries while minimizing tax liabilities. 

You can use wills, trusts, and gifts to pursue your estate planning goals.

For instance, let’s say you want a smooth transfer of assets to your children and grandchildren while minimizing applicable estate taxes. To do this, you can establish a trust to hold your assets, designating your heirs as beneficiaries. By doing so, you avoid probate and reduce the tax burden on your estate, ultimately preserving more wealth for your loved ones.

Chapter 5

Employee Benefit Plans for Your Practice

Surgeons can implement Employee Benefit Plans to attract and retain talented staff while benefiting from various tax advantages. These plans can include multiple services, such as retirement savings options, health insurance coverage, and additional perks. 

  • Retirement Savings Plans: Surgeons can establish retirement plans like 401(k)s or Simplified Employee Pension (SEP) IRAs for their employees. These plans offer tax advantages through tax-deferred contributions, reducing the employees' taxable income and promoting long-term financial security.
  • Health Insurance Benefits with Additional Coverage: Offering extensive health insurance coverage, including dental and vision, is a significant benefit for employees. Employer-paid premiums are generally tax-deductible, and employee contributions are often made using pre-tax dollars. This arrangement reduces employees' taxable income while ensuring they have access to essential health services, such as regular dental checkups and vision care, alongside their general medical coverage.
  • Flexible Spending Accounts (FSAs): Surgeons can offer FSAs, which allow employees to set aside pre-tax dollars for eligible medical expenses. This reduces employees' taxable income and provides a convenient way to manage healthcare costs.
  • Health Savings Accounts (HSAs): HSAs are another tax-advantaged option. Employees can contribute to these accounts with pre-tax income and use the funds for qualified medical expenses. Employers may also make contributions, which can be a valuable perk.
  • Life and Disability Insurance: Surgeons can provide life and disability insurance coverage to protect their employees in case of unexpected events. Premiums for group coverage are generally tax-deductible for the employer, and benefits paid out may be tax-free for the employees.
  • Education Assistance Programs: Offering financial assistance for employees' education or professional development can be attractive. While these benefits are generally taxable to the employee, they can still provide valuable support for career growth.
  • Transportation and Commuting Benefits: Surgeons can consider providing commuter benefits, such as transit passes or parking subsidies. These can be offered pre-tax, reducing employees' commuting expenses.
  • Child care Assistance: Supporting employees with childcare expenses can be a tax-advantaged benefit. Surgeons can establish dependent care FSAs or even offer on-site childcare services.
Chapter 6

Finding the Right Financial Advisor

Who you hire to oversee the management of your wealth is one of the most important decisions you can make for your financial future.  

At Surgeons Capital Management, we attend surgical conferences yearly to better understand your industry. Our clients benefit from our deep understanding of the unique challenges and opportunities that shape surgeons’ careers and practices. Attending your conferences is a key to helping us shape our services to meet your needs. 

With over 200 years of collective experience in private wealth management, Surgeons Capital Management is dedicated exclusively to serving you, your families, and your surgical practices.

We understand the economic drivers of your profession. We also recognize that your financial needs evolve throughout your career, encompassing everything from cash flow management and retirement savings to tax strategies, healthcare benefits, and planning for your legacy. Our guidance is comprehensive and adaptable to these evolving changes in your journey through life.

When you partner with us, we take on the day-to-day financial tasks, allowing you to concentrate on growing your practice, spending more time with your family, and enjoying leisure activities.

Our work with surgeons throughout the U.S. and our financial advisors are prepared to meet you wherever you are. If you relocate, your financial strategy remains uninterrupted and seamlessly adjusts to your new circumstances.

Connect with us to learn more about our wealth management solutions for surgeons.