How Surgeons Can Strive to Shield Wealth with State-of-the-Art Risk Management

As a surgical professional, you specialize in meticulous planning and intricate execution.  Day in and day out, you make decisions that impact the outcome of surgeries, affecting the well-being of countless patients. But just as you safeguard your patients, it’s equally crucial that you protect your financial well-being.

The world of wealth management is like an operating room. It involves many moving parts and complexities while requiring attention to detail. So, how can you help ensure that your hard-earned wealth is protected from risks created by uncertainties in the economy and securities markets? 

For surgical professionals, understanding risk management and working alongside a team of experienced financial advisors specializing in serving surgeons can be the difference between achieving a comfortable lifestyle and an affluent lifestyle. 

Like many other professionals, as a surgeon, you may have concerns about your investments’ security and growth potential. While the specific concerns may vary based on personal circumstances and market conditions, here are two important questions that involve risk & reward: 

1. How Can I Try To Protect My Investments From Significant Losses?
2. Is My Investment Portfolio Diversified Enough?

Read our popular article, “The Benefits of Financial Planning for Surgeons.”

How Can I Try To Protect My Investments From Significant Losses?

With rising income comes increasing fiscal responsibilities, complexities, and potential vulnerabilities. Like other high-income earners, as a surgeon, it’s crucial to implement effective wealth protection strategies designed to protect what you’ve worked so hard to achieve. 

Without a sound financial plan and investment strategy, your wealth could be at risk from various outside factors, such as litigation, market volatility, or changes in the tax code.

Following are four of the most common tactics for protecting the value of your assets:

1. Maximize your retirement savings efforts. Utilize tax-advantaged retirement accounts like 401(k)s, IRAs, or SEP-IRAs (if you’re self-employed). You should aim to maximize your contributions to these accounts every year. 

2. Consider a Roth conversion strategy. A Roth conversion involves changing a traditional IRA or 401(k) into a Roth IRA. This requires paying taxes on the pre-tax contributions and earnings in the current year of conversion. However, it offers future benefits of tax-free growth and withdrawals during retirement, assuming you meet the five-year rule and are over 59.5 years old. It’s often used by individuals who anticipate being in higher tax brackets after they retire. 

3. Develop a tax-efficient investment strategy. You most likely are in a higher tax bracket, making tax efficiency especially important to help minimize the erosive impact of the taxes you pay on investment income and realized gains. For example, you can invest in tax-managed or tax-efficient investments like index funds or ETFs. Another tactic is holding investments that produce taxable income (like bonds) in tax-advantaged accounts, while keeping more tax-efficient investments (like stocks) in taxable accounts. Alternative strategies such as tax-loss harvesting, which includes offloading securities at a loss to counterbalance a capital gains tax obligation, can also be advantageous.

4. Asset Protection Planning: Because of your profession, you could face a higher risk of malpractice lawsuits, which could put your assets at risk. Asset protection planning, which may involve using trusts or family-limited partnerships, can help protect your assets from potential creditors or claimants. It’s important to note that asset protection planning is complex, and laws will vary from state to state, so working with a legal professional specializing in this field is essential.

Surgeons Capital Insights: What distinguishes Surgeons Capital Management from other wealth management companies is our deep understanding of your financial requirements as a surgical professional. Our three core services focus on taxation, risk management, and legacy planning.  We believe in working with you to identify and create a financial/retirement plan and an investment strategy designed to last throughout your working years into retirement.

Is My Investment Portfolio Diversified Enough?

As diverse surgical tools and techniques are necessary for handling varying patient client cases, your investment portfolio should be diversified to provide safeguards against potential pitfalls based on your risk tolerance, time horizon (when you need the money), and financial goals. 

Diversification is a strategy that involves spreading investments across diverse classes of investments (like stocks, bonds, real estate, etc.) to mitigate risks. It’s a way of not putting all your eggs in one basket.

With the help of a financial advisor for surgical professionals, you should be able to effectively minimize the risk of significant losses in any area through a well-crafted strategy designed to spread investments across various classes, such as equities, bonds, real estate, and alternative assets.

Following are some asset diversification strategies that may be appropriate:

• Invest in a mix of asset classes such as equities (stocks), fixed income (bonds), commodities (like gold), and real estate. Each asset class behaves differently under various economic conditions, and the right mix may produce smoother returns.

• A global investment strategy may also provide additional diversification for your portfolio. Even though we live in a global economy, international markets may perform well when domestic markets are struggling. Additionally, emerging markets often offer higher growth rates compared to developed markets.

• Apart from your primary residence, investing in real estate2, both residential and commercial, can provide a steady cash flow in the form of rent and potential appreciation over time. Real Estate Investment Trusts (REITs) can also diversify into real estate without needing to manage properties directly.

• Alternative Investments: These include assets such as art, other types of collectibles, cryptocurrency, or hedge funds. They can provide returns uncorrelated to traditional asset classes, although they may have higher potential risks.

• Diversification is a frequent key, even within a particular asset class. For example, if you’re investing in stocks, you should aim to own companies from different sectors, of different sizes, and with different risk profiles.

• Annuities can be a good option for surgeons concerned about a more secure income stream in retirement. Likewise, proper insurance coverage (disability income, malpractice, life insurance) is key to protecting one’s wealth.

• Regular Rebalancing: Over time, some of your investments may outperform others, skewing the original asset allocation. Regular rebalancing helps maintain the original risk-return profile of the portfolio.

Surgeons Capital Insight: We understand the economics of your profession and the specific financial needs that highly skilled professionals like you have. We recognize that your financial requirements can evolve throughout your career. We guide cash flow management and retirement savings to tax strategies, practice management, and succession or legacy planning. Our commitment to helping surgeons separates us from other financial firms in the country. Connect with us to learn more about our customized wealth management solutions for surgeons. 

This article is being provided for informational purposes only.  It does not constitute a solicitation or offer of any particular product or service and is not intended, and should not be relied upon, as insurance, investment or financial advice. 

Duly registered and duly licensed financial professionals with Surgeons Capital Management offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA/SIPC (Equitable Financial Advisors in MI & TN); offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor; and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC; Equitable Network Insurance Agency of Utah, LLC; Equitable Network of Puerto Rico, Inc.). Equitable Advisors and Equitable Network are affiliates and do not provide tax or legal advice or services.  Surgeons Capital Management is not a registered investment advisor and is not owned or operated by Equitable Advisors or Equitable Network.  PPG-5867893.1 (8/23) (Exp. 3/27)

1. Diversification which positions assets among major investment categories may be used in an effort to manage risk and enhance returns.  However, it does not guarantee a profit or protect against a loss.
2.  Equitable Advisors, its affiliates, and financial professionals do not offer real estate brokerage or any related advice or services.
3.  Investments in foreign securities may be subject to greater risks than U.S. investments, including currency fluctuations, less liquid trading markets, greater price volatility, political and economic instability, less publicly available information, and changes in tax or currency laws or monetary policy. Investments in emerging markets are generally riskier than those that invest in developed countries.
4. Re-balancing accounts does not guarantee a profit or protection against loss.