Discomfort or trepidations aside, you’ll have to answer these tough, but inevitable, questions.
There is no doubt about it, becoming a physician is not easy. You spend years training to be able to make life-altering decisions, sometimes at a moment’s notice. Chances are you feel comfortable making these types of calls, but less confident when it comes to making major decisions that, for example, affect your finances.
And who can blame you? Decades of demanding medical education may have prepared you to become a great physician, but offers little in the way of financial guidance. Discomfort or trepidations aside, you’ll have some tough decisions nonetheless.
|Business Ownership/ Partnership||W-2 Employee|
|Need to open and maintain own retirement plan, possibly for employees, as well. Possible need for plan manager.||Employer sponsored retirement contributions with possible employer match.|
|Potential to make higher retirement contributions by adding profit sharing plan or other retirement plan vehicles to traditional 401k. May need to open additional IRAs or perform Roth conversion for optimal savings.||Limits on retirement plan contributions. May need to open additional IRAs or perform Roth conversion for optimal savings.|
|Must obtain any and all insurance policies to cover a range of personal and professional liabilities.||Some malpractice coverage held by and paid for by the corporation.|
|Real estate needs for patient care, surgery, etc.||Facilities provided for use.|
|Increased autonomy.||Limited autonomy.|
|Uncapped income potential.||Fixed income potential.|
Keep in Mind: Within the industry as a whole, larger corporations are buying out and acquiring smaller hospitals and practices at an alarming rate. Many physicians even wonder if opening a private practice is sustainable when a handful of mega-corporations continue to expand, grow, and monopolize the scene. As such, many physicians are trading the autonomy and earning potential of business ownership with the security and longevity of a corporate position. Of course, there is no right answer, only personal preference and fiscal reality, but balancing the two will be the key to keeping your finances on track.
Of course, none of the answers to the above questions will come easily and should always be considered in the context of your overall financial plan.
Julianne F. Andrews, MBA, CFP, AIF is a principal and co-founder of Atlanta Financial Associates. She specializes in working with physicians and executives in the healthcare industry. Her passion for working with physicians comes from being a pediatrician’s spouse for more than three decades. Julie has been featured on Forbes’ list of America’s Top Women Wealth Advisors since 2017 as well as Forbes’ Best-in-State Wealth Advisors since 2018. Julie can be reached at firstname.lastname@example.org.