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What Physicians Must Know About Financial Planning: The Assessment


During the assessment phase of financial planning, the physician's financial planner will provide recommendations that may lead to a more cohesive and thought out structure.

The last two columns reviewed the subjective and objective phases of developing a financial plan.  Here, we’ll look at how the assessment is made. 

The assessment usually entails the planner providing a careful discussion of each of the important factors in the family’s financial life.  There is a specific review of asset protection (as appropriate), estate planning, insurance planning, educational planning, tax planning, business planning (as appropriate). and more.  The discussion will include the planner’s recommendations in each area that may lead to a more cohesive and thought out structure.

For most families, a review of cash flows is important.  If you are working and accumulating retirement funds, the planner will help to determine if there is an adequate amount of savings to reach your goal.  If you are in retirement, the planner can help pick a “safe” distribution rate and asset allocation for the retirement funds.  Depending on your circumstances, a detailed review of your estate planning documents should be considered.

Often, a family may not agree with some of the recommendations, or reviewing a specific plan may trigger other concerns.  So, the assessment is a give and take on what all the parties agree is important, and what it not. 

There are rare occasions when I will be emphatic about an action with a family-such as estate planning when minor children are around.  Having umbrella liability insurance is another “must do” for many families.  There are other issues that can be worked on in time, or reconsidered.  Optimally there is a written document detailing the assessment that can be updated and kept “live” over time.

Some, but not all planners will use software to make projections of cash flows into the future.  If so, you’ll get some nice charts and graphs printed out.  I’m not a fan of this, but there is certainly nothing wrong with doing so as long as all the important factors are well covered elsewhere.  Be careful of being dazzled by a document that does not have a careful assessment of your financial matters in great detail.

After the assessment phase is done, the planner and family should move on to “the plan.”  This involves implementation of the changes documented as important to do during the entire process.  The planner should be working with the family and its associated advisers to provide a smooth coordination of effort, and should follow up from time to time to check both for old and new issues.

I’ll close by remarking on how few medical families have a good financial plan.  Go to napfa.org and find a good fee-only planner to help you if you belong to this group.

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