Have You Assembled Your Personal Finance Team?

Teams win championships; just ask the New Orleans Saints. It’s tough to go it alone and come out on top in any endeavor, and that includes personal finance. A team of experts, ranging from attorneys and accountants to estate and certified financial planners, can make the difference between success and financial chaos.

“I think all physicians need some guidance on how to do financial planning, how to do estate planning, and how to plan their taxes and their insurance needs,” says Alan Lambert, MD, chair of Butzel Long’s New York healthcare practice. “But I think the level of need among physicians varies widely. And that’s because physician incomes vary widely.”

All the more reason to work with a team—whether large or small—of professionals who can offer the experience and guidance physicians need.

Quarterbacking the team

No football team goes anywhere without a solid quarterback in position—someone who understands the roles of the other players and can coordinate the team’s efforts. When it comes to a physician’s financial team, a certified financial planner might be best suited for that position.

“Everybody is overworked, everybody is more stressed,” explains Greg Merlino, CFP, president and founder of Ameriway Financial Services. “It’s not just physicians; it’s the attorneys, accountants and risk managers as well. That’s why it’s really important not only to coordinate the activities of the physician’s various advisors, but to ensure that nothing falls through the cracks.”

Merlino says that certified financial planners have been trained in all disciplines. They aren’t attorneys and they don’t draft legal documents, but they have been trained in that financial discipline—just as they have with regard to risk management, portfolio management, and income tax planning. And when there’s conflicting advice coming from the members of a physician’s financial team, someone needs to sort everything out.

“We sit in on those meetings with the estate planning attorney, with the CPA, to ensure that everybody is on the same page,” Merlino says.

Where to start

Merlino urges caution when it comes to selecting the quarterback of your personal financial team. Anybody, he says, can call themselves a financial planner or wealth manager. Anyone can hang out a shingle and say they’re open for business. That’s not the case, however, with the certified financial planner designation.

“In order to get that designation, you have to pass a series of exams that encompass all these various disciplines, from risk management and insurance to retirement and estate planning,” Merlino explains. “You’re also required to have a certain amount of experience in the profession before you can achieve that designation, as well as adhering to continuing education requirements to maintain the designation. That’s why I think it’s the most respected designation in our profession.”

Planning, says Merlino, is critical. He explains one of the first things he does is sit down with his physician clients and talk about the goals and objectives they want to achieve. If the topic is estate planning, he explains what having trust provisions in their will might accomplish, and what information an estate planning attorney will need in order to devise various strategies to help the physician reach his or her goal.

“By doing that ahead of time, you cut back on the number of hours that the estate planning attorney needs to educate the physician with regard to all of these strategies,” Merlino explains.

Beware of abuse of power

Lambert urges caution when it comes to appointing one individual to coordinate all of your personal finance needs. He explains that relying on one person can render a physician subject to abuses by that individual, or potentially inadequate advice. Sometimes, he says, it’s more helpful to have a larger team of professionals who are not related. It’s also important to get different opinions.

“I think it’s well worth a minimum investment of each physician’s time to communicate with a number of different types of professionals in order to try to obtain the best possible information on what type of planning is best for them, and to get as much disclosure as possible on how these professionals are compensated by the companies they’re steering you towards,” Lambert says.

He believes that physicians should have an arm’s length accountant, an arm’s length attorney, and an arm’s length banker, all of whom might point out contradictions in the advice the others are providing. “If you’re getting discrepancies in the advice, that might warrant further research by the physician. But if there’s some degree of overlap, that might be an indication of the accuracy of the advice you’re receiving.”

And, Lambert adds, make sure your plans are flexible. “Always plan for potentially worse or less desirable outcomes at a minimum, and make adjustments along the way.”