Q&A: Protecting your investment portfolio and assets

November 6, 2009

Investors should consider obtaining a qualified second opinion when concerned about "bleeding" of portfolio values due to market losses.

Q: During the past 24 months, my investments have been on a roller coaster ride due to the banking challenges, recession, government bailouts, and stimulus plans. What can I do to stop the "bleeding" as it relates to my portfolio?

As a possible alternative to the stock, bond, mutual fund, and annuity markets, consider that demographic, economic-driven investment strategies have performed very well during the same time period. Demographic economics research involves analyzing the spending and migration patterns of a population to determine where it will be spending its money and what it will be spending its money on in the future. In the current, tight economic environment, consumers will be spending money on non-discretionary items such as food, shelter, medical care, prescription drugs, transportation, and energy.

PROTECTING YOUR ASSETS

Q: Much like I have asset protection strategies in my retirement portfolio, my practice needs to be protected from various scenarios that could put me out of business in a heartbeat. What do I need to know?

A: Asset protection is an important planning consideration in the litigious society in which we practice and conduct business.

The preferred asset-protection choice of business entity in which we do business varies by state. Your attorney must be knowledgeable and up to date on these choices.

Discuss with a litigation attorney how he or she would approach "piercing the veil" of protection for the personal assets you have or plan to have in place in terms of business entity (for example, a limited liability corporation or corporation). Consider professional liability and commercial liability insurance as well as commercial and personal liability umbrella policies.

Review your income and estate-tax plans and qualified retirement plan documents at least annually to update documents and strategies to avoid paying unnecessary taxes.

Shrinking physician reimbursement schedules from insurance companies and government agencies over the past 10 years, combined with increasing costs of doing business, have created a difficult business environment in which to operate profitably. A quarterly financial review process to examine effective ways to control costs and increase revenues, perhaps through cost sharing and/or technology improvements, would be a timely and prudent methodology to maintain profitability for your practice and avoid credit challenges and bankruptcy.

Dan Deighan, CLU, CFC, is founder and principal of Deighan Financial Advisers in Melbourne, Florida. He has counseled clients since the firm's inception in 1974. Learn more by visiting http://www.deighanfa.com. Send your money management questions to memoney@advanstar.com
.