80% of ‘financial planners’ operate under the auspices of an institutional owner. That institution makes most of its money selling managed funds and life insurance.

Unsurprisingly, about 80% of financial plans are therefore a waste of time and money. They only deal with managed funds and insurance products. They do not deal with the really important assets, i.e. the practice, the home, other property, direct shares and so on. They rarely deal with real financial strategies based on long term coordinated plans to maximize financial outcomes and happiness amongst the wider family and across the generations.

To be blunt, they just flog second-rate managed funds to GPs.

Most GPs are surprised to hear most financial planners are actually not allowed to recommend investments other than managed funds. Why? Simple: they do not generate income for the institutional owner. That is why you never see a financial plan prepared by an institutional financial adviser that discusses the GP’s income, their practice, their property, direct shares, investment property, etc. The institution does not sell them, so the adviser does not recommend them.

Even worse, these financial plans also ignore things like asset protection. The risk of patient litigation should not be overstated. But nor should it be ignored.

Most financial plans also under-estimate the income security of a doctor. Conventional financial planning theory says that a person aged 55 is due to retire soon and therefore should be moving to a more conservative investment profile. This is a problem for all people, as many people can expect to live at least another thirty years once they reach the age of 55. How would your current finances (or those of your parents) look if all of your assets today were still valued in 1987 prices?

But it is a particular problem for a doctor, who can look forward to another ten or fifteen years of above average income, even if they begin to cut their hours back and work part time over that period. Indeed, there may be more work than ever for these doctors. With a high proportion of GPs over the age of 55, the Health Work Force initiative estimated that Australia will face a massive shortage of doctors by 2025 when a large number of GPs are set to retire.^[1] ‘Forced retirement’ on anything other than medical grounds is simply not going to happen.

Successful financial planning and investing is well within the abilities of most GPs. Simple low-risk strategies over time produce good results and create financial security.

What is the point of being wealthy? If you are to become wealthy, you have to understand why you want to be wealthy. There are many reasons for accumulating wealth. Most GPs will become wealthy by operating efficient practices: the market rewards good medicine and good patient outcomes. The practice income is first re-invested in the practice and then, once the practice is at optimal efficiency, invested in more passive investments, ideally the home, and then other property, direct shares and index funds owned in SMSFs, companies and trusts.

Anthony Moncada (MAppFin, BInfTech, DFS(FP), CertIV FMB), is Director of Wealth Strategic, a Financial Planning Practice specialising in helping Doctors, Specialists, Dentists, Physiotherapists and Health Professionals.

Anthony Moncada (AR 1234994) and Assurance Alliance Pty Ltd trading as Wealth Strategic (CAR 1234995) and Authorised Representatives of Dover Financial Advisers Pty Ltd AFSL 307248.

General Advice Warning – All strategies and information provided are general advice only which does not take into consideration any of your personal circumstances. Please seek personal financial and taxation advice prior to acting on this information.