Create a Game Plan with Your Financial Team

Physician's Money DigestMarch15 2003
Volume 10
Issue 5

Growing up, family barbecues werealways fun: the smell of hamburgerssizzling on the grill, mom'shomemade coleslaw, and the annualbackyard wiffleball game. If you werelucky, you got to captain 1 of the 2 teams.And when you chose teammates, youalways tried to pick the best players thefamily pool had to offer. Of course, atsome point you had to take either AuntTillie, who each year had to be remindedhow to hold the bat, or cousin Tommy,who still liked to run the bases backwards.Thus, the team you went into battle withwas not quite all-star caliber.

When assembling your financial team,however, physicians shouldn't settle foranything less than a true all-star lineup.Fortunately, you have more than mediocrewiffleball players to choose from inyour search for a stellar financial advisoryteam. And although you love yourAunt Tillie and cousin Tommy, this timeyou're not forced to choose from a preselectedgroup—a welcome opportunitysince there's a lot more riding on yourfinancial team's performance than braggingrights at the family barbecue.

1. Discover the Power of Teamwork

There's a long list of reasons why it'simportant to form a financial advisoryteam. Perhaps the most importantreason is that volumes of tax, estateplanning, insurance, and investmentinformation are available today. Andeven if you could get your arms aroundall of that information, it's very difficultfor any 1 person to be an expert on allfinancial matters.

"The impact of not forming a financialadvisory team is that you'll probablybe leaving money on the table,"explains Richard Joyner, partner anddirector of Ernst & Young's SouthwestArea Personal Financial CounselingPractice ( Joyner points tothe impact of putting a particular a ssetin a tax-deferred account vs a taxableaccount, or not funding insurance in away that allows you to minimize estatetaxes. "If you don't take more of a multidisciplinaryapproach, you're settingyourself up for problems."

Echoing Joyner's thoughts, BardMalovany, CFP®, Financial Council, Inc,( says it's notas though financial professionals aresmarter than their clients; it's just thatthey're used to handling financial issueson a regular basis. "Our clients arebright enough to research the issues andfigure things out, but it would take a lotof time," Malovany explains. "And aphysician's time is more efficiently spenthelping patients."

Debbie Feldman, CFP®, president ofLeonetti & Associates (877-909-6535; suggests that atthe very least, a financial advisory teamshould consist of a financial advisor, anaccountant, an attorney, and an investmentprofessional. "Those 4 areas arethe keys to a physician's financial well-being.And the most important elementis communication," Feldman says.

Malovany seconds those thoughts,noting that with a team there are multipleindividuals with whom you can shareideas. You gain the advantage of differentperspectives—some more investment-focused and others more tax-focused,depending on which team memberis offering insight. And the end resultis a well-rounded financial strategy.

How to prevent chaos:

However, assembling a successfuladvisory team involves much more thansimply hiring various financial professionalsand setting them to work. "Theold paradigm is that each advisor doestheir own thing," Joyner explains."Unfortunately, that leaves the physician,who in most cases is a very busy person,with the difficult job of pulling allthe pieces together, making sure theycomplement one another. It's asking forthe impossible." It's also asking for chaos.Find the key toyour team—a trusted financial advisor.

2. Choose the Leader of Your Pack

The best place to start when buildingyour personal advisory team is withthe financial advisor. If you think in businessterms, the financial advisor serves asthe coordinator of your advisory team.More often than not, the financial advisorwill be the first person to learn ofchanges in your life.

A good financial advisor, Joyner suggests,will spend a lot of time with youon the front end, asking questions, gatheringinformation, and finding the missinggaps in your current financial plan. Afinancial advisor will want to knowabout your assets and liabilities, insuranceyou have, investments you havemade, and what your comfort level is interms of the amount of investment riskyou're willing to take.

In addition to big-ticket items such asgoals regarding retirement, Joyner believesunderstanding simple things like aclient's communication preference (eg,e-mail, voice mail, or face-to-face) is alsovery important. "Some clients like everythingon 1 page," Joyner says. "Just tellthem what to do and where to sign.Others want to understand the analysis,how the recommended financial strategyhas been determined."

When selecting a financial advisor,you might want to consider someonewith the combined certified publicaccountant (CPA) and personal financialspecialist (PFS) designations. The trainingrequired to obtain the PFS designationprovides an individual with a diversebackground and the ability to understandthe languages spoken by themembers of the financial team.

"You can't have a quarterback whoisn't familiar with all the plays," explainsDavid Bendix, CPA/PFS, president andfounder of the Bendix Financial Group( "There arenew tax laws, insurance products, andestate planning regulations to be familiarwith. Years ago, a financial advisorknew only 2 things: stocks and bonds.Today, a much more multidisciplinaryapproach is required. It's to the physician'sadvantage to have someone witha better understanding of the specificprofessionals who have to be brought into complete the financial team."

While not essential, it's also a goodidea to select a financial advisor who hasexperience working with physicians.Understanding upfront what's importantto medical professionals can makethe difference between hitting theground running and learning on the job.

3. Establish a Lineup

An accountant is one of the keymembers of a financial advisoryteam. And when you think accountants,you should automatically thinkCPAs. Accountants earn that designationby passing rigorous exams. Andonce earned, CPAs are required toregularly upgrade their knowledge.Accountants can also lose the designationif they don't maintain professionalstandards and practices.

How can you find a good accountant?In many cases, that's where yourfinancial advisor comes in. Manyfinancial advisors work closely withaccountants who may reside underthe same roof. That familiarity canhelp when it comes time to develop acohesive financial plan. However, ifyou're concerned about conflicts ofinterest, or simply want to ensure anoutside perspective, there are somekey steps to take.

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Stephen Pollan, inhis book (Harper-Collins; 2001; $19.95),suggests word ofmouth. Talk to other professionals,especially peer physicians whose opinionsyou value. In addition, it's a goodidea to keep an eye out for a youngindividual or small firm eager to builda client base. Even though you maysacrifice some of the clout of an older,established firm, the younger CPA willlikely charge less and be more willingto work hard. In addition, they'llprobably be more aware of the latestdevelopments in their field. Not all accountants are the same,so ask a lot of questions.

Attorneys are also critical membersof a financial team, responsiblefor a number of important jobs,including drawing up wills, creatingbusiness plans and contracts, andmanaging your affairs should youbecome incapacitated. But just aswith accountants, not all attorneysare the same. "You may bring in anattorney to help with the formationof your business, but they may notbe the right person to handle yourestate plan, or your business successiongoals," Bendix says.

Estate planning attorneys alsohave a specific expertise in estateand gift tax laws that many CPAsmight not possess. Again, that'swhere a good financial advisor isworth their weight in gold. "It's likehiring a general contractor whenyou're building a house. Rather thanthe physician having to run to 7 or 8different subcontractors, they havetrust in 1 general contractor to bringin the right people and make sureeveryone works together."

In addition, don't forget theimportance of having an insuranceprofessional as part of your financialteam. In some cases, the financialadvisor may be well versed in assessingyour overall insurance needs. Ifnot, you should certainly find a professionalwith reputable expertise inall forms of insurance—from life andhealth to liability and medical malpracticeexposure.

"A patient could slip in the parkinglot while going into the physician'soffice," Bendix explains. "Also,physicians should consider umbrellainsurance. If a physician is drivinghome and gets into a car accident,the minute the party in the othervehicle finds out the other driver is adoctor, they're going to think thephysician has deep pockets. So thephysician really needs to create assetprotection." That's why it's a goodidea to have an insurance expert onyour team. When the chips aredown, you'll feel better knowingthere's someone only a phone callaway who can bail you out.

4. Meet Regularly with the Team

Most advisors believe that periodicmeetings between team membersare critical to a successful working relationship.As Joyner points out, there arenuances to communication that can't besolved in an e-mail, voice mail, or evenphone conversation. Face-to-face brainstormingwith other team memberswho have diverse backgrounds and approachesis very helpful. Getting togetherregularly is the most importantfactor. When and where you meet issecondary, although there's nothingwrong with making it enjoyable.

"It's very important that all membersof the team are on the same page, andthat they have the same philosophyabout financial planning," explains EricSands, a financial advisor with InvestorsCapital (800-949-1422; "There can't be any hiddenagendas among team members, andthere can't be any conflicting goals. It'sthe lack of policies, procedures, and asound business plan that will lead tothings falling apart."

Should you be present at all meetings?Most advisors don't believe periodic attendanceis key. The physician-investordoesn't necessarily need to know the finedetails of every document, but theyshould know, conceptually, why a particularstrategy is being implemented.

In comparison to a corporate environment,the physician is the president of thecompany, the financial advisor is theequivalent of a corporate chief financialofficer, and other team members representthe company's different departments.Physicians, like corporate presidents,are busy. They should focus onwhat they do best and delegate responsibilityto their different specialists.

"The physician has to give up somecontrol," Bendix asserts. "It may be hard,but the president of a company can't beinvolved in typing every letter or researchingevery project. That's why the physicianhas to develop a trust factor, andbring people into their life who can helpmake smart decisions."

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