Stress Testing Results a Decade Later
By Dr. David Edward Marcinko; CPHQ, MBA, CMP™
By Hope Rachel Hetico; RN, MHA, CPHQ, CMP™
We are often asked by physicians and colleagues; medical, nursing and graduate students, and/or prospective clients to see an actual “comprehensive” financial plan. This is a reasonable request. And, although most doctors who are regular readers of this Medical Executive-Post have a general idea of what’s included, many have never seen a professionally crafted financial plan. This not only includes the outcomes, but the actual input data and economic assumptions, as well.
The ME-P Difference
And so, in a departure from our pithy and typically brief journalistic style, we thought it novel to present such a plan for hindsight review. But; we present same in a very unusual manner befitting our iconoclastic and skeptical next-generation Health 2.0 philosophy. And, we challenge all financial advisors to do same and compare results with us.
How so?
By using a real life plan constructed a decade ago and letting ME-P reader’s review, evaluate and critique same.
- Part I is for a married drug-rep, then medical school student [51 pages] with no children.
- Part II is for the same mid-career practicing physician [28 pages] with 2 children.
- Part III is for the same experienced practitioner at his professional zenith [56 pages].
Part III: Sample Financial Plan III
Fiduciary Advisors
As former financial advisors and licensed insurance agents – and a reformed certified financial planner – it is our duty to act as economic fiduciaries for clients. In other words; to put client interests above our own. This culture was incumbent in our participatory online www.CertifiedMedicalPlanner.org educational program in health economics and medical practice management; since inception in 2000.
Assessment
And so, as Edward I. Koch famously asked as Mayor of New York City from 1978-1989: “how am I doing”; we sought to ask and answer same. What did we do right or wrong; and how were our assumptions correct or erroneous? As Certified Professionals in Healthcare Quality this is the question we continually seek to answer in medicine. And, as health economists, this is the financial advisory equivalent of Evidence Based Medicine [EBM] or Evidence Based Dentistry [EBD] etc. It is a query that all curious FAs should ask.
Note: Be sure to review sample plan I and II, right here:
Link: Sample Financial Plan I
Link: Sample Financial Plan II
Conclusion
And so, your thoughts and comments on this Medical Executive-Post are appreciated. As a financial advisor, accountant, financial planner, etc., we challenge you to lay bare your results as we have done. And, be sure to “rant and rave” – and – “teach and preach” about this post in the style of Socrates, with Candor, Intelligence and Goodwill, to all. Doctors – chime in – too.
Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
Get our Widget: Get this widget!
Our Other Print Books and Related Information Sources:
Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759
Physician Financial Planning: http://www.jbpub.com/catalog/0763745790
Medical Risk Management: http://www.jbpub.com/catalog/9780763733421
Healthcare Organizations: www.HealthcareFinancials.com
Health Administration Terms: www.HealthDictionarySeries.com
Physician Advisors: www.CertifiedMedicalPlanner.com
Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest ME-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Sponsors Welcomed
And, credible sponsors and like-minded advertisers are always welcomed.
Link: http://healthcarefinancials.wordpress.com/2007/11/11/advertise
ASSUMPTIONS
Sample Mega Plan for a New Physician
Joe Good, a 30-year-old pharmaceutical sales representative, and his pregnant wife Susie Good, a 30-year-old accountant, sought the services of a certified financial planner because of a $150,000 inheritance from Joe’s grandfather. The insecurity about what to do with the funds was complicated by their insecurity over future employment prospects, along with Joe’s frustrated boyhood dream of becoming a physician, along with only a fuzzy concept of their financial future.
After several information-gathering meetings with the CFP, concrete goals and objectives were clarified, and a plan was instituted that would assist in financing Joe’s medical education without sacrificing his entire inheritance and current lifestyle. They desired at least one more child, so insurance and other supportive needs would increase and were considered, as well. Their prioritized concerns included the following:
1. What is the proper investment management and asset allocation of the $150,000?
2. Is there enough to pay for medical school and support their lifestyle?
3. Can they indemnify insurance concerns through this transitional phase of life, including the survivorship concerns of premature death or disability?
4. Can they afford for Susie to be the primary bread winner through Joe’s medical school, internship, and residency years?
5. Can they afford another child?
Current income was not high, and current assets were below the unified estate tax-credit. Therefore, income and estate-planning concerns were not significant at that time.
After thoroughly discussing the gathered financial data, and determining their risk profile, the CMP™ made the following suggestions:
1. Reallocate the inheritance based on their risk tolerance, from conservative to long-term growth.
2. Maximize group health, life, and disability insurance benefits.
3. Supplement small quantities of whole life insurance with larger amounts of term insurance.
4. Create simple wills, for now.
Sample Mega Plan for a Mid-Life Physician
A second plan was drawn up 10 years later, when Joe Good was 40 years old and a practicing internist. Susan, age 40, had been working as a consultant for the same company for the past decade. She was allowed to telecommunicate between home and office. Daughter Cee is nine years old, and her brother Douglas is seven years old.
The preceding suggestions had been implemented. The family maintained their modest lifestyle, and their investment portfolio grew to $392,220, despite the withdrawal of $10,000 per year for medical school tuition. The financial planning aspects of the family’s life went unaddressed. Educational funding needs for Cee and Douglas prompted another frank dialogue with their CMP. Their prioritized concerns at this point were as follows:
1. Reallocation of the investment portfolio
2. Educational funding for both children
3. Tax reduction strategies
4. Medical partnership buy-in concerns
5. Maximization of their investment portfolio
6. Review of risk management needs and long-term care insurance
7. Retirement considerations
The following suggestions were made:
1. Grow the $392,220 nest egg indefinitely.
2. Project future educational needs with current investment vehicles.
3. Maximize qualified retirement plans with tax efficient investments.
4. Update wills to include bypass marital trust creation, and complete proper testamentary planning, including guardians for Cee and Douglas.
5. Retain a professional medical practice valuation firm for the practice buy-in.
Sample Mega Plan for a Mature Physician
At age 55, Dr. Joseph B. Good was a board-certified and practicing internist and partner of his group. Susan, age 55, was the office manager for Dr. Good’s practice, allowing her to provide professional accounting services to her husband’s office and thereby maximizing benefits to the couple from the practice. Daughter Cee was 24 years old, and her brother Douglas was 22 years old. The preceding suggestions had been implemented. They upgraded their home and modest lifestyle within the confines of their current earnings. They did not invade their grandfather’s original inheritance, which grew to $1,834,045. Reallocation was needed. The other financial planning aspects of their lives had gone unaddressed. Retirement and estate planning issues prompted another revisit with their original CMP’s junior partner.
Their prioritized concerns at this point were as follows:
1. Long-term care issues
2. Retirement implementation
3. Estate planning
4. Business continuity concerns
The following suggestions were made:
1. Analyze the cost and benefits of long-term case insurance, funded with current income until retirement.
2. Reallocate portfolio assets and plan for estate tax reduction, with offspring and charitable planning consideration..
3. Retain a professional practice management firm for practice sale, with proceeds to maintain current lifestyle until age 70.
If you want the opportunity to reach a personalized weekly audience of health care industry insiders, innovators and watchers, the Medical Executive-Post and its educational forums may be right for you?
Advertise with us:
http://healthcarefinancials.wordpress.com/2007/11/11/advertise/
Ann Miller; RN, MHA
[Executive Director]
Medical Executive-Post
