Physicians dedicate their lives to caring for others, often at the cost of long hours and the everpresent burden of navigating an emotionally and intellectually demanding profession.
While the later stages of your career might come with significant financial rewards, those benefits might also carry considerable challenges that warrant careful consideration. That’s where proactive wealth management for physicians is so important.
Let’s be clear from the outset: in this author’s view, wealth management shouldn’t just be about mindlessly accumulating wealth, but about aligning your finances with your personal goals and values, whatever those may be — especially considering your commitment to “do no harm” and to safeguard, heal and restore human life wherever and however you can.
There are plenty of wealth management options out there, but if you were to create a personalized financial plan with Iron Point Financial, we would advise you to start with what matters most to you as an anchor for what comes next — whether that’s prioritizing your family’s future, using your resources to impact your community, or mapping out a meaningful retirement.
In the rest of this article, we’ll dive into four critical areas of wealth management for physicians: (1) debt management, (2) investment management, (3) tax planning, and (4) family wealth planning. We’ll also discuss how fiduciary financial planners, like those at Iron Point Financial, can help tailor a financial strategy that reflects your unique values and aspirations.
The Snare of Unbridled Wealth Accumulation
What good would it do to get everything you want and lose you, the real you? What could you ever trade your soul for?
Before we jump into the main areas of wealth management for physicians, please allow us to get a little philosophical — or, perhaps we should say, psychological.
The paraphrased quote we have highlighted above was first recorded 2,000 years ago, but we believe there’s still something we can learn from it today… and that something is focused on the word, ‘soul.’
Now, before you start thinking about disembodied experiences in the clouds, immortality, or other distracting pseudo-Platonic concepts, let’s pause. The Greek word for ‘soul’ is psuche, from which we get the English words ‘psyche’ and ‘psychology.’
That link is important because it tells us that the primary meaning of the word ‘soul’ has to do with a person’s mind, will, and emotions — in other words, an individual’s personality, the sum total of their being.
So if we feed that definition of ‘soul’ back into the quote above, we get the idea that endless, unbridled wealth accumulation (getting everything you want) can ironically result in the loss of what makes you truly you.
Another way of framing that is to say: when you get obsessed with gaining more and more, you end up being possessed by the things you think you want, at the cost of what really matters.
What’s the antidote to that kind of worldview? Well, we would suggest that the best place to start is to work out what exactly makes you uniquely you, so you know what it is you’re trying to safeguard — what constituent parts make up your personality and the story you want to express through your life.
Practically speaking, that means clarifying what your values are in tangible language, and starting to think about what purpose means to you, especially in the context of your immediate and wider community. You can start to tap into your unique life purpose by asking yourself questions like:
- What gets me up in the morning? (Or ‘What do I feel most excited about?’)
- On what occasions have I felt most alive? What common threads tied those experiences together, if any?
- What keeps me up at night? (Or ‘What do I feel most anxious about?’)
- What issues in society bother me the most? What have I done about them in my own life?
- What would I do with my life if I had unlimited resources?
You might not crack the purpose code after five questions and a single blog post subsection, but this kind of introspection could start you along the right track. And once you start down that track, you have something to live for other than pure wealth accumulation (by which, remember, you are likely to lose yourself).
Instead, whatever assets fall under your net worth in the future can become tools for expressing your values and purpose; which is what we would call financial stewardship, and which happens to be one of our core values as an organization. Goodbye meaningless ‘zeroes’, hello lifelong impact and legacy.
With that framework in mind, we are ready to tackle wealth management for physicians…
1. Debt Management: Conquering Medical School Loans
It could feel pretty hard to stay purposeful and values-driven when you are weighed down by ultra-high levels of medical school debt — one of the most significant, unique financial hurdles physicians are likely to face.
Managing, and eventually overcoming that debt, is as important a task as any on your financial journey, especially when you consider that, per the AMA, the average medical school graduate carries more than $200,000 in student loans.
While your high earning potential offers a theoretically straightforward path to debt freedom in the long term, there are a few ways you could think about this problem and its solution a little differently.
Align Debt Management with Your Goals
The first way to approach this particular financial obstacle is to ask: how quickly do I really need to have these loans paid off? Depending on your goals, which you can set in accordance with your values, the answer may look a little different:
- Short-Term Goals: If your priority is to build an emergency fund or to invest in your practice or career development, you may choose a repayment strategy that prioritizes consistent, accessible cash flow over rapid debt reduction.
- Long-Term Goals: If eliminating debt quickly aligns with a desire for financial freedom, you might consider a more aggressive repayment plan to reduce your interest payments over time.
Either way, the key here is intentionality: starting with the end in mind to achieve the outcome you desire.
Debt Management Strategies for Physicians
Once you’ve answered the short-term/long-term question, there are a few practical approaches you could take:
- Income-Driven Repayment Plans: These plans tie your monthly payments to your income, which could make them more manageable during your residency or fellowship. This kind of plan could also qualify under the Public Service Loan Forgiveness program, provided you complete a minimum commitment in a nonprofit or public service role.
- Refinancing: Physicians with a stable income and good credit could benefit from refinancing their student loans to lower their interest rates, potentially saving thousands over the life of the loan (Take that, Sallie Mae!).
- Hybrid Strategies: Combining an income-driven repayment plan during your residency, and refinancing once your income stabilizes, could strike a healthy balance between affordability and debt reduction.
If you need a little help thinking through these options further, or if you are looking for general help getting your overall financial health in order, including debt management, a fiduciary financial planner like those at Iron Point Financial could help.
At Iron Point Financial, we can tailor debt repayment plans that complement your unique circumstances, to help ensure that you are not just paying down debt but doing so in a way that aligns with your goals, values, and sense of purpose.
2. Investment Management: Building Wealth with Purpose
As a physician in North America, your earning potential places you in a unique position to build substantial wealth over the course of your career — wealth that can be allocated and applied in alignment with your values.
Those values are especially important when you consider that, according to one 2023 survey, the average physician income was $363,000. Income of that size requires careful, wise management, which we would suggest might also include investment management (setting aside a proportion of your income to build a diversified investment portfolio).
Careers don’t last forever, and salaries are a one-track source of income, which is why we speak of investment management as a cornerstone of wealth management for physicians; it can help you grow the value of your assets in a way that aligns with what you care most about in life, long after you stop practicing medicine.
Align Investment Management with Your Values
Your investment strategy is an ideal space to express what matters most to you. For example:
- If sustainability and social impact are important investment markers for you, you might prioritize Environmental, Social, and Governance (ESG) investing.
- If building a legacy for your family is a high priority, you might focus on growth-oriented investments into your children’s and grandchildren’s education, perhaps through 529 funds or trust vehicles that specify the purpose of the funds you are leaving for future generations (including restrictions on their use).
Basic Investment Strategies for Physicians
- Diversification: Spreading your investments across asset classes (e.g., stocks, bonds, and real estate) can reduce risk and help to facilitate stability during market fluctuations.
- Tax-Efficient Investments: Maxing out tax-advantaged accounts like IRAs or Health Savings Accounts (HSAs), can help minimize your tax liability while building long-term wealth.
- Risk Management: After overcoming the proverbial ‘debt mountain’ and heading towards your peak earning years, you may want to work with a fiduciary financial planner who can help design a portfolio that aligns with both your risk tolerance (by building in protection from market shocks) and big-picture financial goals.
At Iron Point Financial, we understand that your investment decisions are likely to be as unique as you are. We can work with you to curate a portfolio that not only builds and manages the wealth entrusted to you, but also reflects the impact you hope to make in the world.
3. Tax Planning: Optimizing Your After-Tax Income Slice
Tax planning is the third component of wealth management for physicians we are going to touch on today. Why include it? Well, given that physicians and medical specialists earn some of the highest incomes in the country, it shouldn’t come as much of a surprise that physicians are likely to pay much higher taxes than the average person — which is why proactive tax planning becomes so important.
Align Tax Planning with Your Goals
It could be helpful for your tax strategy to adhere to your overarching financial goals, such that you holistically maximize the application and impact of your personal values, in accordance with other elements of your financial plan. For instance:
- If Family Provision is Key: You could aim to maximize deductions and credits so as to free up cash flow for family expenses like special meals out or exciting vacations (in other words, memory-making experiences of shared quality time);
- If a Meaningful Retirement is Your Focus: You could take full advantage of tax-deferred accounts such as 401(k)s, IRAs, or HSAs to reduce your taxable income now while saving for future plans.
- If Impacting Your Community is a Priority: Sizable charitable contributions, e.g. through Donor-advised funds (DAFs), combined with other tax strategies, could provide tax benefits while directly supporting causes you care about. And who knows: perhaps one of your retirement goals could even be to sit on the board of one of those NGOs?
These are simplified examples but we hope they provide a rough start for thinking about tax planning within the bigger-picture context of wealth management for physicians, of the kind we have been focusing on today.
If this kind of tax planning — aligning your tax strategies and plan with your whole life values — is something you are interested in, you could speak to your tax advisor and ask him or her to formulate a plan that suits your needs.
It’s also worth mentioning that at Iron Point Financial, we take a proactive approach to tax planning, and can help you navigate complex tax structures while aligning tax strategies with your goals. Our fiduciary advisors ensure that every tax decision reflects your broader financial objectives, in tandem with your tax advisor.
4. Family Wealth Planning: Leaving a Legacy
For many specialists in the medical profession, a conversation on wealth management for physicians would not be complete without family wealth planning: helping to ensure that your family is financially healthy after you retire or pass away. Family wealth planning is about coming up with strategies to help protect your assets, support your loved ones, and leave a meaningful legacy.
Align Family Wealth Planning with Your Values
Ideally, your family wealth plan should reflect both your personal values and long-term goals as they concern your family and wider community (the ‘friends you call family’):
- If education is an important value for you, you could consider establishing college savings plans for your children, grandchildren, or other younger members of the community with a soft spot in your heart.
- If family unity is a priority, you could start drafting and communicating a clear estate plan (or, as we call them, legacy plans), to promote family harmony, sidestep disputes, and ensure your wishes are carried out.
- If compassion is something you have thought a lot about, you could incorporate a comprehensive charitable giving strategy as part of your legacy planning.
Key Family Wealth Planning Strategies
At Iron Point Financial, we view family wealth planning as an opportunity to clarify your lifelong values and build for a lasting legacy in the present day. Our fiduciary advisors take the time to sit down with clients interested in family wealth planning so they can understand your family’s unique interpersonal dynamics and goals, and then craft a wide-ranging plan that touches on each of the following:
- Legacy Planning: Drafting wills, trusts, and other legal documents to help ensure that your assets are distributed according to your wishes, in a way that creates clarity for those you love.
- Life Insurance: Protecting your family’s financial future by securing adequate term life insurance coverage to replace your income or settle debts in case you pass away under unexpected circumstances.
- College Savings Plans: Opening 529 plans or other tax-efficient investment vehicles to fund your children’s education while benefiting from the associated tax advantages.
- Charitable Giving: Establish charitable trusts or donor-advised funds to leave a lasting impact on causes you care about.
Partnering with Iron Point Financial
Managing wealth as a physician is about more than achieving financial stability after overcoming debt; it’s about crafting a life that reflects your values and supports your goals. Whether you’re paying down debt, growing your investments, optimizing your taxes, or safeguarding your family’s future, there’s always a way to make sure that your decisions align with what matters most to you.
At Iron Point Financial, we specialize in wealth management for physicians, offering tailored financial strategies designed to mirror your unique circumstances. As fiduciaries with CFP® credentials, we will always put your interests first by providing personalized guidance that can help you build a healthy, values-driven financial future.
If that sounds like something you would be interested in, why not reach out to schedule an appointment at a time that works for you?
And if you enjoyed this introductory article on values-based wealth management for physicians, why not sign up for regular email updates from this blog, so you don’t miss future posts?
Iron Point Financial is here to empower you to secure a brighter tomorrow. We operate physical offices in Grove City, PA and Greenville, PA.
We primarily serve residents of Pennsylvania, Ohio, West Virginia and Florida but we also have registered broker licenses for 22 other states across the continental USA.
