Important Financial Contacts for Specialized Professionals
If you are a doctor, lawyer, dentist, or other high earning professional that might have their own business one day, listen up! Hi, earning and highly specialized professionals like the ones mentioned above spend years surrounding themselves with the knowledge and people they need to easily earn over $200,000 a year before they turn 35 while also having the opportunity to earn much more with some years of experience. Today, we're going to jump into some reasons why these types of professionals very often benefit from working with financial professionals as well as what those financial professionals bring to the table. Let's jump in!
Why Doctors, Dentists, Lawyers, and the like?
In my years of knowing and working with these types of professionals, they tend to have these things in common:
Flexible Earning Potential - these specialized professionals can make a lot of money doing what they do, which is to be expected. What you might not expect is the way that they do it. It is common for doctors to only work 4 and 1/2 days a week when they start out and some specialties like surgery can even condense their schedules down to 2 days if they want to while maintaining very high earnings. By either working more hours (but still not that many compared to public accounting or investment banking) or specializing very deeply and making their own schedule, these professionals can earn themselves more money if they want while still having a floor that is multiple times the median salary in America. This flexibility gives these professionals choice and agency to dictate how much money they're going to make.
Business Ownership Potential - The titles I mentioned above are more likely to be in a position to start their own practice, which means they are more likely to become a business owner. From what I've heard, medical school tends to focus more on medicine than business and as a result these people that have an incredible opportunity to go out on their own don’t have the training to run the business themselves from the financial perspective.
Enough Income to Fund a Comfortable Lifestyle - as noted above, these professionals make a lot of money. However, the path they took to be able to make that money puts them in a unique position relative to the rest of us. Most of these people have taken on lots of student loan debt and have sacrificed some or all of their twenties to study and spend more time in school without a significant income. Once they are finally done with their required education, they get thrown into their profession knowing a lot about their specialization but not a lot about making or saving money, while simultaneously making a truckload of money. For many of these professionals, this means that they can skip having a detailed budget for things like groceries and going out to eat as long as they don't go too crazy. The unique combination of the level of earnings these professionals have and the timeline it took them to get there creates a scenario where they skip over learning personal finances in the same way that their friends from high school did in their mid-twenties. The best example I can give here is that I have met 50-year-old doctors worth millions of dollars that did not know what a high-yield savings account was, because they never had to!
Who are these financial contacts and what do they do?
A CPA - I might be biased in saying this, but a CPA can help these high-earning professionals with a lot of their problems. Personally, I have used my knowledge of taxes, personal finance, fundamentals, and business acumen that I possess as a CPA to support many of these professionals to great success. As mentioned above, these specialized professionals do not have the same level of education or experience when it comes to the financial side as I do, and my goal is to share my knowledge with them so they can continue to focus on doing what they've spent decades learning how to do.
A Banker - after a good CPA, these professionals should consider developing good banking relationships within their community. When it comes to opening up A medical or legal practice, a banker is going to know what a healthy practice looks like and will offer a great perspective on how to grow or properly staff these specialized businesses. A banker that specializes in serving medical or legal practices will have experience with the common but complex issues that these professionals face, such as:
Partnership buy-ins and buyouts
Financing for specialized medical equipment
Acquisitions and sales of practices
A Good Financial Planner - this one is last on the list because it applies mostly to those who are actively planning their retirement. It's important to understand that a good financial planner is not the kind that only tries to sell you different types of life insurance that they earn a commission on. A good financial planner will work with you to understand both your income until retirement and the lifestyle you want to have in retirement. Financial planners are used to working with people who are worth multiple millions of dollars and want to keep it that way through proper diversification and sound investing strategies relative to their age.
For high earning specialized professionals like the ones I've talked about today, engaging these financial professionals is incredibly important because they are able to make a huge impact when more money is at stake. I've heard stories about doctors that have a million dollars in the bank and we're able to make an additional $50,000 a year because their accountant introduced them to treasury bonds in a 20-minute conversation. Doctors, dentists, Lawyers, and similar professionals spend years of their lives learning their craft so they can start earning lots of money. CPAs, bankers, and financial planners spent years of their lives learning about money and business to help them. If you are a specialized high-earning professional like the ones I shared above, it's probably a good idea to start networking to meet these incredibly important people in your life.