Bridging the Financial Gap for Dentists by Larry Mathis

Author:Larry Mathis
Language: eng
Format: epub
Published: 2019-03-29T00:00:00+00:00

What is Financial Planning?

Before we go any further, I think it's important for me to define financial planning. Financial planning is a term that is misused in my industry. Unfortunately the majority of people who call themselves financial planners are not truly planners at all. They are financial sales people. They are selling financial products, either some sort of insurance-based product like life or disability insurance, or some type of investment product such as stocks, bonds, or mutual funds, for the purpose of filling a need. In many cases they are sold with a tax-favored system involved. However, in most cases these products are sold without much regard for how they integrate with one another in a comprehensive financial plan.

So what is a comprehensive financial plan? Here's my definition: a comprehensive financial plan is a systematic approach toward integrating all aspects of a person's financial life for the purpose of improving their financial well-being both today and in the future. It includes planning for the accumulation, use and distribution of wealth. Developing a comprehensive financial plan includes a holistic approach to determining your core values and establishing written goals that are compatible with those values.

The planning process includes an assessment of all aspects of your current financial situation, including a detailed assessment of ALL assets and liabilities and a detailed analysis of your personal cash flow. A financial plan includes a written implementation plan designed to maximize the likelihood of achieving your prioritized financial goals. A comprehensive plan will include a review, an analysis, and a systematic implementation process that will coordinate all financial areas of your life. At minimum the financial topics listed below will be included when designing a written plan:

1. Personal cash management

2. Debt management, debt reduction & debt elimination

3. Insurance: Life, health, disability, property & casualty (auto, home, etc.), mal-practice, business, long-term care, umbrella coverage, etc.

4. Employee benefit plans

5. Income taxes

6. Business structure, i.e. sole proprietor, C Corp, S Corp, LLC

7. Asset accumulation

a. Short-term savings

b. Retirement planning

c. Educational funding

8. Investment analysis

9. Estate planning considerations

a. Estate distribution (gifting, wills, trusts, etc,)

b. Estate taxes

c. Other legal documents: general and medical powers of attorney, etc.

There are many objectives in comprehensive financial planning. Here are a few:

1. Identifying those things that are most important to you.

2. Establishing and prioritizing financial goals.

3. Determining what can be done now to improve your immediate financial situation, i.e. personal cash flow, reducing debt, reducing taxes, eliminating unnecessary expenses.

4. Minimizing costly mistakes, i.e. avoid purchasing costly insurance and/or investment vehicles that are not maximizing your chances of meeting your goals.

5. Developing the best strategies of accumulating wealth, using wealth assets during your life, and ultimately the distribution of wealth at death.

So let's get started!

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