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 CFP 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 CFP.

Their prioritized concerns at this point were as follows: 1. 2. 3. 4. 5. 6. 7. Reallocation of the investment portfolio Educational funding for both children Tax reduction strategies Medical partnership buy-in concerns Maximization of their investment portfolio Review of risk management needs and long-term care insurance Retirement considerations

The following suggestions were made: 1. 2. 3. 4. Grow the $392,220 nest egg indefinitely. Project future educational needs with current investment vehicles. Maximize qualified retirement plans with tax efficient investments. 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 revisitation with their original CFP's junior partner. Their prioritized concerns at this point were as follows: 1. 2. 3. 4. Long-term care issues Retirement implementation Estate planning 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.