Accept Referrals To Specialists

Posted by & filed under Business, Business Owners, Doctors, Healthcare.

So, you’ve learned that the only real way to build and maintain wealth is by leveraging effort, assets, and people. You’ve learned that leveraging people is the most powerful method of Leverage and that leveraging advisors is the most powerful way to Leverage people. It wouldn’t be a stretch to say that once you figure out how to use Leverage to achieve even a modest level of wealth, learning how to Leverage advisors is the single most important thing you can do if you want to save time and money and get the most out of your medical career.

To help you better understand this lesson, you need only look at the practice of medicine. A primary care physician is generally the first line of contact for a patient. Though the Doctor has a very wide range of general knowledge, he or she will have to refer patients to a number of specialists. In some instances, the Doctor may request the help of radiologists to review tests. In other instances, there may be a referral to surgeons who will undoubtedly need to work with anesthesiologists. The Doctor will encounter cases in which patients will need referrals to obstetricians, gynecologists, urologists, cardiologists, orthopedists, oncologists, and other specialists. The situation with respect to your finances is very similar.

In this Article—Accept Referrals to Specialists—we will examine the types of advisors who can help you Leverage your time and money, review the benefits and limitations of each specialist, point out some common pitfalls, and ultimately recommend how to assemble the right team of advisors.

The Value of Financial Specialists
The best way to maximize your benefit from leveraging people is to work with experts in many financial and legal fields. As you learned in Lesson #2, you have very different needs than Average Americans do. As a result, the right specialists for most people are not likely to be the right advisors to help you.
As you become more successful, you need advisors even more. Adding employees, making additional investments, purchasing equipment and real estate, and creating new businesses add complexity to your plan. This increased Leverage exponentially increases the complexity of your comprehensive financial plan. This complexity necessitates the need for a team of advisors. Without a very strong team, you will struggle to find the time to focus on the important things that make you money, let alone enjoy any free time. To illustrate the value of advisors, refer to the equation below:

  • Wealth can only be achieved through Leverage
  • Leverage can only be managed with a team of Advisors
  • Wealth can only be achieved with a team of advisors managing the Leverage

 

In this section, we will discuss the reason why Doctors need a team of knowledgeable advisors with diverse areas of expertise. Then we will discuss how to maximize the value of your advisors and suggest tips for working with your team.

Managing Complexity: The Need For Advisors
Most people realize that wealth creates complexity. What Doctors need to realize is that the management of complexity and Leverage is not the job of a traffic cop. As wealth grows, the number of complicated, technical risks that the Doctor faces also grows exponentially.

As an example, the transition from running a sole proprietorship to having a single employee may not seem to be major, but that couldn’t be further from the truth. The addition of just one employee creates a need for:
· Payroll creation, funding, and paymentsPen on Notebook
· Regular payroll tax payments (or you can go to jail)
· Withholding tax filings and payments
· Workers compensation insurance or fund payments
· Occupation Safety Hazard Association (OSHA) compliance
· Separate retirement plan (ERISA) regulations and contribution requirements
· A host of other state and federal reporting requirements.

 

In addition to all of the aforementioned specific issues, the Leverage of assets also increases the need for more general categories of planning, like asset protection, banking (private and commercial), business planning, financial planning, healthcare law, HIPAA, Medicare, income tax management, investing, life insurance analysis, disability insurance analysis, property and casualty insurance analysis, long-term care insurance analysis, educational funding, retirement planning, family law, gift and estate tax planning, charitable planning, Medicaid planning, and a host of other areas.
Each category of planning has its own technical areas that can be competently handled by an advisor who has expertise in that area. Although it is common to find an advisor who has expertise in several areas, there are categories in which the input of two advisors may be necessary. For example, tax issues are typically handled by a both a tax attorney and a CPA. As a result, there is no way that a small team of two or three advisors could possibly handle the needs of a Doctor. This means that a Doctor may need to Leverage the services of six or more advisors over their career.
While the concept of such a large team may seem overwhelming, consider your profession of medicine. Adult patients do not continue to see the obstetrician who delivered them or the pediatrician who treated them in childhood. Patients need to see a number of specialists as they mature and as their needs change, often consulting with a number of Doctors at once.
If you are like your patients, you may want to be able to keep the same financial “primary care” advisors for as long as possible. Having someone you know and trust as your primary contact is very comforting. This “primary advisor” can help explain situations to you, find the right specialists if a need for one arises, and help communicate with you as complicated procedures take place. Keep this in mind. In Lesson #10, there will be discussion of your team of advisors. One of your advisors on this team is going to be the primary contact to help you through it all.

Working With Your Team
Having the right team of advisors is another step in More

The Mixed Blessing of Property and Casualty Insurance

Posted by & filed under Business Owners, Doctors, Insurance.

Property and Casualty Insurance

The Mixed Blessing of Property and Casualty Insurance
As principals of a financial firm that provides all types of financial planning, business consulting, insurance analysis and product implementation, a number of the authors of this book, including the attorney co-authors, are very familiar with the benefits of insurance.
We all see Property and Casualty (P&C) insurance as an important part of any asset protection plan—both for the practice and personal assets. In this chapter, we will define P&C insurance coverage and discuss its uses and limitations in the context of asset protection planning.
What Is P&C Insurance?
There are two “categories” of insurance: Life and Health (L&H) and Property and Casualty (P&C). L&H insurance includes all life insurance and health insurance, as well as disability insurance and long term care insurance. P&C insurance is designed to protect against property and casualty losses. Often, P&C insurance is referred to as “property and liability” insurance because it protects people from all types of liabilities. Examples of P&C coverage include: auto-mobile, homeowners and renters, umbrella liability, professional liability, medical malpractice, general liability, flood, earthquake, premises liability, errors and omissions, products liability, and others.
P&C insurance is designed to “indemnify” the insured. The insurance industry’s definition of “indemnify” is to “make whole” or to restore the status quo. In other words, if you suffer a loss and have P&C coverage, you will be “put back” into the same financial place you were before the loss (minus any applicable deductibles or co-payments). As such, P&C coverage will cover your legal bills and other loss adjustment expenses, as well as the actual loss. These other expenses may include the costs of adjusters, estimates, expert testimony, or other associated costs.
P&C insurance coverage is very important given today’s litigious society and the “American Rule” of legal fees. As mentioned before, there is no out of pocket cost (or deterrent) to the plaintiff under this system, yet the defendant is responsible for the actual loss and associated fees. Therefore, if you didn’t have P&C insurance but still won your case, you still might have tens—if not hundreds—of thousands of dollars in legal fees and related expenses. As such, it is usually worth buying insurance to avoid these costs and the inconvenience and aggravation, let alone the potential judgment or loss.

 

A photo by Vadim Sherbakov. unsplash.com/photos/Hi9GSwWkCJkBest Uses Of P&C Insurance
As we mentioned above, there are various types of P&C insurances. The most common P&C insurances are homeowners (or renters) and automobile insurance. Average Americans generally have these forms of coverage because they have a mortgage on their home or because they have a loan or a lease on a car. Yet, in a way, one does not own the home or car yet—the bank or credit department does. As such, they require collateral. Buyers must insure the asset while they are paying for it. Once the debt on a home or car is paid off, there is no bank or finance company requiring insurance protection. Of course, we would never recommend completely dropping all insurance on the home. The odds are very slim that they will suffer a house fire or burglary, but the costs of insurance are very small relative to what clients could lose.
Another common type of P&C insurance is the umbrella liability policy. For a very reason-able premium, you can get an additional one to five million dollars of excess liability insurance on top of the liability protection you may have from your homeowners or auto policies. You should seriously consider an umbrella policy.
Other popular P&C coverage includes professional liability insurance and premises and products liability insurance. As a physician, medical malpractice insurance, premises liability insurance, and other overhead insurances are wise options, if not requirements.
Four Limitations Of P&C Insurance

While some P&C insurance always makes sense as part of the asset planning for every Doctor, there are limitations to this tool. That is why we typically recommend using the other asset protection tools we describe in this Lesson, in addition to any insurance. Let’s examine these limitations individually.

 

1. Policy Exclusions
Often we find that clients are completely unaware of the “fine print” P&C exclusions and policy limitations. Of course, they often become aware of such exclusions after it is too late. For example, many clients fail to realize that their “umbrella” policy only applies if certain underlying insurance coverage amounts are in effect. If your liability limits on your homeowner’s policy or auto policy are too low, then you’ll have to pay out of pocket before the umbrella coverage is in effect.

 

Case Study: Andy’s Daughter’s Car Accident
Andy was sued for more than $150,000 when his teenage daughter was involved in a car accident while using his car. Andy was certain that his insurance policy covered his daughter. Only then did his insurance agent tell Andy that the policy no longer covered his daughter, since she had recently moved out of the house. There was an exclusion from coverage for child drivers if they did not reside in the same residence as the parents. Now, Andy alone faced a lawsuit which cost him over $150,000.

 

The lesson to be learned from Andy’s story is simple: Know your policy and the limitations contained therein!

 

2. Inadequate policy limits
Even if your insurance policy does cover you on a particular lawsuit, the policy coverage may be well below what a jury will award. You must pay any excess above the coverage out of your own pocket. If you were hit by a large judgment, would your policy cover you completely?

 

3. Insurance forces you to lose control of the defense
Even if your insurance policy covers against a specific claim, you must consider the consequences of filing a claim. You have lost negotiating power because your insurance company will dictate when the case is settled and how much the case settlement will be. While this may not matter with a personal injury car accident lawsuit, a case against you More