Thomas Dickson reveals the key areas where having specialist financial advice can save time and add value.
We are living through turbulent times – a cost of living crisis, compounded by soaring gas and oil prices, inflation, disruption in trade caused by Brexit, thousands of dentists leaving the NHS, and low morale in the profession.
In twenty years of working with dentists, the strain on many of the dentists I speak to is palpable. There is therefore no better time for dentists to be supported by financial professionals who specialise in working with dentists and can add value to their finances and quality of life.
As practice owner and Orthodontist Neha Passan points out: ‘I’m a specialist orthodontist so I understand the importance of specialism. Dental practices are run so differently to normal businesses. There’s a unique model of self-employed associates; NHS contracts; high upfront equipment expenditure – you need someone who really understands all that to be giving you financial advice.’
In the years we’ve been helping dentists with their finances, there are some key themes that keep cropping up:
- Dentists and particularly practice owners tend to work extremely long hours which can lead to burnout
- Long clinical hours, mean that many dentists are time poor. As a result, they often don’t have the headspace for organising personal finances
- Dentists’ finances are often complicated and it can be difficult to navigate the various issues specific to the profession. That’s because of the mixture of private and NHS dentistry creating different income streams; the complexity of the NHS pension scheme; and for example, the small print in insurance contracts which specifically affects dentists.
Who can help? Getting specialist advice
It therefore seems logical to seek out a specialist financial adviser who understands the dental profession and all the financial challenges that need to be worked through.
On top of that, your adviser is likely to add more value if they understand things like the many different career path options open to dentists; the intricate workings of a dental practice; practice loan options; and some of the terminology and jargon associated with dentistry, for example the difference between a UDA and a UOA – this kind of in-depth knowledge is going to save you a lot of time in the long run.
With a demanding career as on orthodontist and practice owner, Neha Passan says she doesn’t have the time required to get her head around the financial side of things:
‘I don’t think it’s possible for someone who isn’t a dental specialist to have helped us and been that guiding person that we’ve needed. Things like refinancing mortgages, loans, income protection, insurances – these can be a real minefield. You certainly don’t want too much cover, but you certainly want enough. As specialists, Wealthwide have been able to tie in my NHS pension benefits with my personal protection plans.’
Here are some key areas where having specialist financial advice can save time and add value:
1. Lifestyle financial planning
It’s only when you see and understand the full extent of your financial picture that you can start to make important and sometimes life changing decisions, like whether to reduce your working hours, with the peace of mind that you’re not going to run out of money.
Sukhi Atthi is a tier 2 oral surgeon in Birmingham. He has recently sold his practice and significantly shortened his working week: ‘I used to work 7am till 11pm, but through financial planning I was able to see that I didn’t need to work all those hours; that we would be okay financially if I reduced my hours. It made me realise that I could make life more fun again; take more holidays; spend more time with my wife and children.’
Your can find out more about financial planning for dentists here.
Before any adviser invests your hard-earned cash, they should be talking to you about what you actually want to get out of life and helping you achieve that. If your adviser is focused on investing all your savings with the promise of being able to predict/second guess the market, then I would suggest you take a second opinion. Often the fees charged by this kind of wealth manager or adviser are vastly inflated and don’t reflect good value.
I’ll never forget one of my first clients who had dreamed of spending his retirement playing golf. By the time I met him, his physical health had faltered to the extent that he was unlikely to ever play a full 18 holes again. Getting value from your investments isn’t just about the financial return, it’s about setting them up. This is so that you can adequately fund the life you choose to live now – not at some point in the future.
3. The NHS pension
This is an excellent scheme for most dentists, but it’s complicated and sometimes the detail can feel overwhelming. Having specialist knowledge of the scheme can help you decide when to start taking your pension; what the difference in your income would be if you take it five years earlier or later; how to tie in your NHS pension benefits with your personal protection plans, and whether the dependents benefits are sufficient or if you need to top these up; how much (if any) pension you should convert to a tax free lump sum; and if you need help to minimise the effect on your individual tax liability if you’re in danger of breaching the life time or annual allowance pension limits.
To understand how you’re affected by the recent McCoud judgement – you can read more here https://www.wealthwide.co.uk/blog/mccloudjudgement
4. Insurance/income protection
Most self-employed dentists want to know they’re covered if an accident or illness stops them working. In our experience, there isn’t a perfect off-the-shelf solution for all dentists. So we tend to dovetail policies from different insurers to arrive at the most comprehensive and cost-efficient solution.
With insurance, the devil is in the detail. As a dentist, you need to make sure that your insurance has been set up correctly. Crucially you need to make sure that you have ‘own occupation’ on your income protection or critical illness plans. Without this, an insurer could reject a potential claim. Although you certainly want enough insurance to cover you for any unforeseen events, you don’t want to pay for too much insurance either.
5. A good relationship
Equally important as receiving sound accurate advice from a specialist financial planner, is the ability to have an honest and open conversation with them about what you want to achieve in your work and life. We find that we’re able to add the most value to clients who think deeply about where they would like to be now and in 10, 20 or 30 years. Our meetings often touch on really personal aspects of life.
I’d highly recommend finding an adviser where you have relationship where you can explore and expand upon your hopes, dreams and fears for the future. Over the years, I’ve been privileged and proud to help clients through various stages of the lives and careers. Former practice owner, Jo Wirdnam explains how having a good relationship with an adviser who has your best interests at heart can be ‘life changing’. Click here to watch her interview.
Please be aware of the following investment risks
- The value of your investment can go down as well as up. You may not get back the full amount invested
- When investing your capital is at risk
- Levels and bases of, and reliefs from taxation are subject to individual circumstances and may be subject to change
- The Financial Conduct Authority does not regulate taxation and trust advice.