The Specialists Doctors Need

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Specialists Doctors need

Choosing Advisors

Before you can choose your advisors, delegate responsibilities to team members or begin to benefit from the Leverage of advisors, you need to understand the types of advisors you need. In this chapter, we provide a list that covers the team members that 90% of situations require. Some advisors, like mortgage brokers, are not discussed because they typically play a transactional role at different points in the client’s lifetime. The other advisors may review mortgages, but the mortgage broker typically is looking for the lowest price and isn’t changing loan offers based on the other pieces of the comprehensive financial plan. In addition, unique circumstances may call for some teams to require additional advisors with very unique skills.

Below is the list of the most common advisors:
Choosing Advisors· Asset Protection Attorneys
· Accountants
· Estate Planning Attorneys
· Tax Attorneys
· Insurance Professionals
· Investment Advisors
· Financial Planners

Accountants
The term accountant will be used to generically describe an accountant, Certified Public Accountant (CPA), or Enrolled Agent (EA).
What They Do: Accountants (and CPAs and EAs) are trained and licensed to prepare tax returns for submission to the Internal Revenue Service. Each state has its own licensing and accreditation procedures for accountants and CPAs. California is no exception. The CPA has a multi-part exam that is required to earn the CPA accreditation. Enrolled Agents complete a federal licensing process. In all situations, these advisors primarily prepare tax returns. In the most desirable client-advisor relationship, the accountants also provide clients with advice on tax matters.

Limitations of an Accountant:
1. The U.S. tax law is potentially the most complex set of rules created by human-kind, and significant changes are made to these rules every year. Therefore, it is impossible for any accountant to be well versed in all areas of tax policy. More likely, the accountant may only know one or two areas (of 20 or more potential areas) intimately. Tax planning is like medicine—each area has become so complex that one can’t possibly expect to become an expert in many disciplines. In the medical arena, most patients and physicians realize that one Doctor can’t do everything. They both readily accept being referred to, or referring patients to, other physicians. A gastroenterologist would no sooner make diagnoses for skin conditions than a dermatologist would try and diagnose and treat an intestinal issue. Unfortunately, this is what happens all the time in the tax arena.
2. Some accountants are comfortable acknowledging what they know and don’t know. Some accountants feel responsible for answering all tax questions and resist referring clients to other accountants for specific needs for fear of losing the client altogether. This is more of a limitation of an individual than it is a limitation of the profession as a whole, but it should be recognized.
3. Conflicts of interest may arise. Many accountants are beginning to look for additional revenue opportunities by getting licensed in life insurance and securities. They will then recommend their clients particular investment and insurance products. This can create significant conflicts of interest with clients who are looking for tax advice, but who are getting financial suggestions. Clients should be concerned how accountants who deal with very complex tax issues find time to become experts in insurance and investments. In revisiting our Doctor analogy—how could a practicing dermatologist find the time to learn oncology on the side and offer high-quality consultation to the dermatology clients who develop cancer? Savvy patients would prefer a full-time oncologist in that situation. Despite the conflict and impracticality, many CPAs with years of accounting experience are now trying to increase revenue by advising clients on investments and insurance, despite having little or no practical experience in these areas.

Asset Protection Attorneys
The term asset protection attorney describes an attorney who has a strong working knowledge of and experience in the area of creditor protection. There is no state-specific accreditation for asset protection. All attorneys must be admitted to the Bar Association in the state(s) in which they wish to practice. To see if an attorney is licensed and in good standing in California, you can go to www.calbar.org.
What They Do: Asset protection attorneys specialize in the field of asset protection. They help clients arrange their personal and business affairs in a manner that protects their wealth from potential future lawsuits and other creditor risks. Because many of the tools used in asset protection are the same tools used in estate planning and business planning, it is common for asset protection attorneys to also have a strong working knowledge in those areas as well.

Limitations of Asset Protection Attorneys:
1. Because asset protection is a relatively new field of law and most attorneys are overwhelmed in their primary fields of interest (litigation, business law, estate planning, etc.), few attorneys have found the time or had the interest to study this important field of law. As a result, there are very few attorneys who are experts in this area. Though one of the co-authors (Mr. Mandell) specializes in this area, he is one of fewer than 50 attorneys in the country whose focus is exclusively in this area.
2. Asset protection attorneys are NOT estate planning or tax attorneys—or any other type of attorney, for that matter. Do not expect that you will get estate planning or tax advice from these attorneys unless they also have specific training in these areas. However, your asset protection attorney should be willing to interact with attorneys from the other fields who will be necessary to help you complete your planning.

Estate Planning Attorneys
The term estate planning attorney describes an attorney who has a strong working knowledge of and experience in the area of trusts, probate, and estate planning. There is a state-specific accreditation for estate planning in many states. All attorneys must be admitted to the Bar Association in the state(s) they wish to practice.
What they do: Estate planning attorneys focus on helping families address the financial More

Benefits to Leveraging Advisors

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Leveraging Advisors

Leveraging Advisors
Leveraging advisors is one application of Leverage that the wealthy believe is integral to their success, yet many Doctors ignore or undervalue it. Look at any wealthy person’s inner circle and you will almost always see key business and financial advisors who are involved in most of their decisions. The advisors’ charge is to help develop a plan, analyze how every step fits (or doesn’t fit) into their plan, and help them avoid numerous pitfalls that could arise from straying from the course.
Simply put, most successful business owners recognize that it makes more sense to hire advisors to help them handle their planning than it does to try to do it themselves. Doing it them-selves is not only a bad idea because the client undoubtedly does not have the experience and expertise in all the areas needed in planning, but it also violates the principles of Leverage.
By “doing it themselves,” Doctors would be spending their time sub-optimally, instead of in the desired highest and best use of their time. In other words, does it pay for a neurosurgeon to spend three hours of his time researching a disability policy when a disability expert could do it in one hour? Also, consider that those three hours could have been spent seeing patients and making more money than the disability expert will be paid. And do you think the Doctor would enjoy this research more than he would enjoy playing golf or relaxing on the beach? Probably not.
Finally, what is the likelihood that the Doctor will make the right analysis and decision on the policy? Is he an expert? Has he looked at hundreds or thousands of policies in the past? Why would you think he would do any better job performing this task than would the disability expert in performing a neurological exam?
Despite the obvious pitfalls of fighting the principles of Leverage, some Doctors make the mistake of foregoing advisors and attempting to “do it themselves.” They are stuck in the mindset of saving a penny and losing a dollar.
This leads us to a very important statement that may seem crazy at first:
Doctors must realize that time is worth more than money.
Instead of looking for ways to save money by doing things themselves, Doctors must look for highly qualified people to handle as many tasks as possible so they can focus on the best possible use of their valuable time. Since the right advisory team has expertise that physicians don’t have, the right advisors can do the job in much less time than the physician or the wrong advisors could. Since a job done poorly will need to be repeated, doing it right the first time, even at a higher hourly rate, can actually save money in the long run. Additionally, when a Doctor can pay someone to do what they do best, this gives the physician more time to do what he does best—which undoubtedly is what will make the most money (seeing patients, running a practice, investing in real estate, etc.).

Complexity Demands LePeople meeting at computer - Contemporaryveraging Advisors
We have found that, the greater the wealth of the individual or family, the more important the role of the advisor team. As the client’s wealth increases, the more complex the comprehensive financial situation becomes. As the situation grows more complex, the client’s need to Leverage the advisors’ expertise and experience to save time and maximize total benefit increases exponentially.
To illustrate how complexity grows exponentially, let’s consider the following two situations. The first chart below shows the relationship between two people. The second chart shows the six different relationships that exist when you have four people in a group.

Situation 1: Relationship Between Two People
In the chart above, you can see that John and Paul have one relationship. There is only one relationship when you have two people. This seems relatively easy to manage as you have two people and only one relationship. Let us see what happens to the complexity of the interactions when we have four people in a group. This is illustrated in the next chart.

Situation 2: Relationship Between Four People
In the chart above, you will see John, Paul, George and Ringo. There are two additional people than we saw in the first chart. Doubling the number of people in the group actually increased the unique interactions by 500% from 1 interaction to 6 interactions (John and Paul, John and Ringo, John and George, Paul and Ringo, Paul and George, George and Ringo). Though it only takes one good relationship for two people to work together, it takes six good relationships for a group of four people to work well together. If one of the six relationships is strained, the entire group may have to be disbanded.
This same analogy can be applied to the elements of your financial plan. All elements of your plan, and all advisors in your plan, must work well together. That means that it is at least 500% more work to manage four businesses or elements of a comprehensive financial plan than it is to manage two businesses or elements of financial plan. If you have eight businesses or elements of a plan, then you have 56 different interactions to monitor. You can see how the complexity of the situation increases quickly!

To see how this general theory of complexity can be practically applied to planning for physicians, we need to understand what the physician’s concerns are. Below is a partial list of common financial planning concerns among physicians:
· Managing growth of the assets
· Managing lawsuit risks from employees, patients, and competitors
· Protecting assets from eventual lawsuits
· Managing the investment risk while attempting to grow assets
· Managing tax liabilities to maximize after-tax growth
· Managing business succession and estate planning concerns
· Protecting family members against a premature death or disability
· Protecting family’s inheritance against lawsuits, taxes, and divorce
Surprisingly, physicians worry about all of the More