Over the past 22 years, I have specialised as a financial planner to doctors and dentists and been lucky enough to work with many healthcare professionals. I have gained in-depth knowledge of both the NHS and University pension schemes, together with a good understanding of the financial issues and challenges that doctors, dentists, and other professionals face throughout their careers.
The income earned by doctors and dentists tends to change as their careers progress, for instance when moving into general practice, going from employed to self-employed, when varying working hours, taking a career break or starting a private practice. This means inconsistent income levels which may impact any existing financial arrangements.
Going from employed to self-employed, taking a career break or starting a private practice means inconsistent income levels, which may impact any existing financial arrangements.
Also, some Senior Medical & Dental professionals in the NHS have faced a reduction in their pension benefits as a result of the new Lifetime Allowance and Annual Allowance limits. Without having valid HMRC protection, NHS pension benefits will exceed £1 million at the following pension amounts (source):
- 1995 Section – £43,478
- 2008 Section – £50,000
- 2015 Scheme – £50,000
There are several common complaints that I hear from all professionals, not just within this sector, and below are a few remedies that could give your wealth a boost and provide a healthier financial prognosis.
Complaint: Finding help with NHS pension decisions
Doctors and Dentists, like most senior professionals, need to make some important decisions about their retirement planning to avoid a reduction in their future pension income as a result of the Annual and lifetime allowance tax charges. Most simply want to know if they will exceed the reduced allowances and what to do now to avoid this.
Remedy: Seek a Specialist NHS Adviser
Working with a specialist adviser over the long term can help reduce the stress of the choices to be made. In conjunction with a lifetime cashflow projection, it is possible to look at various scenarios to provide clients with a more informed view of how their pension and tax may pan out. This should also help in answering questions such as “does my pension still offer good value?”, “Should I consider taking my pension benefits early?” or “Should I opt out of my scheme altogether and consider alternative ways to save for my retirement?”
Complaint: Having No Time to Spare
It’s no myth that healthcare professionals work long hours. Most would prefer to spend the little time they do have engaging in more interesting things like being with their family or enjoying a hobby rather than having to manage their own investments and deal with their financial administration (which for the majority is tedious).
A good adviser will ensure that your long hours don’t negatively affect your financial future.
Remedy: Seek a Professional Adviser
My clients like the fact that they have one point of contact for all things financial, which ultimately saves them time and hassle. They often comment that I know more about their financial situation than they do. Having a trusted adviser will take the worry out of financial planning. They will remind you when action is needed on important matters (such as the impact of legislation changes and tax allowances before the tax year end) and liaise with your legal and other financial professionals. A good adviser will ensure that your long hours don’t negatively affect your financial future.
Complaint: Too Much Paperwork
Most Medical & Dental professionals accumulate a number of financial ‘products’ during their early career but rarely have these been reviewed. The sheer number of arrangements and the paperwork these produce can also cause an administration nightmare.
Remedy: Get Organised
As an adviser, I am keen to help clients to get organised and to keep things simple -controlling the things that can make life easier. Following my initial review, most clients benefit from consolidation of their arrangements, a reduction in paperwork and a clear appropriate financial plan. Many of my clients are relieved that their paperwork is handled for them.
Complaint: Inconsistent Financial Planning
When it comes to existing investment and pension portfolios, many of the professionals that I meet complain that they have had too many styles, opinions and investment strategies, some of which are poorly performing, no longer consistent with their risk appetite and levy high fund management charges. They have experienced a high turnover of financial advisers, so rarely establish a good long-term relationship with one person. Even when they do, some clients have been let down by poor service and lack of timely responses to calls, letters or emails.
Remedy: Choose One Trusted Independent Advisor and Stick with Them
Choose an adviser you like who offers a holistic approach that starts with an understanding of your risk tolerance, a detailed financial plan, cashflow modelling and access to low-cost investment strategies.
Choose an adviser you like who offers a holistic approach that starts with an understanding of your risk tolerance, a detailed financial plan, cashflow modelling and access to low-cost investment strategies. Only then can you see the long-term impact of professional advice. Clients get peace of mind that even if the worst happens, their plans and goals will remain on track. Your adviser needs to consider all family members, including grandparents, and implement strategies for passing wealth to the next generation in a tax-efficient way.
If you are a doctor, dentist or other professional who would like to learn more about the impact of legislation changes on your pensions, developing a clear financial plan and how we manage investments, please get in touch.
This article does not constitute financial advice. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner to take into account your particular investment objectives, financial situation and individual needs. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections.