I Just Sold My Medical Practice. Now What?
I just sold my medical practice. What do I do now?
Congratulations! You just sold your medical practice. The question is – now what? Let me take three minutes to walk you through some tips I have picked up from clients who have sold their practices over the years.
What’s Next for Me?
Odds are you have a workout agreement as a part of your practice sale. This could be working another few years or maybe even a decade. The question that may be going through your head is – what do I want to do next? Do you continue on after the timeline in your current role, a modified one, do something else entirely, and hang it all up to golf as much as possible?
The crossroad you may be at is you have focused so much of your life on becoming and being a medical professional you may not be able to think about doing anything else. Fortunately, I do what I describe as Real Financial Planning with my clients who have sold their practices. As part of this, we figure out what you truly want to do. The example I use is my client who sold their surgical practice. As a result of Real Financial Planning they figured out they want to continue surgeries, but focus on more complex ones, while also working fewer hours and being able to take more time off. Until we did the Real Financial Planning this was not an option they had considered.
Taxes Will Still Be There
Uncle Sam is not going anywhere now that you have sold your practice. If you are doing a workout, you will continue to have a decent income. Your marginal tax bracket may continue to be one that starts with a 3. So, paying attention to taxes will continue to be paramount with your workout. And if you modify your role as the example above, your income will continue to stay high even once the workout is complete.
Now, when it comes to the Cash received as a result of the sale, this will still be taxed. I think this needs its own section.
What Do I Do with the Cash Proceeds from the Sale?
Your proceeds could easily be seven to eight figures. This might be more money than you ever imagined having. The focus now needs to be on setting up the right investment strategy to get this money working for you. And it is not as simple as you may think, for a few reasons.
First, taxes will continue to be there. Yeah, you may have already paid taxes on this money, but Uncle Sam is still there with his hand out. Paying attention to taxes has to continue in this phase. And because we can be dealing with 7-figure accounts the tax implications of investment decisions are amplified. I do a lot of Direct Indexing with clients who have sold their practices. The goal here is – It’s not what you make; it’s what you keep.
Just as important is making sure the investment strategy is designed to reflect your Real Financial Plan. I’m just making this up (or not), but maybe as part of your process you realize you only need 75% of the assets you have to reach all your personal financial goals. And you decide this separate 25% can be used to help loved ones. Because of this it strategy it requires its own investment plan.
The final comment here. You need to be extra careful with the investment strategy. As a medical professional your timeline for saving for retirement was already shorter than most people due to all the extra time in school and training. Developing, monitoring and maintaining the proper investment plan for you is critical. I have a feeling you would rather not have to go back to work because of poor financial decisions.
Do I Need The Same Financial Team That Helped Me Sell?
You hired a team that was made up of business advisors, attorneys and CPAs to help you with the sale. They have completed their work, been paid a healthy fee and you may be wondering if you still need them. Well, with all specialties, it may be time to find a Financial Planner who is experienced in working with medical professionals who have sold their practices and are ready to start their next phase. Including figuring out what that next phase is😊
This is where I come in. I do the Real Financial Planning, Investment Management, Tax Planning and much more. I am a CERTIFIED FINANICIAL PLANNER (The CFP Board makes me write it in all caps) and also an Enrolled Agent (highest credential awarded by the IRS). There was a survey done and it showed roughly 4% of financial advisors hold both designations. On top of this, I am in even rarer air as I specialize in medical professionals. Last, but not least, I operate under a Flat Fee structure. This is based on my knowledge, experience and service model. The goal is for you to accumulate wealth, not fees. So, it may be time to leave the high-priced consultants who have done their job well behind you to move onto a new specialist focused on this newest stage of your life.
As always, if you have questions, do not hesitate to send me an email to dan@forwardthinkingwm.com. I am happy to schedule a complimentary call.