Richard Lishman, co-founder and managing director of Money4dentists and the 4dentists group, is well known for helping associate and principal dentists achieve their financial objectives. This year he was among the speakers at Dentistry 15, delivering his talk entitled: ‘Money, money, money’.
The dental landscape has never been more competitive than it is today and there are now more options open to patients than there has ever been before. From the range of treatments to the type of practice they attend, patients must make a number of decisions before they even present to you in the dental chair. But it’s not only your patients that will need to make crucial decisions behind the scenes.
Indeed to be fully prepared for the future, a rigorous approach to your personal finances is imperative, and goes hand-in-hand with clinical excellence when striving to meet your full professional potential. After all, if you are not secure in your personal pecuniary position then this is bound to play upon your mind and affect your day-to-day practise.
But there are so many aspects and elements to securing your finances that, to the uninitiated, knowing where to start and which choices to make can seem like an impossible task. The first step is to ensure you are ruthlessly organised. Working in or running a busy dental practice, it can be all too easy to let your own personal administration fall to the bottom of the to-do list. But when you take the time to review your daily incomings and outgoings, you may be surprised by the results!
From ISAs to pensions, property to equities, you may have accumulated a number of assets over time and so regular comprehensive financial reviews of your portfolio are essential to make sure your money is working as hard for you as you are for it. It is also important to keep up with key changes in the rules and regulations regarding these areas. Were you aware for instance that the Lifetime Allowance fell this year from £1.25m to £1m, so that anyone who might be on course to exceed this amount, will now be in breach of HMRC rules and face large taxation fines?
To help you in all these areas, employing the services of a specialist independent financial adviser (IFA) is a must. They can look at whether you are putting your money in the best place to achieve your long-term goals. An IFA will advise on the most suitable products to your situation, which will also depend on the level of risk you are comfortable with. One of the many advantages of using an IFA is that the advice they offer will not be biased, or based on the sale of a particular commission driven product. This will help you to build more flexibility into your finances, as an IFA will look at how they can help you today and in the future.
Types of cover
However, planning for the future isn’t solely about making investments and watching your money grow. It is crucial that you have adequate cover in place should the worst happen, to protect you, your family and your business. From ensuring sufficient life insurance, income protection and key-person assurance, to planning for retirement, making sure the best choices have been made is crucial. But exactly what these products are and why they are important is not always clear.
Key-person assurance is essential as it protects a practice for financial losses that would arise from the death or extended incapacity of an important member of the business. The practice pays the protection and in the event of death or critical illness, a lump sum is paid by the assurance company to eliminate the financial strain on the surviving business partner.
Naturally, there are financial implications of key-person assurance, such as the need to pay the premium. However, as this is paid by the business not the individual, tax relief can be applicable on the premium and the benefit is also paid out tax-free.
Income protection comes in many different forms and it is important to know that insurance companies describe the level of income protection in terms of how ill you have to be before any money is paid out. There are three main definitions of cover: ‘suited’, ‘any’ and ‘own’ occupation.
‘Suited’ occupation is based on your training, education and experience. It protects your income if you cannot continue to work in any area of dentistry. ‘Any’ occupation only protects you if work of any kind (including outside of dentistry) cannot be undertaken. If you can work at all, the policy will not pay out. ‘Own’ occupation is the ideal definition of cover for anybody in professional employment, as you would receive a claim based on your capacity to perform every day duties relevant to your profession.
Life Insurance is another essential consideration when carrying out an audit of your personal finances. While nobody likes to spend too much time considering their own mortality, you will want to protect those who are left behind should the worst happen. The cost of premiums has often dissuaded many from taking out life assurance policies, especially the younger generation. However, of late due to a number of factors, protection cost has fallen in price. Premiums do depend on a variety of things including age, current health considerations, occupation and whether or not an applicant is a smoker, and it is possible to purchase sufficient cover from as little as £5 – £10 a month.
When you consider all the elements that go into securing your financial security and future prosperity it can be easy to be overwhelmed by the different factors that must be addressed. However, it pays to spend time thinking about each eventuality and ensuring some means are in place to protect you, your family and your businesses. With the right information, help and advice you can ensure that the best decisions are made.
For more information and to find out what Money4dentists and the 4dentists group can do for you through DPAS’ new initiative, Business Bites, contact DPAS Dental Plans on 0845 802 820 or email [email protected].