SHARON H. FITZGERALD

Lee Blank, Regions Morgan Keegan

Stay the course. That’s the advice of two Nashville private bankers who specialize in service to physicians. During today’s rocky economic times, it’s good to have a financial plan — and it’s probably not a good time to make major changes.

“If you have a core plan, you need to adhere to it,” said Lee Blank, senior vice president and private banking executive with Regions Morgan Keegan. And, he added, if you don’t have a plan, it’s time to get your financial ducks in a row.

Steve Jaynes, team leader for SunTrust’s Medical Specialty Group, said, “I think the most important thing that we try to stress to our physicians, and it’s particularly true in times like these … is to come up with that financial plan based on risk tolerance and financial goals, and then stick to that plan.” He added, “Have an idea of where you want to be at some given point in the future. Of course, there are several things that will determine some of the decisions you make.”

The first step is to decide when you want to retire and work toward that goal. That decision could be based on family obligations, such as paying for college, or simply on personal preference. After a close look at that “time horizon,” Jaynes said, risk tolerance is the next factor to consider. He posed the following questions: “Do you want to preserve your capital? Do you want to grow your portfolio? How aggressively do you want to grow your portfolio? How aggressively do you need to grow your portfolio to reach your financial goals for retirement?” The answers to those questions will help a physician map out a money strategy.

Jaynes said doctors need several professionals on their side to ensure a sound financial plan. He likened SunTrust’s medical client advisers – and the bank has about 20 of them in Nashville – to “quarterbacks” who call on other professionals at the bank based on the specific needs a physician might have. “We think about it as being foundational to the broad relationship we have with our clients to make sure that we’re all on the same page. We have a team that works with each of our physicians on the investment side and on the traditional banking side – loans, deposits, mortgages. We try to make sure we utilize all the tools available to us,” he said. “A physician often brings a team to the table just as we do. They will have a relationship with their attorney and with their accountant and with their office administrator. We try to look at all this holistically to make sure that the advice we’re giving is consistent with the goals of the physician, but understanding too that the goals of the physician are sometimes going to be motivated by the advice they’re getting from these other outside sources.”

With physicians, especially those in solo or small practices, that holistic approach may well mean financial planning for the practice and for the individual. Yet Jaynes cautioned that meshing business and personal finances isn’t usually a good idea. “I think it’s best, and we certainly advise it, that you don’t comingle those things. Frankly, most of our physicians don’t. They try to keep all that separate,” he said. “Their goals for their practice are to bring as much to the bottom line as possible, so that then they can fund what they need to do on the personal side for their family and future retirement.”

When it comes to the health of a practice, cash flow is key, noted Regions’ Blank. “We need to make sure that we have (the practice) appropriately structured from a rate perspective,” he said. And speaking of rates, restructuring debt to take advantage of low interest rates is an option in these tough times, he said.

Added Jaynes, “Managing cash flow is becoming ever more critical as reimbursement rates change and all of the things that are affecting the top line, the revenue side. It pays to keep a close eye on expenses.” Cash-flow management differs from practice to practice and from specialty to specialty. “Whether you are an orthopaedic surgeon versus a neurologist versus a pediatrician, it’s very hard to have a rule of thumb in that regard,” he said. “A lot of it depends on how the practice manages its revenues, expenses and head count.”

Finally, Jaynes noted that, despite all the cautionary advice these days, physicians may need to make changes to their financial plans, and that’s fine, too. “Your goals may change. You may decide that you want to do something a little different,” he said. “You may decide you’re going to do some gifting, some generational-skipping planning. Certainly, in those cases, a trust may be the appropriate vehicle. Ideally, you want to find a bank and have a financial plan that will give you access really to all the resources that you might need.”



April 2008