Biomedical entrepreneurs, like physician entrepreneurs, usually spend 99% of their time heads down trying to commercialize their ideas or deliver user defined value through the deployment of innovation. Somewhere way down their to do list is to preserve, protect and grow or disperse their personal or corporate assets.
Of course, the conventional wisdom is that “doctors are lousy business people”, so it should come as no surprise that ultimately, the failure to pay attention to wealth management becomes a self-fulfilling prophesy.
However, there are several reasons why you should pay attention and stop cutting those wealth management and asset protection classes:
- Doctors are not lousy business people and you should stop buying into the myth
- You might wind up quitting clinical practice and become a financial services professional instead
- There are many tax and estate planning consequences when you exit
- You will need a succession plan for your business
- Corporate risk management is as important as finding the right product-market mix
- It will help you get your ducks in a row when it comes time to accept other people’s money.
- It protects you, your employees and your family against the consequences of death, disability, disaster or divorce
- It will satisfy your fiduciary responsibilities to stockholders
- It will provide you with a long term plan
- It will allow you to contribute or donate moving forward as a philanthropreneur
You should also include planning for unexpectedly early departures from the workforce.
While an increasing number of Americans say they want to remain on the job after age 65, between 37% and 52% of retirees polled annually since 1991 by the Employee Benefit Research Institute say they left work before they had intended—often due to a health issue or job loss.
Some call 1945-75 the Golden Age of medicine, before corporatization and rising student debt. Prior to the end of the 19th Century, most doctors had little status or wealth. We might be coming full circle into the Frugal Age given threats to entitlement programs, looming retirement liabilities, dropping incomes and rising costs of practicing medicine.
Of course, you will learn nothing about these subjects in medical school or residency, so , it is incumbent on you to find education, resources, networks and advisors on your own. Fortunately, in recognition of that fact, physician innovation networks and other bioentrepreneurial education programs, are trying to fill the gaps, and you should take advantage of them. Educate yourself on these topics:
- Basics of personal financial planning
- Fundamentals of accounting and reading financial statements
- Exit strategies, succession planning and their financial and tax implications
- Understanding stock and option awards
- Debt management
- Retirement planning
- Investment instruments and portfolios
- Risk management
- Asset protection
- Estate planning
The foundations of biomedical entrepreneurship are intellectual property protection, finding the right product-market mix, regulatory affairs, reimbursement and team building and execution. Asset protection and risk and wealth management should not be far behind.