Thought Leader: Paul Larson, CFP, CLU

Tuesday, February 18, 2014

In the following profile, Paul Larson, CFP, CLU, founder and CEO of Larson Financial, a financial advisory firm exclusively for physicians, sheds light on how physicians are meeting certain challenges while still maintaining their viability in an era of fiscal uncertainty and increasing regulations.

Q: What is the most significant change you have seen in health care in the last decade?

A: The biggest shift in medicine is more doctors have moved their private practices into hospital settings and academic centers. At the same time, there has been a movement away from private practice because physicians aren’t trained to manage practices and, as a result, don’t understand the complex tax laws that affect them. Increased taxes are making it more difficult for smaller physician groups to stay viable as medical practices. We are also seeing the primary goal for physicians has moved from finding a place to make the most money to finding a lifestyle that balances work and home.

Q: What do you think will be the biggest change in health care in the next 10 years?

A: A socialized medicine structure due to a shortage of physicians and a surplus of people demanding service. This will lead to a compensation structure driven more by government and larger institutions. The other change on the horizon is segmentation by way of concierge medicine for the upper-middle class and higher, in which they will pay more cash out of pocket for medical services. All of this will lead to a bifurcated healthcare delivery mechanism that is very much split between the wealthy and the not so wealthy.

Q: What is the most common obstacle you see facing physicians today?

A: Primarily, a decrease in overall profitability. Many physicians are finding it harder to keep their incomes as high as they are used to and often have to work more to get to the same net result. This is a function of tax increases as of January 2013. Most physicians don’t even realize the impact of this because they haven’t filed their taxes yet. Another obstacle is lawsuits. Though these may not be frequent, the amount of money for judgments against physicians has increased significantly. When those occur, it bankrupts not only physicians but also their partners. In turn, asset protection has become a greater concern for doctors.

Q: What do you think are the benefits of being a private-practice, independent physician?

A: One of the positives we hear from our physicians in private practice is the flexibility to manage work as they see fit. The way they manage their staff, office and schedules is completely contingent on when and how they want to work. What often deters physicians is it’s pretty stressful. It’s faster-paced; these physicians have to make more decisions, and there is a lot more risk.

Q: Why are you so passionate about helping physicians?

A: I’ve found over the years that many physicians don’t have a credible financial source able to cover the breadth of information they need. Physicians focus on medicine and helping people, which I think is amazing, and what we do allows them to carry that out on a daily basis. The relationship we have with physicians is unique; they come to us for everything, even goals beyond the typical financial planning discussion, such as helping their children carry on the legacy they have started.

Q: Why does financial planning differ for physicians?

A: For one thing, physicians are coming into their jobs later in life. They are between 30 and 35 years old when they finish their training and go into practice, so they have 10 fewer years to be saving. Therefore, they need to save a significantly higher amount. Also, their incomes are quite a bit higher than the average American, so they require a different methodology for creating a savings plan, as their taxes are higher.

Finally, they get sued, so you have to navigate ways to protect them from lawsuits. Instead of just saving money, a large part of the focus is on keeping money after a lawsuit.

Q: What inspired you to start a company focused on physicians?

A: The main drive was recognizing that doctors didn’t have an advocate. They didn’t have anyone on their team pursuing what was in their best interest. Physicians were left to their own devices and often left to work with someone who wasn’t meeting their deeper need of comprehensive financial planning.

Q: What financial advice would you give to a newly graduating physician?

A: Most residents are in a position where they have a lot of debt, no cash and many big expenses coming. There are boards, traveling to interviews for jobs, student loan payments and buying their first house, all converging in that first year of practice. As they come out of training, we recommend physicians set a solid foundation to their plan and a healthy strategy to handle debt. Risk management and strategizing “what if” scenarios are also key, making disability insurance critical, particularly finding coverage that would pay them if they can’t work in their specialty, which only a limited number of companies offer. We like to do this while they are in training because there are discounts and lower rates available at this stage of their career.

Q: What motivates you each day?

A: I was once told, “If you have a strong enough ‘why,’ the ‘what’ doesn’t matter,” and I completely agree with that. If your motivation is strong enough on why you do what you do, what it is you are trying to accomplish becomes secondary. I attribute where I am today solely to the fact that the Lord has saved me from the path I would naturally go down on my own, and he has given me a new way and new focus. For me, that means taking care of people and ministering to their needs. Ultimately, that is what drives me and compels me to do what I do. That’s why we give money, that’s why we treat people differently, as clients and as coworkers; it sets the culture in a different pattern. Our core values are to find people who are goal-oriented servant-leaders with a warrior spirit.

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