Don't just protect your financial future, profit from it

Posted by Neal Durling on 9 January 2017
Don't just protect your financial future, profit from it


The mere mention of the word is often enough to trigger a boredom-induced coma. But how about insurance where you get to share in the profits? That's a little more interesting.

The reality is that any responsible financial strategy includes good-quality life insurance, income protection, and total and permanent disability insurance. So why not consider obtaining these products from an organisation focused solely on benefiting its members?

PPS Mutual is a new provider in the Australian market that does exactly that. Profits get returned to the people purchasing its products as bonuses.

What's more, PPS Mutual products are only available to a select number of professions, including general practitioners, medical specialists, dentists and dental specialists. That means the products have been specifically tailored to meet the needs of professionals.

If PPS Mutual sounds familiar, it may be through a colleague who has worked in South Africa where they have enjoyed great success amongst the medical fraternity for over 75 years. PPS Mutual is South Africa's largest mutual financial services company, with assets in excess of $3 billion. In the last 10 years alone it has assigned $2.2 billion in profit-share to its members.

Medical Financial Planning is fortunate enough to be part of a small, select group of advisors that have been accredited by PPS Mutual to give advice on their products.

As with any financial decision it's important to look at each individual's specific circumstances to determine if a particular product is the right fit. It's also important to note that Medical Financial Planning will always consider a broad range of products to ensure our clients receive the most appropriate option for them.

For many doctors and dentists, the PPS Mutual products may offer a genuinely compelling alternative to the traditional insurance providers.

Once you've learnt more about PPS Mutual's products you might even find yourself dropping the word "insurance" into conversations with your colleagues. Just make sure you follow up quickly with the interesting part before they pass out...

Posted in: News Wealth Creation Financial planning Insurance superannuation Planning Investment Financial independence Diversified portfolio   0 Comments

Don't have a nightmare before Christmas

Posted by Matt Connor on 13 December 2016
Don't have a nightmare before Christmas
'Twas the night before Christmas and all through the house not a creature was stirring, except...

...for the GP who'd woken in a panic because she knew there was something she should have done before her practice closed for the year, but couldn't remember what it was!

Like everyone else doctors deserve a good break at Christmas. And by December the last thing most medicos want to think about is practice administration. But if you don't tie up all your loose ends, you could find yourself with a serious New Year's headache - and not the fun kind!

There are a few simple things you can do however, to make sure you finish the year in good shape and hit the ground running in 2017.

Communicate your shutdown period

Letting your patients know is obviously step one, but don't forget your referral partners, suppliers and anyone else in your network. Sending a small gift with a short note is a great way to get the word out and also build good relationships.

Get your bills sorted

Your practice may be taking a break, but that doesn't mean your invoices are. Make sure you're fully across anything that is due before you're back in the New Year. It might be painful, but sometimes the easiest solution is simply paying bills early.

Take care of wages

Another way to start 2017 on a sour note is to neglect to pay your staff over the break. Set up an automatic payment for any wages that are due during your shutdown.

Do some business planning

This one may be a little unpopular - after all, you're supposed to be relaxing and recharging! Unfortunately, the end of year shutdown is one of the only times you can turn your attention to your finances and business processes without having to balance it with patient demands and practice administration.

Set aside a few days to really interrogate your financials. What services are the most lucrative? What expenses are really dragging you down? Think about how you run your practice. Are there any opportunities to introduce new systems or software to improve efficiency?

Commit to a day or two - perhaps somewhere between Boxing Day and New Year's Eve - and really interrogate how you do business.

With a little foresight and planning, the only thing that will wake you in the middle of the night will be the sound of Santa's sleigh touching down softly on your roof.

Posted in: Budget Owning a medical surgery Staffing Planning Risk management   0 Comments

The case for Global Equities - their place in an investment portfolio

Posted by Neal Durling on 17 November 2016
The case for Global Equities - their place in an investment portfolio

Do you know Australian equities make up less than 2% of the world equity market? The Australian domestic market is limited and dominated by the relatively big four banks and resource companies. 98% of the world's equity market capitalisation is made up of businesses not listed in Australia and many industries don't exist here at all.

Despite this, it is understandable that many Australians focus on investing in their local market. This is a theme throughout the world. But to ignore global markets is, in my view, a missed opportunity.

As an experienced financial planner, my advice is a well-diversified portfolio is particularly relevant for higher income earners such as medical specialists, who are looking for leverage opportunities to build wealth, or to invest to provide (inflation protected) income in retirement.

This is the subject of our upcoming Christmas event on Thursday 1st December 2016 at the Fireworks Gallery in Brisbane. Come and join us as we celebrate Christmas and address the benefits of developing an investment strategy that leverages global equities to create long term wealth.

What sets global equities apart

1. Access to a broader range of industries and high-growth companies

As stated, the Australian market is quite limited. By investing in the global equity market, you can tap into a bigger and more diversified pot of investment opportunities and growth-oriented companies.

Growth-oriented companies tend to generate significant positive cash flows and earnings, but reinvest more of this into capital projects for future growth. You might say they are operating in fields that have stronger growth opportunities than traditional industries and can leverage retained profits more effectively.

More traditional companies, such as those which dominate the Australian market, tend to distribute more of their profit as income. Often this is because they don't feel able to maintain a strong return on capital by reinvesting it within their business.

What's more, because of the more expansive playing field, global fund managers are able to employ a broader range of strategies and ways of investing and managing money. This may lead to higher growth potential and a better financial solution than investing solely in the Australian market.

2. Lower income and higher growth returns

While global equity funds tend to provide lower income because they are reinvesting more, they often provide higher growth than Australian equities.

Generally speaking it is not unusual for Australian funds to pay 5.5-6.0% in dividends, whereas a growth orientated global fund would usually pay significantly less than this. That said, in developing an investment strategy, there are real benefits for high income earners to invest in a global equity fund that takes a long-term 'buy and hold' investment approach and provides lower income in the pursuit of higher growth.

This is principally because this kind of investment strategy results in:

  • lower taxable income (making this an effective tax planning strategy) for those already paying high rates of tax
  • higher potential for growth with capital gains being more concessionally taxed by the Australian Government.

Including global equity exposure in an investment strategy creates a more diversified portfolio compared with an Australian only strategy.

In short, it can be a very solid, long-term, tax-effective strategy.

3. The option to hedge

The final reason concerns hedging. You can choose to invest in a hedged version of a global equity fund to reduce the fund's exposure to foreign currency movements. Currency movements can represent gains or losses on global investment portfolios depending on which way the Australian dollar and other currencies move.

Because we tend to consume in Australian dollars, hedging can provide a more stable or "accurate" portfolio return for most investors. This is because you end up with a return in Australian dollars which is influenced less by currency fluctuations.

However, investors may choose an unhedged version for a portion of their portfolio if they think the Australian dollar is going to devalue or for protection in down markets. While this is by no means guaranteed, when global stock markets trend lower due to uncertainty or unfavorable sentiment, the Australian dollar tends to weaken as currency flows back to the traditional safe havens. This can result in a degree of insulation from market volatility when the return is converted back to a weaker Australian dollar.

Looking for financial solutions or tax planning advice when it comes to investing? If you're interested in finding out more, attend our upcoming Investment Insights event in Brisbane on Thursday 1 December 2016 - click here to register your interest.
Posted in: Financial planning Investment Global equities Hedging Diversified portfolio   0 Comments

The risks facing your practice and how to avoid them (Part 2)

Posted by Matt Connor on 10 November 2016
The risks facing your practice and how to avoid them (Part 2)

In my last post, I addressed the topic of risk management and, specifically, issues relating to staff and revenue. In order to run a successful medical practice, it's important business owners understand the risks they face and adopt processes to mitigate them.

In a second article on this topic, I'd like to address three further risk-management issues I often see clients face. These relate to IT, occupational health and safety, and vicarious liability.

IT risk management

IT plays a critical role in supporting medical practices, where risks include hardware and software failure, human error, viruses and malicious attacks. There are a few things every practice can do to mitigate these risks:

1. Ensure your surgery maintains up-to-date anti-virus and spam software. Regular software updates are essential, as they protect against ever-changing viruses and security breaches. Be proactive and change software if you find a better product.
2. Have a reliable IT support team that takes an interest in your business and gives regular advice. A good IT support team will be proactive in advising you to spend money on worthwhile upgrades.
3. Invest money in good backup infrastructure to secure data and enable business continuity.
4. Ensure staff members understand IT network risk factors, and will actively work to keep your medical practice's data safe. One inadvertent mouse click can shut down an entire network, and training is available to help your frontline staff manage these risks.

Workplace health and safety

Safety is an important responsibility of the practice owner. Workplace-related injuries and illnesses cause suffering and are costly. As such, business owners need to follow and apply state and federal workplace health and safety legislation. Common risks in healthcare include accidents due to slips, trips and falls; ergonomic design of the workplace; stress; and biological and chemical hazards.

Business owners and practice managers can take these steps:

1. Identify and assess potential hazards and implement procedures that manage or eliminate these.
2. Implement a health and safety policy and be sure to provide information to all staff to ensure good practice. Here are the standards as set out by the Royal Australian College of General Practitioners.
3. Ensure you have up-to-date workers compensation insurance.

Vicarious liability

As a medical practice owner, you are held responsible for the actions of your staff members. Common risks associated with staff include clinical negligence, unethical behaviour and breach of confidentiality (Avant provides a useful Medico-Legal Checklist for Physicians).

To illustrate, I had a client whose administrative staff inadvertently provided clinical advice over the phone. This is inadmissible and the staff members involved were reprimanded accordingly. However, it demonstrates that each staff member must understand their role and responsibilities within the team - as well as their supervisors' roles. In the case of this medico-legal risk, the practice followed up directly with the patient to ensure they knew the real facts.

It's vital that practice owners understand these risks and put strategies in place to manage them by following procedures whereby:

1. Staff members are trained and competent at procedures.
2. Employees are properly supervised during medical procedures.
3. Appropriate indemnity insurance policies are in place for staff.
4. Staff members understand and sign employment contracts and confidentiality agreements.
5. Training is provided on key policies and procedures so staff members across the team understand what behaviours are required.


Every medical practice owner faces unique challenges in running a surgery, but we hope these two guides increase awareness of some of the most common risks medical professionals encounter.

If you'd like to find out more about our specialist advisory services and how we assist medical professionals and practice owners to achieve the best business and tax outcomes, please contact our Brisbane-based team on (07) 3363 5800.

Posted in: Staffing IT risk Workplace health and safety Vicarious liability Risk management   0 Comments

The number one financial mistake newly qualified medicos make, and how to avoid it

Posted by Sean O'Kane on 5 October 2016
The number one financial mistake newly qualified medicos make, and how to avoid it

Upon finishing their years of training, many medical specialists make hasty financial decisions that they live to regret (and that get in the way of their long-term financial success).

In our white paper, "Are you planning your journey to financial independence?" we identified key financial challenges faced by medical specialists. Chief among these is that practitioners are either complacent that they're now earning good money so don't need to plan financially, or they're eager to finally enjoy the rewards of all their hard work and want to spend money now!

I have a good friend who is very successful in his career and has come up with the phrase 'toy fever' to describe the urgent desire to make lifestyle purchases. While it can apply to the nice-to-have things in life, I believe it can equally be applied to the purchase of houses and cars so I've recoined the term 'purchasing fever'.

One of the doctors we interviewed for our white paper commented: "It's very tempting when you are surrounded by people on good incomes, driving around in new sports cars and living in multi-million dollar properties. I find I am trying to keep it real within my own capabilities and trying not to get caught up in what others are doing." 

Keep in mind that as a doctor you're in training for almost half your working life more than most other professions and this puts you well behind many others on your journey towards building wealth and gaining financial independence.

Committing to new cars and an expensive house too soon after finishing your training can often add pressure while, at the same time, you are trying to establish yourself as a specialist or GP. Increasingly, we are seeing doctors completing their training and going into private practice due to the lack of public appointments, which in the medium term can be very financially rewarding, but in the short term can mean some uncertainty around cash flow.

In this blog I address the reasons why it can be beneficial to wait a while upon finishing training and delay important financial decisions and investments, especially if you're going into private practice.

Let's start by looking at a couple of real stories:

  • I had a client commit to a property that needed extensive renovation that would require increasing their income to repay. They subsequently decided private practice was not for them, and decided to sell and buy somewhere less expensive that was already finished.
  • On other side, another client purchased a property while building up private practice only to find after 12 to18 months their income had risen to the point where they wanted to move to a more expensive property expensive to sell and rebuy, not to mention the stress of moving.

These two stories are opposite sides of the coin, but the end result is the same a costly exercise to change the situation.

Issues can also arise as the result of a car purchase:

  • I met a new client who was referred to us they'd not long started as specialist and wanted to purchase a property. They had limited savings, so needed to look at a high loan-to-value-ratio loan. But the issue was they had bought two very expensive cars that seriously reduced their servicing capacity for the home loan they wanted.

Our advice

If you're not careful, you can easily go from a situation where you're tight for money because you're in training to a situation where you're tight for money because of the financial decisions you've made.

However, if you delay these important financial decisions to understand your pattern of income especially if you're setting up in private practice then you will be in a position to make those decisions with more confidence, removing the stress caused by over-commitment and strengthening your ability to achieve financial independence. Waiting could also put you in a stronger position so that you build up your equity, making it easier to find a loan arrangement with better rates.

Setting up in practice as a specialist or GP can take time and an upfront financial investment. In addition to any upfront payments, it will take time to build referral sources. Any delayed payments can affect cash flow keep in mind that health funds can take up to three months to process payments. What we see is that it usually takes a year or so to build a good idea of how things look financially and what you can reasonably expect your income to look like.

With this in mind, in order to help you enhance your financial future for the long term, our team of financial planners advise you to:

  1. Delay making any big financial decisions until you have established yourself as a specialist/in private practice.
  2. Understand what your goals are and what they will cost.
  3. Model different financial scenarios with realistic returns to see the bigger picture and assist with decision-making.
  4. Develop a financial strategy to get you where you want to be over time.

For specialist financial planning, accounting and tax advice for medical professionals, please get in touch with our team.

Posted in: Wealth Creation Planning Financial independence   0 Comments

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The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

The financial planning services are provided by Medical Financial Pty Ltd trading as Medical Financial Planning (AFSL 506557)