A Surgeon's Guide to Navigating Financial Challenges and Building Resilience

Surgeons are no strangers to high-pressure environments that require precision and adaptability. The same applies to financial markets, which can be just as unpredictable. Understanding market cycles, diversification, and creating a strong investment portfolio is a key to surgeon wealth building.

Market Cycles and Their Impact

Financial markets often move in cycles, fluctuating between periods of growth (bull markets) and contraction (bear markets). Sudden corrections and extended periods of economic uncertainty can significantly impact your portfolio.

Here are some historical examples of sharp market declines:

• The Dotcom bubble fueled greed with soaring tech stocks before bursting, leaving many with heavy losses.
• The 2008 financial crisis hit markets hard, disrupting credit and forcing some retirees to lock in losses to cover expenses.
• The 2020 pandemic sparked fear and mass selling, causing a market drop followed by a quick rebound that caught many off guard.

While market downturns can create uncertainty, they also present opportunities. Working with a surgeon financial advisor with SCM can help you identify undervalued assets and strategically rebalance your portfolio for optimal performance.

The Role of Diversification in Mitigating Risk

Being over-concentrated in a single or a few investment types can substantially increase the impact of market volatility on your portfolio. Diversification spreads risk across various assets, helping to shield your portfolio from the effects of market downturns while positioning it for growth.

Consider these investment diversification strategies:

• Asset classes: Balancing stocks, bonds, real estate, and alternative investments.
• Sectors: Investing in industries like healthcare, technology, and consumer goods.
• Geographies: Including domestic and international assets to mitigate localized risks.
• Investment styles: Incorporating growth and value investing to take advantage of different market conditions.

Asset Allocation Strategies for Surgeons

Asset allocation—the process of dividing your investments among various asset classes—is critical to maintaining balance in your portfolio. SCM creates tailored asset allocation models to align your investments with your goals and risk tolerance.

Key asset allocation considerations for surgeons:

• Age and career stage: Younger surgeons may prioritize growth-oriented assets, while those nearing retirement may focus on preservation and income generation.
• Risk tolerance: Understanding your comfort level with market fluctuations and adjusting your portfolio accordingly.
• Income stability: Balancing investments with the unique income fluctuations that often accompany a surgical career.

Time constraints can make it difficult for most people to closely monitor market cycles and their investments. Partnering with an SCM professional who specializes in high-net-worth surgeon investing allows you to keep up with market trends without sacrificing focus on your career.

Financial resilience often depends on how well you can protect your hard-earned assets from unexpected challenges. Understanding the risks unique to your profession and utilizing practical surgeon risk management solutions is vital for building a solid financial foundation.

The Financial Vulnerabilities of a Surgical Career

Surgeons face financial risks that go beyond those of the average professional. Malpractice lawsuits threaten both income and savings, and your earnings rely heavily on your physical and mental health, making disability a major concern. Unpredictable expenses, either personal or business-related, can disrupt financial plans. Also, growing data security risks can leave you or your practice vulnerable to cyberattacks and identity theft.

Implementing Surgeon Risk Management Strategies

Building a strong defense against financial risks requires a combination of strategies specific to your circumstances.

Insurance coverage is integral to managing risk and offering financial protection when unexpected events happen. Key policies to consider include malpractice insurance, which can be occurrence-based or claims-made with tail coverage, providing protection against legal claims. Disability insurance helps ensure a steady income if you're unable to work due to illness or injury. Umbrella insurance adds extra liability coverage beyond standard policies, protecting your personal assets.

Emergency funds act as a financial buffer, covering unforeseen expenses without derailing long-term goals. Aim to save 6–12 months of living expenses in a liquid, easily accessible account.

Cybersecurity measures protect personal and professional data with robust protocols, such as using strong passwords, enabling two-factor authentication, and securing sensitive information on encrypted devices.

By proactively addressing these risks, you can help safeguard your financial foundation and focus on what you do best—excelling in your surgical career. SCM can assist in crafting a personalized surgeon risk management plan that reflects your unique needs.

Paying taxes is unavoidable, but understanding tax implications and using the right strategies can lower your tax burden and keep more of your hard-earned money.

Tax Implications for Surgeons

Surgeons often fall within the top federal tax bracket, which can reach 37%, making tax planning a priority to manage income and investments efficiently.

Short-term vs. long-term capital gains: Investments held for less than a year are taxed at your regular income rate. However, holding investments for more than a year qualifies for lower capital gains of 15 to 20%, depending on your income level. Taking a long-term approach can help you save on taxes.

Additional tax considerations: High-income earners may face a 3.8% Net Investment Income Tax (NIIT) on capital gains and other investment income. Also, the Alternative Minimum Tax (AMT) can affect surgeons with certain deductions or income types. Proactive planning is vital to mitigate these added costs.

Tax-Advantaged Retirement Accounts

Retirement accounts are a powerful tool for minimizing taxable income while building long-term savings.

Employer-sponsored plans: Take full advantage of 401(k) or 403(b) contributions, especially if your employer offers matching funds, which effectively increase your savings.

Self-employed options: If you run your own practice, plans like SEP IRAs and Solo 401(k)s allow for substantial contributions, combining tax-deferred growth with high contribution limits.

Roth strategies: High-income surgeons can explore Roth conversions or backdoor Roth IRAs. These approaches provide a way to enjoy tax-free withdrawals in retirement, even if direct Roth contributions are restricted.

Tax-Loss Harvesting and Asset Placement

Tax-loss harvesting involves selling investments that have decreased in value to offset gains from appreciated assets, reducing your taxable income. Combining this with smart asset placement—keeping tax-efficient investments in taxable accounts and higher-tax assets in tax-deferred or tax-exempt accounts—can further optimize your portfolio.

Surgeons Capital Management can assist in tax efficiency investing that balances growth with effective tax management.

Estate planning is a critical step to building financial resilience for your loved ones and leaving a meaningful legacy.

The Importance of a Comprehensive Estate Plan

Without an estate plan, your assets could face lengthy and costly probate processes, causing unnecessary delays and complications. Creating a clear, thoughtful estate plan ensures your money is distributed according to your wishes. Also, incorporating charitable giving—through tools like donor-advised funds or charitable trusts—allows you to support meaningful causes while enjoying tax benefits.

Key Estate Planning Documents

Every surgeon's estate plan should include essential tools to provide clarity and security:

• Trusts: Revocable living trusts allow for smooth asset transfer while bypassing probate. Irrevocable trusts can help protect assets from estate taxes and creditors.
• Transfer on Death (TOD): These designations simplify the transfer of accounts and assets directly to beneficiaries, bypassing probate.
• Power of Attorney (POA): Assigning a POA grants someone you trust the authority to make financial or medical decisions if you are unable to do so.

Tax Implications of Estate Planning

The federal estate tax rate is 40%, with an exemption limit of $13.61 million per individual in 2025. However, if no legislative changes occur, the exemption limit will revert to the pre-2017 amount of approximately $5 million (adjusted for inflation) in 2026, significantly reducing the amount that can be passed tax-free.

Strategies like family foundations and irrevocable insurance trusts can help lower estate tax liability while fulfilling legacy-building goals. These tools provide opportunities to support loved ones and charitable causes while optimizing tax efficiency.

Surgeons Capital Management can assist you in creating a robust estate plan that reflects your values. We offer expertise in surgeon legacy building, providing personalized solutions tailored to your needs.

Just as regular medical checkups are crucial for maintaining physical health, financial checkups, such as mid-year and year-end reviews, are key for optimizing your financial well-being.

Reviewing and Adjusting Your Investment Portfolio

Periodic reviews of your investment portfolio can identify areas where adjustments may be needed. Questions to consider include:

• Do you need more diversification across asset classes, sectors, or geographies?
• Should your portfolio be rebalanced to reflect your current risk tolerance and goals?
• Could tax-efficient investments like municipal bonds or assets paying qualified dividends help lower your tax burden?
• Are you considering new investment opportunities to drive growth potential?

2025 Retirement Contribution Limits

Evaluate your retirement contributions to ensure you're maximizing savings.

401(k) and 403(b) plans: For 2025, the standard employee contribution limit is $23,500. Individuals aged 50 or older are eligible to make an additional catch-up contribution of $7,500. Individuals aged 60 to 63 can make an enhanced catch-up contribution of $11,250, increasing their total contribution limit to $34,750.

Self-employed retirement options: The 2025 SEP IRA limit is the lesser of 25% of compensation or $70,000. For a Solo 401(k)—available only to self-employed individuals with no employees—employee contributions are $23,500. Those over 50 can add $7,500, totaling $31,000, and individuals 60–63 can contribute $11,250 more, reaching $34,750. The total limit, including employer contributions, is $70,000.

It's well known that having a financial plan is necessary, but it's surprising how many people either don't have a plan or haven't updated theirs in years. Setting clear financial goals and taking actionable steps can make a significant difference in securing your future.

One can begin by categorizing current objectives into short, mid, and long-term horizons. In the short term, one may need to focus on managing debt, such as student, business, or personal loans. Mid-term goals could include building net worth through investments or preparing for significant life events. Long-term priorities often center on retirement planning or legacy building.

A customized financial plan involves:

• Evaluating your current financial situation.
• Identifying areas for improvement.
• Implementing specific strategies tailored to your circumstances.

Regular reviews and adjustments will keep you on track as your life evolves. Professional financial guidance can streamline this process, saving you time and providing the expertise to navigate complex challenges.

At Surgeons Capital Management, every team member brings a refined set of skills honed through experience and backed by respected certifications and designations. This expertise allows us to deliver personalized, comprehensive financial guidance designed to meet the needs of surgeons.

We are deeply focused on you. Our wealth management professionals specialize in serving the medical community with a deep understanding of the issues you face and the importance of protecting and growing your wealth.

Let us help you prioritize what truly matters most to you.

Contact us today to schedule a complimentary consultation with one of our surgeon financial advisors.