Generational Wealth For Physicians

For physicians wishing to leave a lasting financial legacy for their families, passing on the family practice as part of the succession plan is not practical.

While many business owners have a succession plan to pass the business on to their children or heirs, a succession plan for a medical practice is far less practical and less likely to be part of an estate plan.

Just from a logistical standpoint, your interest in a medical practice cannot be simply passed on to your heirs. Most medical practices are partnerships, and transferring one partner’s interest to an heir or otherwise would likely require approval from the other partners. There’s the whole other matter of licensing.

The topic of passing on a medical practice is a topic that comes up frequently with my colleagues. Still, ultimately most of my colleagues conclude that they would more likely have their surviving partners buy out their interests for the benefit of their estates than pass it on to their children. Surprisingly, the reasons have nothing to do with the legalities of the transfer logistics but more to do with the fact that most physicians don’t want their children to follow in their footsteps.

Most physicians want to ensure their children are taken care of but ensuring their children continue in their footsteps is not part of their financial plan.

My colleagues are not alone as most physicians – it appears – have no interest in passing on the family trade. In a recent survey published by, nine out of ten physicians were unwilling to recommend healthcare as a profession.

In another article, nearly 60% of physicians wouldn’t recommend the profession to young people. Why?

The article cites the following reasons:

In 2014, the American Medical Association found that 47% of practicing physicians reported high emotional exhaustion, 35% saw less value in their work. Only 41% were satisfied (not happy, but satisfied) with their work-life balance.

The survey went on to identify the three problem areas:

  • Loss of Autonomy (75% now are in hospital-owned practices).
  • Mental Exhaustion (listing heavy workloads and increased clerical work due to cumbersome electronic medical records).
  • Asymmetrical Rewards (success is expected, but mistakes come with heavy punishments).

Why would physicians recommend a career they’re trying to escape to another generation? Many physicians are resigned to the fact that their jobs alone will not create the type of generational wealth that can be passed on to multiple generations. Most are just eking out an existence until their retirements.

Many love their jobs but would prefer to be in a position not to stress about having to go to work to maintain their lifestyles. Instead, most would rather work because they want to work and not because they have to.

Instead of worrying about potential lawsuits arising from trying to help people, many would rather spend their time helping others through charities and volunteer work.

Physicians need to consider alternative routes for leaving lasting financial legacies for their heirs.

Here are some ideas:

  • Embrace the power of compounding when considering building wealth. Returns that can be reinvested and compounded are the surest way to accelerate wealth exponentially. The $10 return from a $100 investment that returns 10% each year can be turned into a $110 investment the second year that pays 10% on the $110 and so on.
  • Avoid speculative investments that can not only slow but set you back on your path to financial freedom. When you go for broke with an investment, going broke is a very real consequence of your decision.
  • Seek out passive investments that generate income and appreciation in your sleep that compound wealth over time and that are insulated from Wall Street volatility.
  • Invest in private companies and private placements with long-term windows that are illiquid and insulated from broader market volatility and herd mentality. Ownership interests (i.e., equities) in private companies and funds are not susceptible to sudden market runs because of the restrictions on transfer associated with most private equities. There is no ready, open market for these securities like stocks and crypto.
  • Buy into productive companies by taking equity positions in startups and growth opportunities. Productive companies cash flow. Cash flow means reliable, periodic income and distributions that can be reinvested. Equity interests also mean participation in the potential upside of the investment.
  • Consider real assets like CRE and income-producing businesses that offer both income and growth.
  • Consider investments with significant tax benefits that will allow you to keep more of what you make. A penny saved is just as valuable as another penny earned.
  • Organize side hustles that will make you money on the side. Consider a farm or an agricultural or aqua cultural opportunity that will generate passive cash in your wealth machine.
  • Establish a trust with specific instructions for passing on your wealth. Don’t just give your wealth to your heirs to spend at their discretion. The result can be the Vanderbilts’ fate where there is not a single millionaire to be found today among the Vanderbilt line – a line that once boasted one of the biggest family fortunes in the world. Establish clear instructions to your trustees for how to invest and distribute the proceeds of your estate.
  • Don’t just pass on a financial legacy. Pass on your knowledge as well. Teach your heirs about how you built your wealth. Pass on a legacy of financial and investment education as well. Teach your heirs how to not only maintain but to build on the wealth you are leaving them with. Education is the key to preventing your heirs from squandering your wealth. As Cornelius Vanderbilt once ironically stated (not knowing the future fate of his progeny), “Any fool can make a fortune; it takes a man of brains to hold onto it.”

You can make a good living as a physician, but we all know it comes at a heavy price. These days, a high income is barely enough to meet current expenses and demands, let alone allow you to take care of multiple generations. Instead, it will take thinking outside of the Wall Street box to help your children and their children avoid your burned-out and underappreciated legacy.

Instead of conditioning your children to a life of entitlement, help them write their futures, educate them on financial literacy, and provide them with opportunities and establish a clear path to maximize their financial opportunities.