Paul Barnfather, Specialist Financial Adviser at Wesleyan Financial Services, shares the simple steps private dentists can take to maximise their hard-earned money.
As we look to develop habits that have a positive impact on our lives for the year ahead, reviewing your finances can be a great place to start.
A strong financial plan will help you through each milestone on life’s journey – whether that’s getting to grips with being self-employed as a newly qualified dentist, saving and investing wisely, moving up the property ladder or buying your own practice to name but a few.
Whatever your goals are for the year ahead, here are some financial planning areas to look at to truly make the most of your money:
Save and invest wisely.
Where you decide to save your surplus cash is particularly important in today’s economic climate. Whether you should save your money in your bank or savings account or invest will depend on your own personal circumstances.
High inflation and low-interest rates that we are currently experiencing in the UK mean that over time, the money in your pocket will buy you less – often referred to as ‘the loss of purchasing power’. What this means for money sitting in a standard personal or business bank account is that the purchasing power of that fund will be eroded over time due to low-interest rates that aren’t keeping pace with inflation.
Investing is also impacted by the effects of inflation, however, investing with a long-term view (the recommended minimum timeframe is five years) allows the fund to ride out market volatility and therefore offers the possibility for greater returns.
If you need to have easy access to your money in the short term, then investing might not be right for you or your business. You need to clearly define your timeframes and risk appetite and a little careful planning in this area can ensure you don’t overstretch yourself financially.
Bear in mind the value of investments can go down as well as up and you may get back less than you invest.
Set up a safety. net!
Some of the biggest risks to your finances are the ones you don’t know about. Identifying all the insurance needs for your lifestyle as well as your career and dental practice is no easy task, particularly for practising dentists.
You may even feel like you have identified the right income protection and practice insurance for example, but one thing I know from experience is that the protection needs of dentists don’t fit the mould of traditional insurance products.
Does your income protection have an ‘own occupation’ clause? If not, you could be at risk of future claims being rejected if you are able to take up a new career – even if that career offers you significantly less income than you earn now.
Then, it’s important to drill down into your practice insurance. Many financial risks apply to dental practices that are unlikely to be covered by a single policy, such as cyber-attacks, public loss or injury while on the premises, damage to the building or equipment, and many more.
Insurance may feel like one of those financial sacrifices that add little value – until that rainy day comes and you’re glad to be protected. It requires careful consideration and probing to ensure you are adequately protected.
Make full use of your allowances.
Staying one step ahead when it comes to your tax allowances before the end-of-tax year on 5 April may save you a considerable sum of money from the taxman.
After the Autumn Statement delivered by the Chancellor, Jeremy Hunt, in November 2022, you may now be aware of some of the stealth taxes introduced in the guise of freezing and lowering tax thresholds – meaning more dentists could face larger tax bills in the new tax year.
Ensure you fully utilise your ISA, pension, dividends and Capital Gains Tax allowances – some only run from tax year to tax year, so it truly is a case of ‘use them or lose them’.
Save for a dream retirement.
Retirement planning for private or mixed dentists is a complex financial planning area and it pays to have preparations in place sooner rather than later.
You may have multiple retirement pots on the go in the form of a personal pension, NHS pension, investments and potentially even the sale of your dental practice. Reviewing these provisions regularly may mean the difference between retiring early, having to sacrifice some of the retirement lifestyle choices you were looking forward to, working longer, or contributing more than you had hoped you would need to.
Knowledge is power – ensure you understand your retirement contributions fully and the options available to you.
The NHS pension scheme in particular has seen significant changes in recent years, such as the McCloud judgement – it’s not the easiest financial planning area to unravel in order to make informed decisions. Speak to a specialist if you’re unsure how the remedy for the McCloud judgement might affect you. Our team at Wesleyan Financial Services are recognised by the NHS as being able to provide advice on this complex area.
Seek advice from specialists.
On top of a career working in a busy practice, dedicating time to these financial planning areas can feel time-consuming and, in more complex cases, difficult to get to grips with. It can help to identify and tap into experts who can reduce the burden. In particular, consider a specialist accountant and financial adviser who focus solely on the dental profession – it’s a nuanced career often faced with unique financial opportunities and risks.
They may be in more of a position to point you in the right direction and give you confidence that you are making the right decisions for your finances.
Please note: Tax treatment depends on individual circumstances and may be subject to change in future.
About Wesleyan Financial Services
With over 30 Specialist Dental Financial Advisers covering the whole of the UK, the team have a wealth of experience and expertise, exclusively providing financial advice for dental professionals, their families and their practices.
You can book a no-obligation financial review face-to-face, at your practice or virtually with a Specialist Financial Adviser by visiting www.wesleyan.co.uk/dental or calling 0800 316 3784.
About Paul
Based in and around Manchester, Barnsley and Sheffield, Paul Barnfather is a Specialist Financial Adviser at Wesleyan Financial Services, working exclusively with dentists, their families and their practices to achieve their financial goals.
Advice is provided by Wesleyan Financial Services Ltd.
‘WESLEYAN’ is a trading name of the Wesleyan Group of companies.
Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority and is wholly owned by Wesleyan Assurance Society. Wesleyan Assurance Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Incorporated in England and Wales by Private Act of Parliament (No. ZC145). Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Fax: 0121 200 2971. Calls may be recorded to help us provide, monitor and improve our services to you.
