Firm Eases Financial Pain Points of Orthopedic Surgeons

During an operation, it’s the critical job of the “first assist” to anticipate the surgeon’s needs for specific instruments and the like.

Vestia Personal Wealth Advisors’ orthopedic surgeons practice serves as “financial first assist” to its clients, Kameron Helmuth, partner and co-leader of the practice, tells ThinkAdvisor in an interview.

Vestia’s client niche is high-income doctors, mainly orthopedic surgeons and female physicians.

The firm has about $500 million in assets under management, and more than 500 physician families are clients.

In the interview, Helmuth, co-founder of the orthopedic surgeons practice with Brad Quick, Vestia partner and president, describes a few of the complex financial issues facing these short-on-time surgeons, who are one of medicine’s top three highest-paid specialists.

The other two specialties are neurosurgery and invasive cardiology, according to the U.S. Bureau of Labor Statistics.

In the e-book “5 Financial Pain Points for Orthopedic Surgeons,” Helmuth co-writes about bone surgeons’ most critical financial concerns.

Not the least of these is asset protection. Orthopedic surgeons “have a higher propensity for litigation,” he points out.

So “it’s extremely important to keep their assets out of the crosshairs of a potential lawsuit,” he says.

The lawsuits typically arise not from the doctors’ clinical work but from outside business activities with which they become involved, such as investments in startup companies and real estate ventures.

Another area where these surgeons need plenty of advice is tax strategies, partly because many are independent contractors with multiple income sources.

Further, because they’re “consistently in the highest tax bracket, it’s very hard to use creative planning to get them into lower brackets,” notes Helmuth, 33, who was previously an advisor with PNC and The State Bank & Trust Co., in Fort Wayne, Indiana, where his clients were physicians, dentists and business owners.

ThinkAdvisor recently interviewed the certified financial planner, who was speaking by phone from Fort Wayne.

Vestia, a virtual advisory, also has locations in Indianapolis; Los Angeles; Nashville, Tennessee;  and Omaha, Nebraska.

“Doctor’s Eyes Only” is a podcast Helmuth co-hosts that discusses topics relative to “the life of a surgeon,” as he describes it.

A recent interview with two attorneys produced info on how to protect innovative devices and other intellectual property that physicians may create.

“There’s big money to be made [with these], but doctors aren’t familiar with the legalities that come with them,” Helmuth says.

Here are highlights of our conversation:

THINKADVISOR: I imagine that with the aging population, more folks are needing knee or hip replacements, for example. Is that a factor in the success of your specializing in orthopedic surgeons?

KAMERON HELMUTH: Orthopedics is a growing industry. We know there are going to be more and more physicians that need to be served.

The surgeons are in their early 30s before they start practicing. So they have a condensed window to save [money] and avoid mistakes.

Are your clients located nationwide?

Yes. Most physicians tend to transition jobs regularly. So about 50% of orthopedic surgeons will leave their first job in the first five years. We can work with them wherever they go.

You co-wrote the free e-book, “5 Financial Pain Points for Orthopedic Surgeons.” What’s the biggest one?

The No. 1 pain point is that they try to do too much themselves. With high-caliber orthopedic surgeons’ average [high] production [operations], there’s very little time left in their day to focus on personal financial matters.

Orthopedic surgery is one of the three highest paid specialties in medicine — and the surgeons are [among] the most in-demand, short-on-time physicians.

Our thesis is that we can be an outsourced CFO for them. We call ourselves their “financial first assist” [like a surgical “first assistant” anticipating physician’s needs].

[Performing surgery], when a doctor puts their hand out, the first assistant presumes what tool or instrument they need to make the next incision or take the next step.

We play that role so the physicians can focus on what they value most, which is their practice, family and the world of medicine.

We administer all the financial aspects of their lives, which adds time to their day.

What are some financial needs of orthopedic surgeons that might be different from those of other physicians?

Because they’re very entrepreneurial and a number are self-employed, there are tax and planning needs around [being an independent contractor].

It’s understanding the legal and tax structure of their practices and how they and their employees are compensated.

What’s another pain point?

Asset protection. These surgeons make a very high income. And they have a higher propensity for litigation or potential lawsuits.

So the structuring and proper titling of assets and how we plan and diversify their net worth is extremely important to keep their assets out of the crosshairs of a potential lawsuit.

Why is that such a big focus?

Orthopedics is, maybe, among the top 10 malpractice areas. But it isn’t that malpractice claims are related to their [medical] practice.

What’s more likely to occur is a suit resulting from a business transaction, such as being involved in startups inside the non-practice world.

It could be about investing in a device. Or the physician could be involved in real estate or venture capital — areas that aren’t as native to them as their clinical [world].

They might be on a board acting as an administrator or medical director, but not always related to giving clinical advice.

All that opens up a potential line of liability just because it’s not native to them as is medicine.

So the most potential legal issues for asset protection are related to their non-clinical activities.

Why are orthopedic surgeons’ tax planning strategies a challenge?

First, they don’t get an easy, straightforward paycheck from a hospital: There are normally multiple streams of income taxed in different ways. There’s their practice income; there could be royalty income or real estate income.

In addition, because they’re consistently in the highest tax bracket, it’s very hard to use creative planning to get them into lower brackets.

Every surgeon feels the pinch, but when you’re in the top-three-paying specialties, as they are, when it comes to taxes, you definitely feel it more than some other doctors.

What’s another financial issue that orthopedic surgeons face?

They’re constantly being pinched by insurance companies. The reimbursement rate is going lower and lower. That means they have to produce more or be savvy enough to understand insurance and how to get paid fairly.

Most compensation for surgeons is based on either production [surgeries performed] or other metrics related to production. All their [surgery] income is related to the time spent in clinic only.

So if you’re going to make more money, it simply means more hours.

Doctors have a general reputation for being lousy investors. Do you think they are?

I don’t know if they’re bad [at investing]. I think that traditionally, that just hasn’t been their priority. One of the pain points is that [because they’re so busy] they only have a [short] allotted amount of time.

So they have far less time to spend on due diligence on a potential investment or identifying the best tax strategies for their portfolio.

It takes less time to just write a check, make that investment and then deal with the [potential] repercussions because they know they can make good money at work and replace a loss.

But you step in to help your clients invest. Right?

Our thesis is that if you try to do it right the first time, we, as specialists, can help them avoid those obstacles and mistakes.

When you were starting out, you worked with dentists. Do they have any special financial planning needs that physicians don’t?

They’re similar, but dentists have more of a definitive end-date. Most of their net worth and assets are tied up in their practice; so cashing out to fund retirement usually involves selling their practice.

[In contrast], physicians typically make more money during their working years and are less tied to that end-asset — their practice.

Dentists are the opposite; almost all are tied to their dental practice and selling it [for retirement].

How focused are orthopedic surgeons on retirement and retirement planning, then?

The majority are just focused on being good surgeons. It’s looming in the back of my own mind, but they’re [about]: “If I work hard, I can always make more money, and I can always save more in the future.”

So there’s not as much intentionality behind it. They know how to make money. Our goal is to make them optimize it.

Traditionally, they’re used to a higher lifestyle. So being able to create retirement income in the future among their different investment accounts is critical.

Vestia is exploring serving military physicians, urologists and anesthesiologists. Please elaborate on this planned expansion.

We started with women physicians in 2020 and then orthopedic surgeons in 2021.

We’re creating a blueprint that future advisors can follow and use to serve other medical specialists they feel passionate about helping.