Wealth Management for Physicians: A Tax-First Approach
Key takeaways
- For most physicians, taxes are the largest lifetime expense, so wealth planning should start with taxes rather than investments.
- Fragmented advice (a preparer, an advisor, an insurance agent and an attorney who never talk) is one of the most common sources of lost wealth.
- Tax-efficient asset location and tax-loss harvesting can add meaningful after-tax return without changing risk.
- Disability insurance, malpractice coverage and titling of assets protect the income that everything else depends on.
Why a tax-first approach
A physician earning $500,000 a year for 25 years will likely pay several million dollars in federal, state and payroll taxes. Investment returns matter, but a plan that reduces lifetime taxes by even 10% to 15% often moves net worth more than choosing a better fund. GenWealth 360's approach is to design taxes first and then build investments, insurance and estate plans around that design. Shawn L. Davenport describes this approach in his books The New Tax Paradigm and The Physician's Wealth Code.
The parts of a physician wealth plan
Cash flow and debt
New attendings face a sudden jump in income alongside student loans, a mortgage and lifestyle pressure. A written cash flow plan, a decision on loan forgiveness versus refinancing, and a savings rate target come before anything else.
Tax planning
Entity structure, compensation, retirement plans, the state pass-through entity tax and real estate are covered in the physician tax planning guide.
Tax-efficient investing
- Asset location. Hold tax-inefficient assets (taxable bonds, REITs) in pre-tax accounts and tax-efficient stock funds in taxable accounts.
- Tax-loss harvesting. Realize losses in taxable accounts to offset gains and up to $3,000 of ordinary income each year, while avoiding wash sales.
- Capital gains management. In 2026, the 20% long-term capital gains rate applies above $545,500 (single) or $613,700 (joint) of taxable income, plus the 3.8% net investment income tax for most physicians.
- Municipal bonds can make sense in high-tax states for the taxable bond allocation.
Risk management and asset protection
Own-occupation disability insurance protects the income that funds every other goal. Malpractice coverage, umbrella liability coverage, retirement accounts (which have strong creditor protection under federal law for ERISA plans) and proper titling of property all reduce exposure.
Estate and legacy planning
Wills, revocable trusts, beneficiary designations, guardianship for children and, for larger estates, gifting and irrevocable trusts. See estate planning for physicians.
The Advisor Gap
Many physicians have a tax preparer, an investment advisor, an insurance agent and an estate attorney, each working alone. Decisions in one area create costs in another: an advisor sells a fund at a gain, the preparer sees it after year-end, the insurance agent sells a policy that duplicates retirement savings. Coordinated planning, where one plan drives every advisor's actions, closes that gap.
Questions to ask a physician financial advisor
- How are you paid, and are you a fiduciary on all accounts?
- Who coordinates my tax planning with my investments?
- How many physicians do you work with, and in which specialties?
- Will you model the tax effect of each recommendation before I act?
- How will you handle my practice, my real estate and my estate plan together?
Frequently asked questions
Do physicians need a financial advisor?
Not always, but most physicians benefit from coordinated advice because their incomes, tax rates, debt and risk exposure are unusual. The most important thing is that tax, investment and insurance advice are coordinated.
What is tax-first wealth management?
An approach that designs the tax structure of a household first (entities, compensation, retirement plans and investments) and then fits investments, insurance and estate planning to that design.
Get a tax plan built for your situation
GenWealth 360 builds proactive, tax-first plans for physicians, dentists and medical practice owners in all 50 states. Start with a conversation about your income, entity and goals.
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Sources
This article is for general educational purposes and is not tax, legal or investment advice. Tax law changes often and its application depends on your facts. Figures reflect 2026 rules as published by the sources listed above. Consult a qualified professional before acting. See our editorial policy.