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The importance of strategic wealth planning for pharmacist-owners

June 8, 2023

professional pharmacy valuation consultants

When a pharmacist-owner sells their pharmacy, it is likely to be the biggest liquidity event of their life. And as much as they must prepare for the sale with a robust exit plan, it is every bit as important to plan for what happens afterwards – and how their newly monetized wealth will affect their financial health. That’s why we, as pharmacy business consultants, always encourage the pharmacist-owners to align their exit plan with a robust, comprehensive, long-term strategic wealth plan. 

What is a strategic wealth plan? In short, it is a roadmap to help you and your family reach your financial goals. It goes beyond a typical financial plan, however, in that it is usually more comprehensive. 

Many financial planners will model future wealth based on the certainty of financial assets like stocks, bonds and real estate. A strategic wealth plan, on the other hand, accounts for all the assets (some of them relatively intangible) held by a family, as well as projected income and expenses. It also accounts for the frictional costs to your wealth from taxes, and it models for other risks, as well.

A good strategic wealth plan is continually evolving with your changing circumstances, goals and needs. And that makes your relationship with a strategic wealth advisor among the most important business relationships you will ever have.

Questions to Ask Yourself

Many pharmacist-owners who don’t have a strategic wealth plan will often begin the process of selling their business by asking, “When should I sell?” But that’s jumping the gun. A whole lot of other questions need to be answered first, such as: 

      -> “When do I want to retire?” 

      -> “What do I want to do in retirement?”

      -> “How much money will I need to maintain my desired lifestyle in retirement?”

      -> “How will I manage, grow, protect and draw down on my nest egg in retirement?”

      -> “How much do I want to leave to my family or to philanthropic causes after I die?”

Those are questions that a robust strategic wealth plan can help you answer. And your exit planning will be all the more effective and relevant if you have that wealth plan in place first.

Your Wealth Plan

For one thing, a good wealth plan can help you recognize that you don’t know what you don’t know. The wealth planning process should identify areas of risk and unknowns and provide a playbook for addressing them as they arise. Furthermore, it will help you prepare for the life events you can reasonably foresee – the purchase of a business, marriage, children (and education), and of course retirement. 

Even on a day-to-day basis, a strategic wealth plan can be an exceptionally useful tool in helping you make good financial decisions. In your personal finances, it provides clarity to help you determine wants from needs in your spending and gives you saving targets. In your business, it can incentivize you to find ways to optimize your pharmacy’s value – helping you reach your end-goals – and will give you tools to measure your success and identify ways to improve. It will guide you through your pharmacy journey, from acquisition and growth through to your eventual exit. And because it defines clear goals, a strategic wealth plan is a great way to measure your success, personally and professionally.

Wealth Advisor

There are a couple of important provisions, however. One is that you must choose a fully qualified and capable wealth advisor who has the time, experience and contacts to develop a truly comprehensive plan. A solid strategic wealth plan takes into consideration tax, legal, estate, accounting and other issues that may require drawing on the expertise of several individuals, so make sure your wealth advisor knows whom to reach out to and (just as importantly) when.

Another important reality is that good strategic wealth planning is a process, not a piece of paper. You and your advisor need to revisit it regularly and/or whenever your situation changes. Life will throw you curveballs; your planning needs to adapt and adjust.

Also, be careful if it seems like an advisor is trying to sell you something or scare you into buying something. A life insurance policy that you really don’t need at this point in your life? That’s an example.

Finally, when it comes to wealth planning, time is not your friend. As pharmacy business consultants, we have seen how the risk of “bad” events – death, disability, divorce and a host of others – can build over time. The longer you allow yourself to be unprepared for them, the more likely it is that they will derail your dreams. 

So let us end with this plea: If you have not begun working with a competent, experienced wealth advisor to develop a strategic wealth plan, you had better get started – now. If you have any questions, please feel free to contact us.

Read other advsiory articles on Strategic Wealth Planning: Pharmacy Exit Planning Your Pharmacy is an Investment  
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