Navigating Financial Planning for Young Dentists

Dental Regional Manager, Neil Richardson from Wesleyan Financial Services shares his thoughts on what all young dentists should be aware of with regard to financial planning.

What are the first financial planning areas after graduation that dentists ideally need to address?

Neil Richardson (NR): Income protection is the absolute bedrock of any young dentist’s financial planning. A good question for a newly qualified dentist to ask is, how would they support themselves financially in a period of absence, due to illness, injury or accident if they did not have income protection in place? A long-term absence would ultimately wipe out any savings pot very quickly.

We encourage dentists to imagine the value of their career as a whole, taking into account the time spent training, any accumulated debts, and a 40-year career ahead. This overall sum could easily be worth four to five million pounds – therefore, our question to a young dentist would be, would you really take a risk with that amount of money by not protecting it?

I was a financial adviser for around 15 years before becoming a manager. During that time, I had a number of clients who unfortunately had their career as a dentist end in their early 30s, some of which fortunately had a good level of income protection in place, which provided the financial stability necessary to have a reasonable standard of living, pay the bills, mortgage, and so forth.

However, others that did not have sufficient protection in place had to essentially survive on the bare minimum due to the low level of cover in place - the impact this had had on these clients was something I found quite distressing at the time.

What typically comes as a surprise for younger dentists with their financial planning?

NR: Mortgages are often an area young dentists find surprising – with rates and repayments currently higher than we have seen in over 20 years.  

Another factor that they may be unprepared for when looking to step onto the property ladder after living in rented accommodation is the implication of self-employment. Many lenders will only consider a self-employed mortgage applicant after they have accrued two years’ worth of accounts. There are lenders out there who will take a more holistic view, but it can be beneficial to seek advice from specialist financial advisers who can acutely understand the dental career path.

What are good habits to form then with saving and what needs to be considered?

NR: The more regimented and disciplined a young dentist can be and the earlier they begin to think about financial planning, the better. I would urge young dentists to try and adopt a mindset approach of visualisation – by this I would ask them to consider what they will spend their money on in the short, medium and long term. Dental courses, for example, can be hugely expensive, costing several thousands of pounds, and more obviously, first house deposits and so forth. Planning ahead and saving is very powerful.

Another useful consideration for young dentists is to think about how long their career will be, at what point they intend to exit the dental profession and what that process might look like.

Do dentists really need to think about the end of their career so early on?  

I think perhaps one of the big surprises for dentists is when we talk to them about the benefits of completing NHS dentistry and the NHS pension scheme; the surprise being that the standard age for retirement is 67 - this is often a shock for young dentists when they realise just how long their career is expected to be. Of course, this is a choice, it is not something that they are forced to do, it just depends how well they plan.

Is there a difference in terms of financial planning for dentists looking to work primarily in the NHS as opposed to those working solely in the private sector?

NR: Yes, there is and one easy way to understand this difference is a visualisation analogy. Imagine watching a tightrope walker practising, they always have a safety net to catch them if they fall.

This is the best way to think about working in the NHS; sick pay, maternity, ill health retirement pension, death-in-service benefits for your loved ones and a pension are all covered. When a dentist moves to practise privately, they effectively lose that safety net and have to think about how to replace it themselves to ensure that the support still exists – this takes careful planning.

Is there anything else you think needs to be considered for young dentists?

NR: I think we see a general tendency in younger people to lean on social media and the internet to form their opinions and research. My advice for young dentists would be to go and build the support and learning network they need from proven experts and people who genuinely understand dentistry, whether that be advisers, accountants, solicitors or any other professionals where there is consumer protection.

Seek advice from specialists

If you are a young dentist and would like support with your financial planning, you can speak to a Specialist Financial Adviser at Wesleyan Financial Services as part of a no-obligation financial review by visiting wesleyan.co.uk/lifes-journey or call 0800 316 3784. Advisers are happy to meet you in person or via video call depending on your preference.

Please note: Your mortgage is secured on your home.  Your home may be repossessed if you do not keep up repayments on your mortgage.

About Neil Richardson

Neil Richardson is a Dental Regional Manager at Wesleyan Financial Services, leading a team of Specialist Financial Advisers who support dentists, their families and their practices with financial planning to secure their financial future.

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. Calls may be recorded to help us provide, monitor and improve our services to you.