Clients who benefit the most from our wealth management services are small business owners, university professors, or other super-savers who are busy productively earning and saving and want to delegate oversight to a team of professionals. This also includes a number of doctors who have unique but common financial planning concerns. It was with interest therefore that I read fellow NAPFA member Ray Mignone‘s article, “Doctors need financial planning help, too…” in which he wrote:

Unfortunately many individuals erroneously believe that all physicians are very affluent with a financially secure retirement, this is often not the case. …

Physicians enter the workforce about a decade later than their non-medical contemporaries, leaving fewer productive years of earning income. They also usually start their careers with enormous medical school debt levels that many others don’t have.

In addition they tend to marry and have children later in life, often postponing saving for their children’s educational funding and their own retirement. Those who open their own office have significant initial outlays for equipment and furnishings. We all are aware of the high medical malpractice insurance costs that must be paid and the low fees and mountains of paperwork from the medical insurance payers that all erode a physician’s profits.

All of these issues cause most physicians to put in long hours and due to lack of time neglect their own financial and retirement planning.

Doctors are incredibly busy. Their time is precious, and they want to spend that time caring for their patients. They need to understand and trust their financial advisor, and they need to know that their financial advisor has their best interests at the heart of everything they do.

Mistrust of the financial services world is not irrational. As a result, there are two potential pitfalls that doctors can make. I’ve added numbers to two of Mignone’s warnings to physicians:

(1) Since many physicians are well educated and accustomed to doing their own research they also tend to have a hard time making good investment decisions due to a disease I call “analysis paralysis”. This occurs because they feel the need to understand “everything” about an investment before making the decision, so the decision gets put on the back burner.

(2) While having the proper insurance is important too many physicians get “sold” on complicated insurance products that mix investments with insurance. Many of these products end up benefiting the insurance salesperson more than anyone else. Be smart, shop around and understand the costs and expenses of the products being pitched. There is often a better alternative.

Warnings (1) and (2) are most in tension when doctors rightly perceive that their financial advisor is selling them product rather than serving their interests. We believe that the best way to find a financial advisor who you will trust after adequate explanation is through NAPFA, the National Association of Financial Advisors. To find a NAPA advisor in your area, go to napfa.org.

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