Here are 8 reasons why medical doctors need financial planning.
Medical doctors are smart, well-educated, able to understand complex issues and to act decisively in their fields. They are responsible for taking care of not only their own families but also the many patients they treatÂ Â Doctors also often own their own practices and, as business owners, manage and provide benefits for their employees.Â Financial planning is not rocket science, nor is it as complex as diagnosing a rare genetic disease or rebuilding a shoulder. So why does a medical doctor need financial planning? Â Below are 8 reasons why.Â
1). Doctors are busy. According to a 2019 survey by Physicians Research, the typical doctor works a 51-hour week and can see up to 20 patients a day. There is little time to do economic research on investments, let alone the kind of comprehensive planning that yields the best long-term results. You would never perform a surgery without a plan, so why give your money short shrift?
2). Doctors who work with a planner can shift the burden to an experienced financial support team, with an experienced quarterback who can help call the shots. Even if you have the time, it’s impossible for one person to follow all the changes in the markets, taxes, health care regulations, trust and estates options and insurance. That’s why the best planners, like the best doctors, work in teams with specialists available for any challenges a client may need.
3). Doctors do understand planning. They know that, despite the analysis, what you may prescribe for one patient may be quite different for another in a similar situation but with alternative goals, concerns and resources. Similarly, authentic financial planning is not simply a financial plan by the numbers.
4). Doctors carry many expenses most people don’t have, e.g., malpractice insurance, family that may rely on them, and an upscale lifestyle. Budgeting is critically important for doctors. No matter what you make, there is someone, maybe you, who can spend it.
Doctors are often saddled with debt as they obtain their medical education. Managing and paying down that debt takes years of discipline and planned action. Even deciphering the various paydown options can be trying.
5). Doctors are immersed in their fields, under immense pressure to perform and spend most of their time with other medical professionals and doctors. The temptation to just ask your contemporaries what to do, then follow suit, is strong. Well, that’s fine. If you have the same life, lifestyle goals, dreams, aspirations, compensation, assets, liabilities, cash flow, dependents, and living situation.
6). Doctors need asset protection, as much as or more than anyone else, and not just because a patient may sue. One should have adequate auto, homeowners, umbrella liability and malpractice coverage. However, it is 10 times more likely that a doctor will lose assets through a normal everyday divorce, or ruptured business partnership, than through malpractice.
7). Doctors need savings with tax-advantages to maintain their lifestyle into later years. Like all high earners, doctors are the IRS’s best friends. You may be able to push a button to manage your money, but taxes can be inscrutable, even for those in the field.
8). Doctors, like anyone with high income, can fall prey to unscrupulous managers, over-confidence and investment schemes. It’s worrisome to have high cash flow, but little investment experience and no help. A Certified Financial Planner who acts as a trusted fiduciary, the highest ethical standard in the industry, can ease your mind, if nothing else.