As a physician, you can’t afford to go it alone with your finances.
As a physician, you can’t afford to go it alone with your finances.
You can’t risk making very costly mistakes just to save a few bucks. The stakes are too high. You’ve worked too hard for success. Maybe you’ve treated patients who diagnosed themselves via Google and then wised up-recognizing their health is just too valuable and that they needed professional help!
Let me share a little story: When we were building out our new office space nearly three years ago, it crossed my mind to hire an interior designer. Not just to help beautify the space, but because there are only so many hours in a day, and I knew that design would not be a top priority.
But I quickly dismissed the idea as an additional, unnecessary expense, particularly in light of the many other costly and unavoidable expenses that are involved with moving. And yet, nearly three years later, I realized that I needed help. There are spaces that were never quite finished, or that just don’t work. So I decided to call a designer, and get these issues resolved with the help of a professional.
The thing is-I know if I would have just called her in the first place, I would have saved time, money, and energy. The same is true of our finances.
The price of ‘no advice’
Sometimes our attempts to save money cost us more down the line. I often meet with individuals who don’t appreciate all the benefits of working with a full-service wealth manager – until, in some cases, it’s too late.
Sometimes they’ve already paid thousands more in taxes than they should have. A successful surgeon was surprised when I told him that if we made some subtle adjustments, he could double the tax deductions he is taking on 529 college savings plans.
He couldn’t believe it. “I’ve had a CPA,” he said. “Why didn’t he tell me this?”
I explained: “If he knew that you had these other accounts, he most likely would have told you. He probably doesn’t know your total financial picture.”
In another (and not uncommon) case, an emergency department doctor I met with had not purchased a personal umbrella policy. With a large income, and two teenage drivers, he was at great risk should either of them cause damage to another driver or pedestrian. I urged him to get the insurance coverage that would protect his family and his wealth in the event of a lawsuit.
While you may have thought that a financial adviser only helps you choose investments, we actually do a lot more, especially those of us who offer comprehensive wealth management. A full-service wealth manager serves as your personal CFO, focusing on the big picture of your finances, and helping you get the most out of your relationship with your other advisers, including your accountant and insurance agent – so key information is shared.
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A wealth manager finds answers to questions such as:
What are your top concerns when it comes to your money? What would like to achieve with your money?
Do you have a defined strategy for your investments? Do your assets make sense where you have them or do you, for example, own tax-free mutual funds in a tax-deferred retirement account? Are you taking advantage of opportunities to reduce your tax liability?
Do you have a plan in place in the event of a critical illness, long-term disability, or untimely death? Do you have personal umbrella coverage and is your malpractice insurance adequate?
Think of how you coordinate with other care providers to ensure your patient receives the best care. In the same vein, you need a financial quarterback!
Consistent investment approach
A wealth manager also can help you organize your “random” investments and develop a cohesive plan to convert those assets into a dependable retirement income stream. I’ve run into many new clients who had started an IRA early on, currently contribute to a 401(k), and have an assortment of brokerage accounts, annuities, inherited accounts, and more, but no clue how those assets relate to one another, whether they were invested optimally and how they could best be utilized for future financial goals.
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Working together, we establish a realistic retirement plan – and investment strategies that match our clients’ risk tolerance. Then we monitor and track your progress so that you can feel confident about your decision to retire or scale back.
Putting your house in order
A professional wealth manager can work closely with your attorney to be sure that your financial affairs are in line with the estate plan you created.
For example, a key first step in estate planning is reviewing the beneficiaries you name on your retirement and insurance accounts, and making sure they are correct and up-to-date. Mistakes here could cost you and your heirs big time. It’s also vital to have an updated will and to fully-fund any trusts that are part of your estate plan.
Recently I met with a couple that created an estate plan many years ago, but some of the key implementation steps never occurred-and there are unfunded trusts as a result. They weren’t even aware of this until our meeting.
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You also need to consider the formal agreements with your partners for when you retire or phase out. You may need help with buy-sell agreements and other succession planning instruments.
Finally, there are many issues that can arise when individuals become incapacitated. Although incapacity is often associated with the elderly, this is not always the case. Incapacity can strike at any time, and it is important to create a plan in the event that you are no longer able to make your own financial or medical decisions.
In these situations, you definitely need an advisor who knows you, knows your family – and can help you establish the proper legal framework before incapacity strikes.
Maybe you’ve run into patients who stalled on scheduling a consult, necessary surgery, or even prescription refills, only to have the delay damage their health. Don’t delay addressing these critical planning items because you are too busy or dread spending the money-if disaster strikes, it could cost you and your family much more in terms of time, money, and emotional energy.
Not everyone needs a financial adviser. Maybe your affairs are not complex. But as a physician, you likely have a lot at stake. There is simply no substitute for having a relationship with a competent and professional advisor.
After all, you’re spending your time perfecting your medical skills – you don’t have time to become an expert in taxes, insurance, investments, charitable giving and estate planning. And undoubtedly the biggest risk in going it alone is that you don’t know what you don’t know.
Just as WebMD is not a substitute for a real physician, online financial advice cannot take the place of comprehensive advice from a trusted professional.
Yes, there is a cost for advice. But there is also a cost for not seeking advice.
Karen Coyne, CFP(R), is a strategic wealth advisor with Raymond James in Hagerstown, Maryland. With over 15 years of experience, she helps physicians make smart financial decisions so they can focus on what they do best. Email firstname.lastname@example.org.