Including quotes from Dr. Vicki Rackner’s article.
While it may be tempting for physicians to do their financial planning themselves, studies show that financial advisors for physicians bring much better results. We hear it all the time: financial planning is the key to lifelong financial stability, especially in many professional careers. Someone in the legal field wouldn’t think of working without a financial advisor. Financial advisors for physicians are even more critical. Across the board, it’s imperative for many professions to take advantage of these services.
Financial advisors for doctors can be the difference between a healthy long-term investment and a short-term one. According to AMA, American Medical Association, managing and investing funds without a financial advisor is one of the top financial planning mistakes physicians make.
Having a professional financial advisor for physicians is the difference between making or breaking your long-term financial goals.
What are the benefits of using a professional financial advisor?
The benefits to using a financial advisor for medical practice are endless. It’s more than just securing your peace of mind — it’s making sure your finances and documents are in order for the long term.
- Feel better prepared for retirement or medical practice closure – A financial advisor will walk you through all the necessary arrangements for retirement. You want to make sure your finances are secure even after your medical practice, and a financial advisor for physicians can illuminate possibilities that might not be top of mind for you. Whether you need to review your insurance needs, apply for government benefits, or simply come up with a sustainable budget that works for you, a financial planner will lay the framework for your success.
- Have more in emergency savings – Take control of your emergency savings with a financial advisor for physicians. It’s easy to get carried away with day-to-day finances — a financial planner will look at the long term, making sure you have enough tucked away for a rainy day. Ever wondered how much is enough for an emergency fund? A financial planner knows and will get you on track to save the right amount.
- Have more diverse financial investments – When you’re unsure where to take your portfolio, one of the more challenging things to do on your own is diversify your financial investments. It can be tempting to invest in similar industries, especially if you’re working specifically in the medical field, but diversifying your portfolio is key to long-term success and a financial advisor for physicians can map the perfect path for you.
- Feel more confident about their personal financial decisions – Nothing gives you stronger peace of mind than knowing your finances are well taken care of, and that peace of mind is exactly what a financial advisor for physicians can do for your medical practice.
Why do some DIY-ers struggle with financial planning?
It’s not uncommon to struggle with financial planning, especially if you’re doing it completely on your own. Have some of these factors affected your past successes?
- I get too emotional about my money. This is a natural response to financial planning, as it can get quite daunting. The task of establishing saving goals, saving methods, and what to do in case of emergencies can be stressful. On top of it all, you’re working with money you earned through your medical practice. It’s not hard to see how emotions can get tangled up in the financial planning process.
- I don’t really have the time. While many DIY-ers start out with the best intentions, after time it becomes evident that their attention begins to drift. It’s hard enough making money, and putting aside time at the end of the day to plan for a future they might not be able to see yet doesn’t always seem like the best use of time. In the end, financial planning is the first to suffer.
- It’s a lot harder than I thought it would be. Financial planning might initially seem like putting together a budget and sticking to it, but there are many unseen factors that must be taken into consideration. Not only do you have to have the ability to plan, but you must also have the ability to foresee and overcome any obstacles that may be in your future.
How to choose a trustworthy financial planner
As a physician, employing a financial advisor is imperative, but there are so many options out there. It makes it difficult to really narrow down the right financial advisor — the one who’s going to work with you to achieve success.
Here are some tips on how to choose a trustworthy financial advisor for physicians:
- What are their certifications? Make sure to double-check a potential financial planner’s certifications. Do they hold a certification from an accredited source (eg. Chartered Accountant or Certified Financial Planner)? These are all factors that can improve the quality of your relationship with your physician financial advisor.
- Do they have the appropriate education and experience? Though experience breeds experience, it’s important in this case to work with a financial advisor who has worked with doctors and those in the medical field before. This is especially true if you’re still feeling uneasy about hiring one. By ensuring they’ve ran this particular race before, you can have peace of mind knowing they will anticipate your concerns and challenges way ahead of time.
- What is their working relationship style? Are you someone who prefers a hands-on approach or a hands-off monthly update? Do you want to be guided every step of the way or prefer a layout with as much flexibility as possible? If this is a new venture for you, aim to partner with a financial advisor for doctors who suits your working style best.
Key survey findings
These numbers come from the 2014 AMA Insurance Agency Report on Employed Physicians’ Retirement Preparedness. Here are some of their key findings:
- 57% of employed physicians use a professional financial advisor; 43% do not.
- The biggest unanswered question that keeps more physicians from working with an advisor is, “How do I find an advisor whom I can trust?”
- 60% of practicing physicians are employed by hospitals, groups and medical schools
- 42% of of employed physicians are behind where they would like to be in retirement planning
- Employed physicians” #1 financial goal is to provide a comfortable retirement. Other top concerns include funding long-term care, minimizing estate shrinkage and ensuring an inheritance for children/ grandchildren.
- Half of employed physicians believe they have unique or more complex financial needs than other professionals.