It is no surprise that physicians are at a disadvantage when it comes to personal financial management. Although physicians receive the best medical training in the world, they are not provided with the knowledge necessary to deal with the business realities of practicing medicine or their financial well-being.
During residency and fellowship, physicians are focused on their clinical responsibilities and often lack the time or the inclination to concern themselves with financial issues, such as managing debt, creating a budget, obtaining necessary insurance protection, or contributing to retirement plans. Suddenly, upon completing their training, physicians are ready to establish a financial plan. So, should you hire a financial planner? Let’s look at 10 reasons to hire a financial planner and 1 reason not to.
2. “See One, Do One, Teach One” Does Not Apply to Financial Planning for Physicians
Every physician and every family has a different financial situation; therefore, there is no way to improve your personal financial planning without making many mistakes. Establishing a financial plan is in many ways like purchasing a diamond. Although the jeweler may hand you the loupe to help you see the diamond that you are considering, without being educated first, would you see its flaws? Probably not, because you don’t know what you are looking for or how to differentiate between a high-quality gem and a low-end stone.
As financial planners for physicians, we’ve learned everything we can about financial planning for physicians, have written countless financial plans for physicians, and can teach you what you need to know to achieve financial security for your family.
4. Surgeons Don’t Operate on Family Members
Surgeons don’t operate on family members, and neither should they operate on their own portfolios. When it comes to investing, you only have 2 emotions—greed and fear. When the market is increasing, you regret not buying more (ie, greed), and when the market is going down or sideways, you feel you have made a mistake (ie, fear).
In fact, one study titled “Investment Behavior and the Negative Side of Emotion” showed that people with lesions in the areas of the brain that control emotions were more successful as investors than individuals without these brain lesions.1
The study’s participants were each given $20. In a series of transactions, they were asked to bet $1 on the outcome of a coin toss. If they chose not to bet, they kept their dollar. If they chose to bet their dollar and won, they received $2.50. However, if they lost, their dollar was taken. The participants with the brain lesions were more successful than the participants without the brain lesions. The study’s authors attributed that success to a lack of fear. Early in the study, all participants were willing to bet their $1 on the coin toss, but as the game progressed, the participants without the brain lesions feared losing more money, and decided not to continue playing.1
As a physician, you may have to desensitize yourself in certain situations, but when it comes to your money, emotions can make you your own worst enemy. A solid financial advisor can help you make a plan and stick with it so that you’re more likely to have a positive outcome.
6. Financial Planning Takes Time
When you are not sleeping, eating, performing procedures, or are in the clinic, you may want to spend some time with your family. Do you really want to sift through the financial news, read over your insurance policies, tackle your estate planning, and manage the minutiae of your student loans? A financial planner for physicians can perform all of these tasks for you, giving you some energy to enjoy what is left of your free time.
8. The Doctor’s Lounge Only Tells Half the Story
From the outside, it may appear that your colleagues are brilliant financiers. They’ll brag about all the money they’ve made in the market, but they won’t say a word about the huge losses they racked up along the way. A financial planner for physicians can help you make better decisions and prevent the mistakes that your colleagues have made.
10. Your Family Is Counting on You
You may be the only one in your household who understands the money situation. If something happens to you, your family may have a tough time managing the finances unless you have a financial advisor who can help them pick up where you left off. If your wife or husband is not involved with managing the personal finances, a financial planner can help you work together to become financially stronger as a couple and even model good financial habits for your children.
So what is the one reason not to hire a financial planner for physicians? It’s simple. You should not hire a financial advisor unless you intend to follow his or her advice, because the best advice—like the best medicine—will not do you a bit of good unless you actually take it as directed.
- Shiv B, Loewenstein G, Bechara A, et al. Investment behavior and the negative side of emotions. Psychol Sci. 2005;16:435-439.