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Welcome to the latest episode of the Physician Cents Podcast, where we explore complex financial topics tailored specifically for physicians. Whether you're a medical student, resident, fellow, or attending physician, you're going to find valuable insights that can help you increase your financial IQ, further your financial journey, and improve your overall well-being. Hosted by Chad Chubb and Tyler Olson, let’s dive in!
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Ever wonder if hiring a financial advisor is really worth it? If you're a physician who's already comfortable with the basics of investing, like picking index funds and setting up automatic contributions, you might be asking yourself, "What's left for an advisor to do?"
Well, you're not alone! It's a common question, and this post is going to unpack the real value of financial planning that goes way beyond just managing investments. We'll explore when it makes sense to hire an advisor, what to look for in a good one, and whether professional help actually leads to better financial outcomes.
Ready to dive in?
Let's be real: the idea of getting completely conflict-free financial advice? It's kind of a myth. You'll see advisors advertising themselves as "conflict-free," but that's often more about marketing than reality. Why? Because every advisor, no matter how they get paid, has incentives and biases that shape the advice they give.
Some advisors get commissions when they sell you certain products. Others make money by managing your assets. It doesn't mean they're bad people! It just means you, as a smart physician, need to be aware of what's going on. Instead of chasing after this mythical, conflict-free advisor, what you really want to focus on is transparency.
So, what does real transparency look like? It means your advisor is upfront about their potential conflicts. They clearly explain how they get paid and make sure their recommendations are truly in your best interest.
Here are some questions you can ask to gauge an advisor's transparency:
Now, let's talk about how advisors charge for their services. The two main models are:
There's a common idea that AUM advisors are all about growing your assets, while flat-fee advisors do broader financial planning. But here's the thing: it's not always that simple! Some AUM advisors offer deep financial planning, and some flat-fee advisors might not be as comprehensive as you'd hope. The bottom line? You need to understand exactly what you're paying for.
Okay, so we've talked about investments. But financial planning is so much more than just picking stocks and bonds! A good financial plan looks at the whole picture, including:
Proactive planning in these areas can make a huge difference in your financial life. It's about more than just growing your portfolio; it's about protecting what you've worked so hard to build.
Taxes. Everyone's favorite subject, right? (Yeah, right!) But seriously, tax planning is a crucial part of any solid financial plan. An advisor can help you minimize your tax bill through strategies like:
If you can find an advisor with tax expertise (like an EA or CPA), that's even better! They can coordinate your tax planning with your investments and other financial decisions for maximum benefit.
Let's be honest, most Physicians have a lot of student loan debt. It's a unique challenge that requires a smart strategy. An advisor can help you figure out the best repayment plan for your situation, considering your financial goals and income.
They can walk you through the pros and cons of different options, like:
If student loans are a big concern for you, look for an advisor with the Certified Student Loan Professional (CSLP) designation.
Protecting what you've got is just as important as growing it. That's where asset protection comes in. Your advisor can help you figure out how much insurance you need (disability, life, malpractice, etc.). They can also guide you on legal documents like wills and trusts, which protect your assets and make sure they go where you want them to.
Just remember to work with qualified legal pros to create these documents!
Estate planning. It's not just for the ultra-rich! It's about making sure your family is taken care of and that your wishes are honored. Key components include:
An advisor can help you create an estate plan that does all that, while also minimizing estate taxes. And don't forget to review and update your plan as your life changes!
So, when is it really time to get professional help? It depends on a few things:
If you've got a mountain of student loan debt, a complicated tax situation, or just want a comprehensive financial plan, an advisor might be a great idea.
Okay, let's talk about some warning signs. You want to watch out for these red flags when you're choosing an advisor:
Let's zoom in on that whole life insurance thing for a sec. Why is it such a red flag? Well, these policies come with hefty commissions, which can tempt shady advisors to sell them even when they're not the best choice for you.
There are often better ways to reach your financial goals, so if an advisor pushes whole life without a solid explanation, be careful!
Think about it: Are you going to choose an advisor who only responds every couple of days or every few weeks? Probably not.
Responsiveness is a big deal! Your advisor should be quick to answer emails and calls and keep you updated on your financial situation. Set some clear expectations for how often you want to hear from them.
Okay, so you're looking at different advisors. Should you care about those fancy letters after their names? Designations like:
These designations show that an advisor has met certain education and experience requirements. But they're not a guarantee of anything! They're just a starting point.
The Certified Financial Planner (CFP®) designation is a pretty big deal. CFP® professionals have gone through specific education, passed a tough exam, and have experience in the field.
Plus, they're held to a high ethical standard. They have to act in your best interest! You can learn more about the CFP Board and its standards on their website.
An Enrolled Agent (EA) is a tax pro who's been authorized by the federal government. They know their stuff when it comes to tax law and can even represent you before the IRS. If you've got tax issues, an EA can be a lifesaver.
If you're drowning in student loan debt, a Certified Student Loan Professional (CSLP®) might be just what you need. These pros specialize in student loan repayment options and strategies.
Don't get too hung up on designations. They're not the only thing that matters! It's just as important to find an advisor who:
Seriously, find someone who gets what it's like to be a physician. It'll save you so much time and energy! Look for advisors who specialize in working with physicians or have a proven track record in that area.
Trust is everything! You need to feel like your advisor is honest, transparent, and has your best interests at heart. Ask for references or testimonials from other clients to get a sense of their reputation.
Let's take a look at what Jim Dahle of The White Coat Investor thinks makes a "perfect financial advisor." According to Jim, your perfect advisor should have:
Here's a little secret: If an advisor keeps shouting "fiduciary!" from the rooftops, it might be a red flag. Genuine fiduciary duty should be a given, not a marketing tactic.
Be wary of advisors who overemphasize their fiduciary status without actually showing it in their actions.
Okay, let's be real: No advisor is truly unbiased. Everyone has their own perspectives and incentives. What matters is transparency. Your advisor should be upfront about any potential conflicts of interest and take steps to minimize them.
A reasonable investment strategy is important for long-term success! Look for an advisor who uses low-cost ETFs or index funds and avoids chasing after the latest hot stock.
It's a huge plus if your advisor has connections to other professionals, like attorneys, insurance brokers, and mortgage lenders. Having that "deeper bench" of experts can be invaluable when you need help with different aspects of your financial life.
Let's face it: Sharing your financial details with someone can be tough. It's personal and can feel a little vulnerable. That's why it's so important to find an advisor you trust and feel comfortable with. Switching advisors can be emotionally draining, so take the time to find the right fit from the start.
There's no rush! Take your time when you're choosing an advisor. It's a big decision, and the more time you spend on it, the more likely you are to find a long-term fit.
If you think you'd benefit from working with an advisor, start the search now! Don't wait. Start learning how to better interview advisors.
So, should a physician hire a financial advisor? It's a personal decision, and there's no one-size-fits-all answer. But hopefully, this post has given you a better understanding of what advisors do, what to look for, and how to find the right fit for you.
Just remember to do your research, ask tough questions, and trust your gut. Your financial future is worth it!
The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don’t expect!) about a sponsor, please let us know. We call it the “best of the best” for a reason, and we will maintain that standard for our listeners & viewers.
This information is for general purposes only. This information is not intended to be a substitute for specific professional financial, tax, or legal advice, as individual circumstances vary. Please see a financial professional, CPA, and/or an attorney in regards to your own individual situation.
Wealthkeel’s Advisory Services and Financial Planning offered through Vicus Capital, Inc., a Federally Registered Investment Advisor. WealthKeel LLC, 615 Channelside Drive, Suite 207, Tampa, FL 33602 -- 267.590.9533.
Olson Consulting LLC, Offering Advisory Services and Financial Planning, is a State-Registered Investment Advisor.
A podcast designed specifically for physicians, offering a breakdown of complex financial topics to help you develop your financial IQ, further your financial journey, and improve your well-being. Whether you're a medical student, resident, fellow, or attending physician, you're sure to learn something new that will benefit your journey.
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Conversations helping graduating medical students to attending physicians build a strong financial foundation
