As a group, physicians are among the highest-earning professionals out there—and this specialized and life-saving career comes with some specific financial needs. Because of this, physicians should seek out a financial professional who has experience advising others in this industry and can anticipate and help guard against some common risks. Learn more about some of the factors to consider when selecting a financial professional that meets a physician’s unique needs.
Why Do Physicians’ Finances Merit Customized Treatment?
Physicians are generally high earners (what some financial planners call “whales”), but this income comes at a cost.
Many physicians are dealing with high student loan balances. Some of these loans may be eligible for forgiveness under the Public Service Loan Forgiveness (PSLF) program, while others could be repaid through an income-based payment plan that allows for greater financial flexibility early in one’s career. A financial professional needs to be well-acquainted with the terms of these loans so that their advice is tailored to each client’s situation.
The need to tackle these loans and pay them down quickly must also be balanced with the need to save. Because of the many years of higher education required to obtain a medical degree, along with years working as a low-paid resident, many physicians get a late start saving for retirement. Combining this late start with “lifestyle creep,” or the increase in spending associated with a dramatic increase in income, can mean that many physicians wind up saving far too little of their new higher salaries.
Finally, physicians need to insure their earning capacity. While many people purchase life insurance to protect their families in the event of their unexpected death, physicians are far more likely to suffer a disability that prevents them from working.¹ Losing the ability to practice medicine relatively early in one’s career can be financially devastating, and a high-quality insurance policy can help a physician maintain their income and stability no matter what happens.
What Should Physicians Look for in a Financial Professional?
As a physician, you don’t want your financial professional to be learning about these unique risks for the first time while advising you; instead, seek out someone who has helped others tackle these very issues.
There are several types of financial professionals from which to choose: a certified financial planner (CFP), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), or a certified public accountant (CPA) who has been designated a Personal Financial Specialist (PFS). Regardless of which type of professional you select, you’ll want to ensure that they are a fiduciary, or someone who is legally obligated to put your financial interests first.
You may want to begin your search by asking fellow medical professionals or trusted industry organizations (like the American Medical Association) for their recommendations. This offers the best chance of finding someone who has helped others in your position. Once you have a shortlist of names, it can be a good idea to make a list of questions to ask each potential candidate, including questions that are based on your needs and investment goals.
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