Physicians have financial needs that are different from professionals in other fields. Depending on your specialty, you might work mostly on contract, for a hospital or for the government. That, coupled with student loan debt you likely have from medical school, makes for a unique situation that shouldn’t be handled with a one-size-fits-all approach.
You’ll know it’s time to think about getting help with your money if you’re running out of time, expertise, or both to manage your finances (or if you just want a second opinion.) If you’re a doctor and you’re considering hiring a financial planner, here are some important points to consider:
What Kind of Advisor Should Physicians Work With?
Anytime you’re looking for a financial planner, you should do your due diligence. You may have been approached by firms or advisors who work specifically with physicians, but that doesn’t mean they’re automatically a good fit for you.
There are four things I believe you pay special attention to when you’re shopping around for an advisor:
- Credentials. A certified financial planner (CFP) has gone through a rigorous coursework in different areas of finance. A certified public accountant (CPA) with a personal finance specialty (PFS) is tax-focused, but the PFS gives them some education in the finance world. Know what those designations mean when you’re looking at hiring a financial planner.
- Focus on the client. The advisor should actually listen to you and your goals. If they immediately bust out a product to pitch to you to help solve all your problems, you should get a second opinion.
- Fee structure. A financial advisor should be comfortable disclosing how they make their money. If you ask them how they get paid and they seem hesitant to answer, that’s a red flag. Don’t feel weird asking about that. Ideally, you would want to work with a fee-only planner.
- Who they work with. Some financial advisors work mostly with certain generations, young professionals, retirees, and people in different fields. Look into their specialties to see if they are comfortable with your needs and concerns.
How Do Financial Advisors Make Their Money?
As a doctor, you’ve probably been pitched financial products like variable annuities, whole life insurance, and other insurance policies. It can be hard to keep up with what is really for your best interest, and what might be an attempt at a commission. Here are the different ways advisors get paid:
- Commission-based, which is not as common anymore. These advisors don’t get compensated in any other way besides selling products.
- Fee-based, where the advisors are licensed to charge a fee, but they can also make money selling products.
- And fee-only advisors, who don’t make a commission by selling products. Instead, they tend to charge with a per-hour rate, a flat fee or by assets under management (AUM.)
It’s important to know how an advisor makes their money because then you know whether or not they have your best interest in mind. From there, you will better be able to decide if an advisor is truly a good fit for you.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes everyone should have access to financial resources and coaching. For more information on the services offered, contact Katie today.