While becoming a doctor needs 86,000 hours or more of studying and training, there is an absolute total of zero hours of training in: business, taxation, financial literacy or financial issues related to the “business” of being a doctor. Doctors receive no training on how to choose or evaluate financial advisors which includes: Insurance agents, Investment professionals, Accountants or Lawyers, that they would need in planning for their finances over their entire career.
There are two common mistakes we see in a Doctor – Financial Advisor relationship.
Mistake #1. How Physician Choose Advisors
The first mistake of majority of the physicians makes in financial, legal and tax aspects of their careers is how they choose their professional advisors. Whether their accountants, insurance agent, investment professional or lawyer. Many physicians make poor choices.
Working long hours without financial training, doctors are typically busy people and they often take the path with the least resistance and minimum time commitment. They get recommendations from older consultant or from their family or who the medical society recommends.
“This may serve its purpose for a while.” You think, “Your life is so hectic, you just need to – get it done fast.” You think I can just settle for a decent and good enough. Like a GP in the emergency room, you don’t need a highly trained specialist if all you need are a few basic stitches.
Mistake #2. Doctors do not seek a second opinion
Dr. Rey is an Ophthalmologist. He has been earning just 500,000 per annum when he started out, he sought the expertise of a financial advisor that was recommended by his consultant, Tita Lenny. He was advised to get life insurance and few investments. Through the years of practice, he became more specialized and became a sought after Retina Specialist. After 10 years of awesome practice. He is now earning 10 Million per year, he was able to buy a house, a farm and a condominium. He sought again his agent, thinking of his retirement soon, he met her again, she, again offered him a life insurance and few investments. He received no advice on maximizing his investment on his nearing retirement and advice on his enlarging estate which will be an estate tax issue soon enough. Maybe because he did not tell her the details and the agent didn’t even bothered to ask.
The alarming thing here is, even though many physicians have outgrown the expertise of the advisors, they don’t get a second opinion.
Doctors urge patients to get a second opinion before opting for a surgery, but, they don’t get their own “second opinion” before agreeing with the plans they are presented to. Obviously, Tita Lenny, her insurance advisor knows only life insurance, she knows little on investment and does not know Estate Planning Management.
The idea that you can outgrow an advisor may seem obvious to you in Medicine – you no longer send your child to a Pediatrician when the child becomes an adult. Yet, many physicians continued to use the same advisors that are no longer appropriate for them.
Are you one of them? Test yourself now:
- How did you select the professional advisors you work with today?
- How many other professionals did you interview prior to choosing your own?
- Did you choose only because he/she is a relative or someone somebody know?
- Have you sought some second opinion from a more qualified advisor?
Mistake #3. Failure to Understand ‘Sub-specialties’ in Finance
If you need a stent to put into your Aorta, you would not go to a General Practitioner. Moreover, you won’t go to any other specialist outside the field of cardiology. You won’t even settle for seeing the standard cardiologist – you would seek an Interventional Cardiologist to handle the procedure.
Utilizing a specialist to assist you seems obvious, but when it comes to areas of taxation, insurance, investments and business finance, doctors fail to apply this same concept.
All are different subspecialties that you need to consult different experts. For areas of taxation, you need a qualified Accountant that is good in handling all your tax needs, if you encounter problem in this area, you might need a Tax lawyer. The same with your Financial Management area, in Life insurance or Risk Management, you can get that from the insurance agent. When it comes into investing your money, make sure the financial advisor you get is also an expert in investments ( this could be your insurance agent who went to further training or certification) or this could also be an entirely different professional that is expert in investing. When it comes to Wealth Management such us Estate Planning, you will need an Estate Planner or an Estate Lawyer expert.
“In conclusion, doctors need to begin taking their own advice. Seek a second opinion and rely on specialists to address your complex and growing financial needs.”
For Financial advisors reading this post: I challenge you to level-up your practice. Do what the physicians do. They continue learning and training to become more specialized and more deserving to serve their patients, that same should also be applied to your clients’ growing complex financial needs. If you don’t know anything about some areas, refer to other expert professionals. Like how doctors refer their patients to more appropriate specialist.
“Primum Non Nocere – First, Do no harm” should be applied not only to Doctor’s patients but also to Doctor-Clients. Give the best advice possible according to their needs.
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Your Holistic Financial Adviser,
Read More here:
- Why are Most Filipino Doctors not RICH? Top 5 Obstacles Keeping Filipino Doctors from.
- Becoming Wealthy FILIPINO DOCTORS AND TAXATION Part 1: The Ultimate Guide on How to Register as a Doctor/Physician in BIR
- FILIPINO DOCTORS AND TAXATION Part 2: How to Issue Receipts: Guidelines for Moonlighters/Starting Private Practice
- 5 Insider Tips on Finding The Right Insurance Agent/Financial Advisor For You
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