Why do you need professional advisors?
If you were the CEO of a company pulling in $15 million in top-line revenue, you wouldn’t be managing that organization by yourself, right?
You’d have a team of trusted professional advisors in your “C-suite” to help you manage the business. You would have a director of human resources, a chief operations officer, a chief financial officer, and probably ten other people to manage different parts of the business.
Well, guess what? I just described you!
If you start out as a physician in your early 30s and continue to practice for 30-35 years, you will earn millions of dollars over your lifetime that you’ll have to learn to manage.
As you know, I believe strongly in the importance of taking personal responsibility for your finances. However, it is extremely helpful to have a team of trusted professional advisors that can help you manage this company called “You, Inc.”
You’re a physician with years of medical training and expertise, so you expect your patients to trust you when it comes to medical decision-making.
It’s likely that you don’t have formal training in financial matters, so it makes sense to seek wise counsel from financial professionals who can advise you on the management of your financial plans.
You need a “board of directors”
You need individuals to teach you about the different aspects of your financial plans, so you can make well-informed decisions about your finances.
How do I find the professional advisors to sit on my “board”?
Your best bet is to get a personal recommendation from someone you trust. Ask your family, friends, and especially colleagues in similar situations for a good recommendation.
If you’re moving to a new area and don’t know anyone, such as starting a new job or training program, ask people you’ll be working with for their recommendations.
Beware of online reviews
As physicians know all too well, online referrals may not accurately reflect the quality of the professional advisor. People who are satisfied with their services post online reviews much less frequently than dissatisfied customers.
If you have 100% 5-star ratings or 100% 2-star ratings from a few dozen reviewers, that’s probably solid information. If it’s an average of 3.5 stars and the reviews are all over the place, that won’t give you a clear picture.
Make sure you interview the people that will be advising you. If someone has the heart of a teacher, you’ll learn something during your encounters. If you get a salesman instead, you’ll just get a bunch of recommendations, deals, and you probably will feel a lot of pressure to “just buy.”
You’re hiring someone for a major position in your life, so you want to treat this like a professional interview. Ask serious questions and find out what you’re getting for your money.
Make sure it’s someone you feel good enough about that you would recommend them to someone else. If you wouldn’t recommend them to someone else, why would you have them work for you?
Who should I include on my “board of directors?”
Everyone’s situation is a little different, but you should consider having these individuals among your personal list of trusted advisors.
Tax professional or accountant
Once you start earning an attending physician’s salary, your taxes will be complex enough that it’s valuable to have a tax professional. This doesn’t excuse you from being competent in minimizing your tax liability.
I know some physicians who feel confident enough to do their own taxes, but a dedicated tax pro will usually save you money by finding ways to structure your investment strategy to maximize your tax efficiency.
You’ll eventually need an attorney for something, whether it’s to review an employment contract, set up an LLC, represent you in a malpractice lawsuit, file for divorce or bankruptcy (although I pray that never happens to you), or some other unforeseen legal entanglement.
Establish a relationship with an attorney who can advise you on a broad range of legal issues. If you eventually need an attorney for a more specific purpose, your primary attorney should be able to recommend someone they trust.
If you manage your money the way we teach, you’ll have millions of dollars to pass on to someone when you die. You need to consider how that money will be distributed, whether it’s to charity, family members, or anyone else.
There are huge tax implications if you don’t plan this wisely. The estate tax exemption laws change every few years, and if you’re not careful, you’ll find that your estate proceeds go to the government instead of your intended heirs.
You need insurance for a lot of different things. See my post on insurance that you need for more details. An insurance broker can help you shop from among a variety of companies and get you the best deal.
Don’t go with a “captive agent,” which is someone who only represents one company. Also, be sure to avoid anyone who wants to sell you whole life or cash value life insurance.
Real estate professional
You’ll buy a home eventually if you haven’t already. If you’re interested in real estate for expanding your financial portfolio, you may buy dozens of properties over the course of your life.
A real estate professional can help you get the best deals on properties, negotiate good prices for buying and selling real estate, and, most importantly, can help you market properties when you’re ready to sell.
Investment professional or financial planner
This one is a little more controversial, depending on which sources you read.
Full disclosure: I don’t use an investment professional, and I never have. Instead, I spent years reading dozens of books and hundreds of articles on financial planning, and my investments have consistently outperformed the general market. If you’re willing to do that (and I think you should), then you are probably fine without a financial planner.
Most people don’t want to spend that kind of time and energy to stay that far ahead of the curve. If that’s you, then you should have someone who can advise you on your overall financial strategy as well as purchasing individual investments.
A “fee-only” advisor is usually the best way to go, rather than someone who takes a percentage of your earnings. Again, find someone who has the heart of a teacher, not a salesman.
You can’t be expected to be an expert at all financial and legal matters, though you should have a basic understanding of all these areas.
The professional advisors on your “board of directors” will keep you from making major mistakes and can guide you through the decisions that will secure your financial future.
Take the time to find trusted advisors to help you plan the biggest aspects of your financial life.
Brent Lacey is a gastroenterologist and can be reached at the Scope of Practice.
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