While medical professionals often earn lucrative salaries, careful planning and management of these funds are critical. A financial advisor can offer guidance. Choosing a financial advisor with medical professional experience is the key. It enables professionals to access a wide range of financial planning tools and resources.
Medical professionals must navigate complex challenges. These often involve high student loan debt from their education and complex income structures. More so, they need to actively pursue retirement planning strategies early on to maximize contributions. With the guidance of a trusted financial planner with medical professional experience, it is possible to overcome many of these challenges with confidence.
Specialized financial advice for physicians of all types enables better management at every stage of a person’s career.
The Role of a Financial Advisor for Medical Professionals
Doctors, surgeons, and other medical professionals benefit from the support and guidance of a financial advisor. Advisors with experience in this area recognize the unique challenges present. That includes the importance of aggressive but stable investment strategies and the need to navigate the high cost of student loans.
While those in this industry may have a higher income than others, they also have complex financial needs. Their long-term goals are also different. You need a financial advisor capable and experienced enough to help you make decisions you feel good about so that you can achieve each of your goals:
- Reducing student debt obligations to lower costs
- Improve overall financial planning to mitigate risks of losses due to job transitions or moving
- Support investment planning to build wealth
- Maximize tax strategies to minimize costs
- Support real estate and other investment decisions
- Build a strong retirement savings plan
- Establish an estate plan for future generations
Working with a certified financial planner enables you to address your specific plans. It ensures you get insight into your options and allows you to compare strategies.
Getting matched with a financial advisor that fits your specific needs and career goal is easier to do than you realize. Explore how Invested Better can match you with the advisor best suited for your needs.
Key Qualities to Look for in a Financial Advisor
Seek out an investment manager, wealth planner, or financial planner offering specific services to doctors and other medical professionals. Choose a professional with physician clients who are already established, as they have the hands-on experience you need. Consider these qualities.
1. Expertise in Medical Professional Financial Needs
Choose a financial professional with a solid understanding of the specific needs of medical providers and practitioners. Key to this include the following:
2. Student loan debt management
Student loan debt is an initial hurdle for most new doctors. Some key strategies include paying off debt quickly, taking advantage of any student loan debt forgiveness programs, and reducing taxes from student loan interest. Investment professionals can offer guidance on making the most of these areas.
3. Insurance needs
All doctors must carry adequate insurance to protect their financial well-being against claims.
- Medical malpractice insurance is one form. A high level of professional liability insurance may reduce the risk of costly lawsuits exposing personal and business practice assets to claims.
- Disability insurance protects doctors who are hurt and unable to work for a short or long period of time.
- Life insurance provides a financial net for family members should a physician die unexpectedly. Life insurance products, including term-life and whole-life can also play a role in financial strategies and wealth building.
4. Retirement Planning
Financial advising regarding retirement planning is also a critical service from financial advisors. This includes taking full advantage of qualified tax-advantaged plans. It may also include developing strategies that minimize capital gains taxes and enable wealth building over generations. Financial advisors can offer insight into the specific strategies best suited for the goals of the medical professional.
5. Tax Strategies
Medical professionals benefit from tax strategies, such as reducing tax obligations by paying down student loan debt from medical school or maximizing charitable contributions. Allow a financial advisor to create tax planning that minimizes costly tax obligations.
6. Fiduciary Responsibility
Financial advisors should have a fiduciary responsibility to their physician clients. This means they have a legal or ethical obligation to act in the best interests of that client. When choosing a financial advisor, select a professional who will encourage, recommend, and support decisions that benefit your financial goals and financial life.
Choosing a person without this responsibility means they could offer financial products and services based on the compensation received. Instead, choose a financial advisor that prioritizes the client’s best interest over their own.
Comprehensive Service Offerings
When choosing a financial advisor, take the time to explore all of the programs, features, investment strategies, and tools they offer. In some cases, financial advisors may specialize in a specific type of investment strategy. Other times, they offer financial advising that is more robust to meet more needs. Some of the core financial goals many medical practitioners have can be met with financial tools such as:
- Retirement planning through a 401(k) and IRAs, depending on the structure of the doctor’s relationship with their employer or if they own their own practice
- Investment management services, including the types of stocks and bonds, mutual funds, and other investments they maintain and manage
- Tax planning services, including those that provide financial advice to reduce tax obligations through wise investment portfolio management and decision-making
- Personal financial support, including navigating debt and goal-planning for future objectives and investment decisions
- Insurance planning, also important for personal finance support, will provide opportunities to minimize liability risks and claims made against the medical provider
- Estate planning, which can help with planning your current financial life as well as how you plan to leave assets behind for future generations
Financial advisors for physicians must be able to have a whole-person view. That means offering robust financial advice to meet all your financial goals.
Questions to Ask Potential Advisors
As a medical provider, you know the importance of planning, asking questions, and getting all of the data possible before making decisions. Many financial advisors can provide services to a doctor or medical professional. Yet, to choose one that is truly the right decision for you, you need to ask key questions. The following questions can help you gauge how well financial advisors can meet your objectives.
1. What experience do you have working with medical professionals?
Choosing financial advisors for physicians specifically ensures they know how to properly navigate your specific challenges and needs. Ask the financial advisor what types of medical professionals they have worked with in the past. Also ask:
- What types of recommendations have you made for other medical professionals?
- Have you found an effective way of dealing with personal financial struggles for new physicians with medical school debt?
- What recommendations of investment strategies do you have for doctors in my specific medical field?
2. How do you charge for your services?
Discuss the way in which the financial advisor is paid for the services they offer. There are several structured options possible. No one method is better. However, you should understand the differences in these areas:
- Fee-only advisor: A fee-only financial advisor is paid a specific rate for the services they offer. They are not paid a commission on what they help you buy or sell.
- Flat fee service: These financial advisors charge a flat fee for specific services they offer. They provide this fee upfront.
- Commission-based fees: Some financial advisors are paid based on commissions for the financial products they sell. These tend not to be fiduciary advisors.
- Performance-based fees: Some advisors are paid based on how well a financial portfolio does over a set amount of time.
Ask the financial advisor to explain what they charge, how they calculate those fees, and what the average per-year cost is to provide the services you need.
3. Can you provide references from other medical clients?
While a financial planner may not be able to tell you the names of people they work with, they often have some clients they have spoken to who can offer recommendations. It is wise to ask a financial advisor for some references. When you reach out to those people, ask questions such as:
- How hard is it to get in touch with a financial advisor when they need to?
- How long have they worked with that professional?
- Are they seeing the results they expected to see?
- What happens when performance falls? Does the advisor contact you and make changes?
- How responsive is the financial advisor to concerns?
- Does the financial advisor provide education on why they make the recommendations they do?
Get to know how the professional works and the type of relationships they have with their clients.
4. What is your investment philosophy?
Many financial advisors have a strong investment philosophy. What is right for you as a medical provider may be different from that philosophy. Choose a financial planner with the skill to support your specific financial goals. Do you believe in what they are recommending?
5. How often will we meet to review my financial plan?
Personal finances are a process. When choosing a financial planner or advisor, you need to be sure they will meet with you on a routine basis to help you achieve your goals. You want to know that the financial advisors are going to keep you informed between those meetings as well.
Red Flags to Watch Out For
The right financial advisor is a person you feel you can trust. You know they have the information and resources to help you navigate personal finance decisions. You also feel good about their experience, investment strategies, and knowledge of a rapidly changing financial world. If you have not achieved those goals yet, start there.
At the same time, you also want to watch out for red flags. These are warnings that may mean you need more information. The following key factors should never be overlooked when comparing financial advisors:
- Lack of transparency regarding fees and services. If they cannot provide very specific insight into costs, services, recommendations, and performance, you should not work with them.
- Pressure tactics or aggressive sales approaches: Your personal finance goals should be the priority. If you feel they are pressuring you in one direction or another, move on. Any type of aggressive sales approach creates questions about fiduciary responsibility as well.
- Limited experience with the unique needs of medical professionals. Your personal finance goals are different from others. Tax planning is different, medical school debt is much higher, and your salary differs. If they do not have experience, move on to someone that does.
The more you know about this, the better. If you are not comfortable with what they are providing to you, selling you, or recommending for you, seek out a certified financial planner you feel more comfortable working with to manage your financial future.
Choose a Financial Advisor You Are Confident In
Your personal finance future is on the line. You need the right financial advisor to guide and support you as you build your medical career and continue to help people. Make a decision you are comfortable with based on your short-term and long-term personal finance goals.
Even though you may have some specific needs that other medical professionals have, you also have your own personal goals. As a result, you need a professional you can feel great about communicating with and trusting with your financial future.
You may have numerous future objectives. That may include starting your own practice one day, building a wealth fund to leave for your heirs, or helping in third-world countries. No matter how big and bold your specific goals are, you need an advisor who can help you navigate the complex financial landscape you are facing.
Use our Advisor Match tool now to connect with experienced financial advisors who specialize in working with those in the medical field.
