Doctors need financial treatment

“Physicians have a significantly low propensity to accumulate substantial wealth.” – Thomas Stanley, author of The Millionaire Next Door

How come doctors fail to get rich? I’ve identified six reasons based on observations working with my physician clients, and supported by Stanley’s book.

A late start

By the time doctors finish medical school and residency they’re typically in their middle or late thirties.  Many have families to feed, and substantial student loans to pay off. It will be years before they can even start accumulating wealth.

Lifestyle expectations

Society expects a doctor to live like a doctor, dress like a doctor, and drive like a doctor. Meeting social expectations uses resources that could be otherwise invested.

Time and energy

A typical doctor works a ten- to twelve-hour day. They simply don’t have enough time and energy left to do proper financial planning. When we’re tired we tend to make mistakes, and financial planning requires focus. Wealth doesn’t happen by accident. It takes careful planning.

Giving

Among all high-income groups, doctors donate more time and money to charitable causes. This is a good thing. But some harm their own future financial health because they don’t understand the right balance between investing and giving.

Financially naïve

Doctors are smart. They’re highly trained in their area of expertise. But that doesn’t translate into understanding about finance. Because they are smart, it’s easy for them to think the consequences of their financial decisions are obvious. They aren’t.

They don’t get good advice

Fiduciary wealth advisors typically require their clients to have $1,000,000 to start. Fee-only financial planners charge fees upfront. What’s confusing for the physician is that salespeople masquerading as financial advisors give them advice for free. Unfortunately, most doctors can’t tell the difference; they end up hiring a fox to guard the hen house.

Want to be a rich doctor?

You can, with proper help. A fee-only independent financial planner like myself can help take care of your money matters so that you can focus on what you do best and enjoy your hard-earned money with peace of mind. Why fee-only? “No one can serve two masters.” If your financial advisor gets paid by an insurance company or a big Wall Street brokerage, don’t count on him to put your interest first.

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