Financial Hurdles for Medical Professionals
Those in the medical field face particular obstacles with regards to obtaining quality financial advice which is due to a myriad of factors. By shedding light on some of these factors, you can more easily spot them and work to safeguard you and your family against their influences. While some these hurdles are subtle and require significant effort in communication to overcome, some are more easily spotted. Medical culture is certainly to blame (we’ll get to that later), but let’s look at the biggest hurdle you have to clear.
As some of you know from experience, watching Last Week Tonight’s episode on this subject, or reading my other blog posts, there’s a big difference in how financial professionals work with clients. There are those who make their money by selling products on a commission basis and their whole job is to put you into the highest commission product that will still clear “suitability” for your situation. As someone who got his start in the industry with a company that operated this way, I was appalled with what exactly they found “suitable” for clients as I was constantly told to sell higher commission earning products. I quickly learned that there is a large gap between what’s best for the client and what’s best for the company, so I left to start a company where those two ideals were aligned and guided by the fiduciary responsibility.
There are also those who have a fiduciary responsibility some of the time. These people can be trickier to nail down as they are able to switch which hats they are wearing at times that benefit them and not you. Regardless, the easiest way to discover how a financial professional operates is to ask “how do you get paid?” as that will help determine where their priorities lie. If they get paid on commissions all of the time or part of the time, be prepared to be pushed a lot of different products that may or may actually be good for you and your family.
Medical professionals are particularly susceptible to falling into this trap because of their incredibly specialized career. You have spent the better part of a decade with singular focus of getting into the medical field, and most of you don’t have the time to do the proper research and vetting for an advisor and fall prey to commissioned salesmen. However, a good relationship with someone who isn’t pushing products or wearing the fiduciary hat when it suits them can last you well into your retirement and beyond, so it’s important to get it right. Do your due diligence, talk to different people, and be prepared to walk away. Just as critical as vetting advisors and finding the right one is where you get your financial information. Be very wary of news and tv, as they are designed to be entertainment not actual advice. Many people are aware of how ridiculous Mad Money and CNBC’s financial coverage can be, but please know that these are produced to gain viewers. You will do much better and have less stress if you simply cut these out.
Now that I’ve denigrated financial salesmen enough, it’s time to look internally for the next big hurdle. Every single doctor, nurse, med tech, chiropractor, counselor, and physical therapist I’ve talked to has all lamented the fact that they weren’t given financial literacy courses with their other studies. This can be tough as it’s not something you generally think about as you’re being bombarded with taking boards and doing clinicals and learning as much as you can, but looking back most people are frustrated that they weren’t better prepared to deal with their family’s finances. Given that medical and nursing schools are charging tens of thousands of dollars per year, it seems like they should be responsible for helping at least a little with understanding student loans and basic financial literacy. However, these schools are content to keep saddling students with hundreds of thousands of dollars of debt that can have profound negative impacts of their well-being while offering no insight in how to deal with repaying loans or building wealth. While I certainly can’t change their model or make them do more to help their students, I can draw attention to their process so that you know that you’ll have to put in the work to effectively manage your finances. If you’re serious about reaching your financial goals and building the kind of life that you’ll enjoy living, it’s going to require considerable effort on your part. The good news is that if you are involved in learning more and engaged in the process of planning and investing you’ll be way ahead of most people. This leads me to the final hurdle...
I will be the first to say that commissioned financial salesmen are a huge pitfall that needs to be avoided, but some of the blame must placed at your feet as well. However, clearing this hurdle is far easier than avoiding commissioned salesmen, it simply requires communication. Many people go into the medical field because there’s a genuine desire to help people when they’re at their most vulnerable. There’s an innate desire to help, which can make discussions surrounding money a bit taboo. It can certainly be difficult to have a conversation about money with your peers when everyone is focused on helping others. Unfortunately, due to mismanagement of finances, enormous student loans, long hours trying to pay off debts or attain a certain lifestyle, the burnout rate is particularly high especially for doctors. If you are able to have control over your finances and make good decisions you won’t be forced into working 90 hours a week to make ends meet and can drastically reduce burnout.
The other issue that can occur is that because of that lack of communication between peers everyone is stuck in their own little bubbles and make the same mistakes over and over again. Everyone is hesitant to admit to mistakes they’ve made, but the goal should be avoiding the pitfalls that others encountered. Maybe you’re lucky and have a group that is open to discussing these things, but if not the responsibility falls to you to educate yourself on what to avoid and how to reach your goals. At the end of the day the buck stops with you, but it can be invaluable to have others to break you out of your bubble.
These are some of the hurdles medical professional face when trying to get on track financially, and by calling them out it will perhaps better arm you against their influences. Are there other hurdles I should mention? How have you counteracted their influences? Which of these is the hardest to overcome? I would love to hear your thoughts, so comment below.