A few weeks back a physician called me because he was interested in how I can help him with his investment portfolio and with financial planning. He had had been receiving emails from me for a number of months and had also read a number of my articles I published.
So he scheduled a second opinion consultation with me.
This guy was in his mid 50s and really started to see the freight train of retirement hurtling straight at him. He felt like he was behind--and indeed when I looked at his retirement portfolio, I told him that he's not where he should be.
I asked what was bothering him and he said something like the following:
"I'm worn down from seeing so many patients everyday. It's really taken a toll on my personal life and my family."
"I'm sick and tired of all the regulations, paperwork, and administrative nonsense I have to deal with as a physician these days."
"If I had enough money, I'd quit practicing medicine in a heartbeat."
Does this sound familiar to you? I bet it does.
Most physicians I speak to simply aren't happy and most of them are fed up with the political, administrative, and tax BS that's thrown at us.
So then I asked him what prompted him to call me. He said that he'd been managing his investment portfolio by himself for a number of years and didn't trust financial advisors.
To which I replied that I don't trust many financial advisors either! He found that somewhat ironic since I'm a financial planner myself, but really I meant what I said. I'm sort of like the "anti-financial advisor" advisor if you know what I mean.
Anyway he said he'd lost a ton of money very quickly over the past few years because he didn't get out of the market when it tanked a few years back and then was so scared that he sold a bunch of his investments near the bottom, and then he missed the huge 100%+ returns since then.
I asked him "How much did this cost you?"
His reply was "Well, my portfolio started out at $2 million, and ended up at $1 million."
This doctor had become a millionaire, but not in the way he wanted to!
I've had other physicians who have financial advisors call me after similar events happened so this is something I've heard before.
Oh, but it gets more interesting.
We then talked about how I may be able to help him manage his investment portfolio using a sound academic investment philosophy and that one of the biggest values of having a good investment advisor is the discipline that is forced upon him.
It's sort of like hiring a personal trainer at a gym. A good one will keep you focused and push you where you couldn't go on your own.
But he balked when he realized he had to pay a fee to have me manage his portfolio. His reasoning was "I'm not paying any fees right now so why should I pay you?"
To which I replied "Let's think about this. You just LOST $1 million. Guess what? That is a seven figure fee you paid! Just because you didn't write a check doesn't mean you didn't pay a fee."
But this doctor just didn't get it.
In the end he decided to continue managing his own investments the way he'd been doing them all those years, thinking he wasn't paying anything. Hopefully he didn't become a hundredthousandaire if you know what I mean.
Dumb. Dumb. Dumb.
It's not that he is a dumb person--he's actually very smart. But he's a very dumb investor. They're two very different things.
He made the classic mistake of looking only at cost and not looking at value even though he already paid dearly for his mistakes.
Now quite frankly it really didn't matter to me one way or the other whether he became a client of mine since I feel comfortable with where I'm at. Granted I think I would have added tremendous value to him and helped him solve his problems, but I didn't get down on my knees and beg for his business since I really didn't NEED his business.
By the way, that's a very good position to be in as a physician--when you get to the point where you have control of your financial life and you don't let the rest of the world trample all over you. Or when you get to the point where you can just walk away with no impact on your bottom line. More on that some other time.
So what's the take home lesson here?
Make sure you look at ALL of the indirect fees you're paying in your invesment portfolio. One of the biggest ones is lack of investment discipline (and therefore lack of an investment plan).
And that can potentially cost you way more than paying someone to get good investment advice--assuming you actually find an investment advisor who is competent.
If you want to find out how I can help you get more disciplined with your investment portfolio and hopefully NOT become a millionaire quickly, then schedule your second opinion financial consultation by clicking the following link: