I recently started working with a new client -- husband and wife who are both physicians.
Like most physicians I meet, their finances were a mess.
Worse is that they were already working with a financial advisor. You would think that if you pay someone to handle these issues, you’d have a well oiled financial engine.
Not the case here.
And not the case for many physicians’ finances I review -- many have financial advisors.
This couple makes good income -- over $500,000 combined.
And they’ve done a decent job of saving their money for retirement -- contributing over $100,000 to various accounts every year.
Like I do with every client, I systematically and methodically poured through every little corner of their personal finances and discovered some huge gaps and deficiencies.
There were multiple areas I simply didn’t understand so I asked this couple a number of questions to clarify their situation.
Here are some examples:
Why do you have 4 IRA accounts at 4 different institutions? Did you set it up this way or did your financial advisor tell you to do this? If he told you to do this, what’s the reason? If you set it up this way and then you hired your advisor, why did he keep it this way?
Why did you switch out of fund A to fund B and then switch out of fund B to fund C?
What fees and expenses are you paying in the investments your financial advisor put you in?
You own what looks like a random collection of 10 individual stocks and dozens of mutual funds. How did you pick those out of the entire universe of investments?
You’re making good income. What’s your plan when you face a financial catastrophe? Has your advisor addressed the other areas of your finances that are important instead of just investments?
As I explored their situation in greater depth it became clear to me that organizing their finances and investments was going to be a big undertaking.
They realized that also.
That’s when both of them said (paraphrasing here).
“I hate you.”
Kind of caught me off guard.
“Why?” I asked.
“Because had we known all of this years ago and gotten good financial and investment advice and fixed these mistakes, we’d probably be much better off now than we are.”
They had actually done a great job of building up assets -- they have a seven figure retirement portfolio, but no one had really looked at how different parts of the financial house fit together.
What really irks me is that these hardworking doctors were paying money to a financial “professional” to help them.
But in my opinion they weren’t getting anywhere near their money’s worth.
This is actually a pretty common occurrence when I review a physician’s investments, insurance, retirement plan, or estate plan.
They hate it when I show them what’s really going on.
See, I don’t like to sugarcoat things. I say it like it is. Not in a mean way. But in a way that helps my clients get results and hopefully avoids the same big mistakes down the road.
And I think that’s the way it should be.
If you’re managing your finances by yourself, you’ve got to be honest with yourself about how well (or poorly) you’ve been handling them.
You’ve got to hate some of things you discover.
Don’t fear though -- I’m launching a new service soon which will help physicians who want to manage their investments and finances by themselves. Quite frankly you’d be nuts not to sign up for this. More details soon.
If you’ve hired a financial advisor, he should act as your personal financial trainer and point out the things you’re not doing well and help you improve them without feeding you a bunch of BS.
A financial advisor who provides good advice will challenge the way you think and the biases you have about your investments and finances.
He will make you hate some of the things he says about your situation.
And that will prompt you to take action.
And get results.
If you’re 100 pounds overweight and a dietician calls you skinny, it’s unlikely you’ll get off the couch, right?
Same thing here.
So think about what your personal finances.
What do you NOT like about your situation?
What are you going to do about it?
If you want to start hating what I have to say about your personal finances and investments -- and whip you into getting results -- you can start by setting up an initial phone consultation right here:
Set up initial phone consultation with me
Setu Mazumdar, MD, CFP®