Today I met with one of my new clients -- a physician in his mid 50s who wants to retire within the next 10 years and live a simple life away from the hectic confines of the hospital. This was our first real meeting after his financial strategy consultation (if you haven’t set your's up you’re really missing out on some valuable advice. Go here: /second-opinion-consultation/) so I’m still kind of getting to know him and his wife. One of the biggest mistakes they made in the past is hiring a financial advisor who was really just a salesman pushing them into high cost and unnecessary insurance and investment products.
Unfortunately this couple didn’t realize what had been done to them over all these years, but the good news is that I’m creating a financial plan and investment plan for them that will attempt to achieve the following:
1. Increase after tax net cash flow
2.Set up appropriate retirement plan vehicles for him at a much lower cost than what he’s doing now
3. Reduce his current income taxes
4. Create a tax efficient portfolio
5. Diversify his investments properly
6. Holistically integrate all of his investment accounts so that each investment makes sense.
7. Fit his insurance needs with appropriate insurance products (I don’t sell any insurance to eliminate conflicts of interest, instead I give advice and help implement that advice)
8. Create a savings plan so that he can achieve his retirement goal
9. Aggressively pay off existing debt
10. And a whole lot more
The problem is that this is a big undertaking and many of these actions will happen simultaneously.
And they haven’t done much of this stuff before so I got a sense that they’re feeling a bit uncomfortable with all the changes I’ll be making in their finances and investments.
It’s completely understandable.
But it’s the financial medicine they need to get where they want to go.
I think this is also a reason why so many physicians are reluctant to ask for help, and it’s also a reason why so many physicians fail to successfully manage their finances, investments, and retirement on their own.
When confronted with the idea of change, our natural response is to just do the status quo -- which is nothing. We feel comfort in doing whatever it is we’ve been doing for so long. We’re familiar with it, and any change -- especially big changes that happen at the same time like what I’m doing for the client described above -- can be downright scary for some even if the long term impact of that change is positive.
And if you manage your finances and investments on your own without a good financial planner, most doctors I meet hit a wall and can’t get past it. For example they know they should be rebalancing their investment portfolios, but instead they think with their stomachs and not with their heads. So what do they do? They buy MORE of the types of investments that have done well recently. It should actually be the other way around.
But here’s the good news.
If you can accept the initial emotional discomfort when you make a big change in your financial life -- and as long as the advice that you’re getting is good advice -- then the long term rewards to you can potentially be enormous.
What rewards am I talking about?
Less stress and anxiety about your career and your life.
More free time to enjoy whatever parts of your life interest you.
The freedom to work how much or how little you want.
So what do you think?
Do you want to stick with the status quo and continue to go down the comfortable path?
Or do you want to dig a different path for your finances and investments -- and ultimately your life -- which will make you feel uneasy at first but which can reap big dividends down the road?