In previous blog posts (see the following: Crazy Financial Strategies Part 1, Crazy Financial Strategies Part 2, Crazy Financial Strategies Part 3), I discussed several bizarre investment strategies that some physicians use. These are real examples from retirement portfolios I've reviewed during my Financial Strategy Consultation.
Here's one more real example:
Recently I reviewed a physician’s portfolio and noticed that he had a huge number of holdings -- around 50+ mutual funds, 20+ exchange traded funds, and 100+ individual stocks. These were spread out across more than 15 different accounts and 5 different institutions.
The physician didn’t trust a single financial advisor to help him manage his $1 million portfolio -- instead he spread out his portfolio across 5 advisors thinking that if one doesn’t do well then surely another one will. Or if one turns to be a fraudster then hopefully the others won’t be.
The problem is that the first guy doesn’t know about what the second guy is doing, the second guy doesn’t know what the third one is doing, and so on. Bottom line is that this isn’t an investment plan. It’s chaos. And you’re wasting your money. Either fire all of these advisors and do it yourself , or choose one to develop a holistic investment plan for you, consolidate accounts, and simplify your life.
Many physicians think that because they're making six figure incomes, they need more complexity in their finances and investments. Or they think that somehow more complexity in your retirement portfolio can generate better returns. While some additional complexity (assuming it's the right type) may make sense, having lots of different advisors managing bits and pieces of your retirement portfolio makes no sense.
If you want to simplify your finances so you can understand them and get closer to making work optional for you, then I'll help you do that. Your first step is here:
Take advantage of it while there's still room!
Setu Mazumdar, MD, CFP®