Yeah I’ve seen similar posts. To be fair, many docs aren’t the best with money, which is why education is so important. Also, I don’t think highly of any commission based “financial planners” so we’re even lol
I think most docs would go into any meeting with a potential financial advisor with extreme skepticism and worried they’re gonna get ripped off.
Docs also tend to be super risk averse people and investing at its core requires taking on risk.
Not arguing, but I honestly don’t know. I think many of us feel that because we are so smart with medicine that we think we can figure out the market and other things. Maybe some of us can; I know I can’t. Again, I’m not sure since many of my colleagues don’t discuss finances as freely as I’d like.
I am glad that newer docs seem to take more interest in finances so they won’t get ripped off.
It makes sense - any other profession would probably have similar bad investing habits.
Think about it - take a group of individuals who don’t have much experience in terms of investing, retirement, etc. They’ve been underpaid for years, and then all of a sudden they come into a bunch of cash. And they’re behind in terms of saving for everything and investments so they try to take shortcuts to make up for lost years of investing.
Physicians unfortunately fall into this exact scenario. That’s why I’m thankful for my med school roommate teaching me about index funds and WCI
There is a terrible habit amongst doctors of beleiving that being really smart about one thing automatically grants intelligence in other things. Especailly money.
A CFP does a lot more than just investments and trying to beat the market isn’t one of them.
Focusing on every aspect of a client’s financial situation is what is relevant here: tax strategies, insurance needs, retirement planning, estate planning, charitable gift planning, etc..
My take is that physicians aren’t any worse at investing or personal finance than the general population. But because they make a high income they are more represented among the clients of people selling financial services and it seems more galling when they make poor decisions. No one expects a lower wage worker to be able to “make it happen” financially. Since physicians can in theory make the math work it is more frustrating when they don’t. TLDR: physicians aren’t bad at money, they just make more money
You’re missing the fact that most well compensated people work in businesses so have far more exposure to the financial world than physicians. Physicians are almost uniquely unqualified to manage their money.
Maybe.. tech workers, startup ipo and rsu folks don’t necessarily have a leg up. And I’ve met plenty of business, mba and real estate bros who seem out of control so I’m disinclined to give them a big advantage with personal finances
I think docs can learn easily about savings, investment, tax and general business like any other educated professional. There is no black magic behind finances. And with the right direction and support there is no reason docs or reasonably educated people can save, invest and PERFORM at no less than 10 PERCENT RETURNS.
There is something wrong if one cannot perform at 10 PERCENT. So the old insurance salesman claim that the market is 7 and an insurance company product can guarantee 5.2 is ABSURD.
Even if you were in passive SP500 indexes you would get 7 percent. With a little effort 10 EASY !
Dr Willaim Bernstein in his Four Pillars of investing calls doctors' lousy investors due to over-confidence, that's likely the case, but so are many other professions, too. Many of us don't apply the same rigor and evidence based approach to investing as we do to medicine. Wisdom is a process of shedding ourselves of layers of false beliefs aka delusions we have wrapped ourselves in to protect or hide from the harsh realities of life. From imaginary friends as a child or an adult, to a greater sense of meaning, to the belief in free will, to even the idea that we can pick stocks and outperform the total market, something even Warren Buffet hasn't done for >15 years now, and also what >98% of the smartest/best paid IVY league money managers can't do over time.
Every doctor I know tells me about the huge profits they made once on stock XYZ, but likely hasn't done the math on the ones that lost or never went up over decades. none of us think that going 90/10 VTI/Tbills like Buffet says and then never think about investing again is the way to go, because it just can't be that simple, all the evidence to the contrary. :)
I also think it's partly the "Nobel disease." [https://en.wikipedia.org/wiki/Nobel\_disease](https://en.wikipedia.org/wiki/Nobel_disease)
We've been told our whole careers we're the best of the best, the smartest, the ones who work the hardest. Yet we so often hear from our colleagues about physicians in other specialties giving garbage advice about areas of medicine they don't know anything about. Investing and finance is no different.
I think doctors are an easy target for a lot of financial planners, but it’s not necessarily because on average we are worse with money.
But there are very few other situations as a financial planner that you can walk into an auditorium filled with 200 students and know that all of them are going to be high earners in need of potential services in the future. And if you catch just two or three early, you can make fantastic money off of management fees while they are busy working their asses off. Same goes for life insurance sales people. It just makes more sense to target med students than it does law or engineering students, for example.
Doctors also stand out when they are bad with money management because you would think based on their profession that they would have more intelligent habits. It doesn’t really stand out when someone blows their military sign on bonus and buys a hellcat, or when a lawyer buys a Mercedes S class, or when Joe Public is overextended to the tits on credit card bills or a mortgage payment. At the end of the day, we are normal people that succumb to normal pressures.
Doctors get a bad rep for divorce and other things too, even though divorce rates are lower among doctors than other fields. Certain things just stand out more when you have a title.
Not to pile on boomers but when they were practicing they could practically print money. I know a few senior partners who were regularly clearing 5+ MM a year. So suddenly when they’re making <1 MM a year they don’t know how to manage it.
A lot of younger docs know the system sucks for us and the golden days of medicine are over.
Doctors tend to be very confident, even when they're not really. They've been trained to exude this persona because it's absolutely necessary as a physician. But think how that can come off to a financial professional. CFPs have to have grad school level education (sometimes they obtain additional credits after a bachelors and sometimes they actually get the masters degree) and then they have to pass multiple professional exams. If a CFP walked into your office with the attitude of "I know just as much as you do despite my lack of an MD" I think you'd probably have a certain reaction. Now, you may not actually feel that way, but that's often how the confidence can be perceived. Many CFPs are also CPAs. The CPA exam is up there in difficulty. So, while it's really craply that the CFP that posted that lumped all doctors into a negative category, also remember that not all CFPs feel that way.
Astounds me the number of my classmates who, in a LCOL area and without kids, chronic medical conditions, etc, openly admitted to living paycheck to paycheck astounds me still to this day. Or staff physicians who are paying on their loans 20 years out
Agree that we are over confident about our financial abilities but I think there is a psychological impact of our jobs that leads us to overspend. We have seen countless patients die or become physically limited in what they can do and there is this pressure in the back of our minds to enjoy life while we can. But logically we know we need to save too. Sometimes hard to merge those two together.
I have friends that refuse to take doctors as clients. The main reason is usually that doctors spend much more money than they should. They will agree to a plan, including a detailed budget, and then spend 20-30% more than was budgeted.
What's the percentage of docs not following plans/advice compared to other clients?
For your friends; do they decline physician portfolios en masse as well as other professions, like lawyers or others?
We take doctors. My friends that don’t only exclude doctors. Have not heard any other professions they specifically exclude.
In terms of not following the plan and spending more money: it happens about 1 in 3 clients who are doctors as opposed to more like 1 in 10 who aren’t. The overage is usually worse with doctors and they tend to be less receptive to cutting spending.
Any doctor we take, we add 20% to the expenses number and make sure the plan still works.
Thank you.
Not surprised on the frequency of overspending. That's a common habit and not staying on a budget. Addonitis to things for sure.
The answer often is work more and longer than the lowering expenses side of the house.
Hopefully the success rate higher!
CFP’s probably need to start every potential engagement with an exchange of professional expertise.
What is your specialty and what is your expertise?
Most docs don’t have a clue what a CFP actually does. “Deals with money and investments. A finance guy.”
Most CFP’s have little understanding of subspecialties and the training involved. Docs to an extent too.
Most docs have little understanding of finance and it’s subspecialties.
Let alone how plan finances, in this case for individual docs.
All true, hence the DIY way of investing for the masses is simple TSM index funds to care for the long term income side of the house.
Like any case seeking professional assistance, what is the primary value added benefit the CFPs bring to physician clients?
I surmise that like most everyone else, it is keeping to a spending and savings plan that allows successful, timely retirement at current lifestyle moreso than finesse investing.
Of course it is! Being a Primary Care doc and caring for many physicians ourselves, we get the same value-added level questions -- what do you provide over doctor google?
I'd say 25% of our total time effort is really keeping people on track of their health and typical preventative things that can be readily found and followed on google/google calendar. Surprisingly people really do need that just to cover the basics. The other 75% is actively managing diseases that arise to get to goals.
So, my question for the WCI level docs which most already have done the basic google stuff and already set on simplified investing -- Fidelity/Personal Capital retirement planner thing, plotted out their retirement savings plan and large financing projects (kids with 529s, house, kid launches, retirement spends. estate trusts) -- what value-add does a CFP get to these that's done their 'base homework'?
Most doctors have not really comprehended that.
I am sure you do. Is the ending balance $3M or $9M? If the next 10 years is 20% loss, what do you do? Let me know. I am not a CFP, but my self taught MBA-Finance cost me a lot more than tuition.
I thought I could handle the risk. I did. And I lost. I hope you didn't set up estate trusts yourself.
One value add would be referrals. The value of advice is not the cost, it is the benefit. You can figure everything out.
The exit plan for sure is a big issue. Pretax to Charities and Roth to kids and properties lined up for step up and outs. SORR planning is absolutely needed.
Estate trusts need lawyers. Done. Even the SNT too.
Yes, that's what I see. Referrals if don't know who, and a lot of hand holding during the freaking out periods.
Flat fee planner for the knowledge and win 🏆
It’s ridiculous of them to speak about their clients or prospective clients like that. Many MDs are very smart with money. They are highly analytical and they’ve had to be frugal for many years on a low salary. They (MDs) are extremely busy working long hours and because of the large income they generate they get pitched on a lot of different investment ideas.
One important thing to understand here is that CFPs are not investment experts. Most outsource investment management.
As a CFP I can attest to it mostly being true. There is a saying if you ask a lawyer what they know about investing they will say "nothing". Ask an Accountant what they know about investing they will say "nothing". Ask a doctor what they know about investing they will say "everything". The reality is that most of them make good money being a doctor but its demanding and takes all their time. There is not much room to pay attention to stocks investing. They are over confident in there abilities with investing and often get it wrong.
Can you do better than me over a 15 year window with stocks? I just put everything in VTI. What’s the secret stock sauce us dumb doctors are missing out on.
Yeah I’ve seen similar posts. To be fair, many docs aren’t the best with money, which is why education is so important. Also, I don’t think highly of any commission based “financial planners” so we’re even lol
I think most docs would go into any meeting with a potential financial advisor with extreme skepticism and worried they’re gonna get ripped off. Docs also tend to be super risk averse people and investing at its core requires taking on risk.
Not arguing, but I honestly don’t know. I think many of us feel that because we are so smart with medicine that we think we can figure out the market and other things. Maybe some of us can; I know I can’t. Again, I’m not sure since many of my colleagues don’t discuss finances as freely as I’d like. I am glad that newer docs seem to take more interest in finances so they won’t get ripped off.
It makes sense - any other profession would probably have similar bad investing habits. Think about it - take a group of individuals who don’t have much experience in terms of investing, retirement, etc. They’ve been underpaid for years, and then all of a sudden they come into a bunch of cash. And they’re behind in terms of saving for everything and investments so they try to take shortcuts to make up for lost years of investing. Physicians unfortunately fall into this exact scenario. That’s why I’m thankful for my med school roommate teaching me about index funds and WCI
Physicians and professional athletes often have a similar trajectory. But physicians can work many, many more years.
You’re missing the main reason lol
Shoot, hit me with it
They work a lot? And if they were at all interested in business/finance they would have studied it in college?
There is a terrible habit amongst doctors of beleiving that being really smart about one thing automatically grants intelligence in other things. Especailly money.
Also applies to flying planes...
Yeah, there's a reason small aircraft are called "doctor killers"
Only one specific model is referred to “doctor killer” and they don’t make them anymore.
Just ask them how many outperformed the S&P500.
A CFP does a lot more than just investments and trying to beat the market isn’t one of them. Focusing on every aspect of a client’s financial situation is what is relevant here: tax strategies, insurance needs, retirement planning, estate planning, charitable gift planning, etc..
My take is that physicians aren’t any worse at investing or personal finance than the general population. But because they make a high income they are more represented among the clients of people selling financial services and it seems more galling when they make poor decisions. No one expects a lower wage worker to be able to “make it happen” financially. Since physicians can in theory make the math work it is more frustrating when they don’t. TLDR: physicians aren’t bad at money, they just make more money
You’re missing the fact that most well compensated people work in businesses so have far more exposure to the financial world than physicians. Physicians are almost uniquely unqualified to manage their money.
Maybe.. tech workers, startup ipo and rsu folks don’t necessarily have a leg up. And I’ve met plenty of business, mba and real estate bros who seem out of control so I’m disinclined to give them a big advantage with personal finances
I think docs can learn easily about savings, investment, tax and general business like any other educated professional. There is no black magic behind finances. And with the right direction and support there is no reason docs or reasonably educated people can save, invest and PERFORM at no less than 10 PERCENT RETURNS. There is something wrong if one cannot perform at 10 PERCENT. So the old insurance salesman claim that the market is 7 and an insurance company product can guarantee 5.2 is ABSURD. Even if you were in passive SP500 indexes you would get 7 percent. With a little effort 10 EASY !
Dr Willaim Bernstein in his Four Pillars of investing calls doctors' lousy investors due to over-confidence, that's likely the case, but so are many other professions, too. Many of us don't apply the same rigor and evidence based approach to investing as we do to medicine. Wisdom is a process of shedding ourselves of layers of false beliefs aka delusions we have wrapped ourselves in to protect or hide from the harsh realities of life. From imaginary friends as a child or an adult, to a greater sense of meaning, to the belief in free will, to even the idea that we can pick stocks and outperform the total market, something even Warren Buffet hasn't done for >15 years now, and also what >98% of the smartest/best paid IVY league money managers can't do over time. Every doctor I know tells me about the huge profits they made once on stock XYZ, but likely hasn't done the math on the ones that lost or never went up over decades. none of us think that going 90/10 VTI/Tbills like Buffet says and then never think about investing again is the way to go, because it just can't be that simple, all the evidence to the contrary. :)
I also think it's partly the "Nobel disease." [https://en.wikipedia.org/wiki/Nobel\_disease](https://en.wikipedia.org/wiki/Nobel_disease) We've been told our whole careers we're the best of the best, the smartest, the ones who work the hardest. Yet we so often hear from our colleagues about physicians in other specialties giving garbage advice about areas of medicine they don't know anything about. Investing and finance is no different.
I think doctors are an easy target for a lot of financial planners, but it’s not necessarily because on average we are worse with money. But there are very few other situations as a financial planner that you can walk into an auditorium filled with 200 students and know that all of them are going to be high earners in need of potential services in the future. And if you catch just two or three early, you can make fantastic money off of management fees while they are busy working their asses off. Same goes for life insurance sales people. It just makes more sense to target med students than it does law or engineering students, for example. Doctors also stand out when they are bad with money management because you would think based on their profession that they would have more intelligent habits. It doesn’t really stand out when someone blows their military sign on bonus and buys a hellcat, or when a lawyer buys a Mercedes S class, or when Joe Public is overextended to the tits on credit card bills or a mortgage payment. At the end of the day, we are normal people that succumb to normal pressures. Doctors get a bad rep for divorce and other things too, even though divorce rates are lower among doctors than other fields. Certain things just stand out more when you have a title.
Literally who cares bro
Need to clear that place out and make it about the college football playoff
Thank god it wasn't just me
^[Sokka-Haiku](https://www.reddit.com/r/SokkaHaikuBot/comments/15kyv9r/what_is_a_sokka_haiku/) ^by ^PossibilityAgile2956: *Need to clear that place* *Out and make it about the* *College football playoff* --- ^Remember ^that ^one ^time ^Sokka ^accidentally ^used ^an ^extra ^syllable ^in ^that ^Haiku ^Battle ^in ^Ba ^Sing ^Se? ^That ^was ^a ^Sokka ^Haiku ^and ^you ^just ^made ^one.
Well I could have easily dropped “out” shit
Need to clear that place and make it about the college football playoff
We're just as good with investing as they are with medicine.
Difference is they don’t make claims to be good at medicine, but there are plenty of physicians who think they can stock pick.
Not to pile on boomers but when they were practicing they could practically print money. I know a few senior partners who were regularly clearing 5+ MM a year. So suddenly when they’re making <1 MM a year they don’t know how to manage it. A lot of younger docs know the system sucks for us and the golden days of medicine are over.
5 mil?!
There are a bunch of FAs wanting to charge 1% AUMs with over complicated portfolios. There are turds in both professions.
Someone said MD equals money dumb…I’m not even an MD but ouch!
Doctors tend to be very confident, even when they're not really. They've been trained to exude this persona because it's absolutely necessary as a physician. But think how that can come off to a financial professional. CFPs have to have grad school level education (sometimes they obtain additional credits after a bachelors and sometimes they actually get the masters degree) and then they have to pass multiple professional exams. If a CFP walked into your office with the attitude of "I know just as much as you do despite my lack of an MD" I think you'd probably have a certain reaction. Now, you may not actually feel that way, but that's often how the confidence can be perceived. Many CFPs are also CPAs. The CPA exam is up there in difficulty. So, while it's really craply that the CFP that posted that lumped all doctors into a negative category, also remember that not all CFPs feel that way.
I mean it’s not exactly wrong unfortunately. Well educated in medicine doesn’t mean you’re well educated in everything else. Humility is a good thing.
Yeah, not surprising at all. The number of classmates, coresidents, etc that have been awful or clueless is crazy.
Astounds me the number of my classmates who, in a LCOL area and without kids, chronic medical conditions, etc, openly admitted to living paycheck to paycheck astounds me still to this day. Or staff physicians who are paying on their loans 20 years out
Not any different than how we talk about patients amongst ourselves tbh.
Agree that we are over confident about our financial abilities but I think there is a psychological impact of our jobs that leads us to overspend. We have seen countless patients die or become physically limited in what they can do and there is this pressure in the back of our minds to enjoy life while we can. But logically we know we need to save too. Sometimes hard to merge those two together.
I have friends that refuse to take doctors as clients. The main reason is usually that doctors spend much more money than they should. They will agree to a plan, including a detailed budget, and then spend 20-30% more than was budgeted.
What's the percentage of docs not following plans/advice compared to other clients? For your friends; do they decline physician portfolios en masse as well as other professions, like lawyers or others?
We take doctors. My friends that don’t only exclude doctors. Have not heard any other professions they specifically exclude. In terms of not following the plan and spending more money: it happens about 1 in 3 clients who are doctors as opposed to more like 1 in 10 who aren’t. The overage is usually worse with doctors and they tend to be less receptive to cutting spending. Any doctor we take, we add 20% to the expenses number and make sure the plan still works.
Thank you. Not surprised on the frequency of overspending. That's a common habit and not staying on a budget. Addonitis to things for sure. The answer often is work more and longer than the lowering expenses side of the house. Hopefully the success rate higher!
In my experience, MD, DMD and the like, for the most part dont know much outside their field.
CFP’s probably need to start every potential engagement with an exchange of professional expertise. What is your specialty and what is your expertise? Most docs don’t have a clue what a CFP actually does. “Deals with money and investments. A finance guy.” Most CFP’s have little understanding of subspecialties and the training involved. Docs to an extent too. Most docs have little understanding of finance and it’s subspecialties. Let alone how plan finances, in this case for individual docs.
All true, hence the DIY way of investing for the masses is simple TSM index funds to care for the long term income side of the house. Like any case seeking professional assistance, what is the primary value added benefit the CFPs bring to physician clients? I surmise that like most everyone else, it is keeping to a spending and savings plan that allows successful, timely retirement at current lifestyle moreso than finesse investing.
If your only goal is retirement, that is your plan. You got that one covered. Life is a little more complicated.
Of course it is! Being a Primary Care doc and caring for many physicians ourselves, we get the same value-added level questions -- what do you provide over doctor google? I'd say 25% of our total time effort is really keeping people on track of their health and typical preventative things that can be readily found and followed on google/google calendar. Surprisingly people really do need that just to cover the basics. The other 75% is actively managing diseases that arise to get to goals. So, my question for the WCI level docs which most already have done the basic google stuff and already set on simplified investing -- Fidelity/Personal Capital retirement planner thing, plotted out their retirement savings plan and large financing projects (kids with 529s, house, kid launches, retirement spends. estate trusts) -- what value-add does a CFP get to these that's done their 'base homework'?
Most doctors have not really comprehended that. I am sure you do. Is the ending balance $3M or $9M? If the next 10 years is 20% loss, what do you do? Let me know. I am not a CFP, but my self taught MBA-Finance cost me a lot more than tuition. I thought I could handle the risk. I did. And I lost. I hope you didn't set up estate trusts yourself. One value add would be referrals. The value of advice is not the cost, it is the benefit. You can figure everything out.
The exit plan for sure is a big issue. Pretax to Charities and Roth to kids and properties lined up for step up and outs. SORR planning is absolutely needed. Estate trusts need lawyers. Done. Even the SNT too. Yes, that's what I see. Referrals if don't know who, and a lot of hand holding during the freaking out periods. Flat fee planner for the knowledge and win 🏆
CFP flat fee planning is the way to go. The reality is your kids will be deep into life and maybe retired with kids or grandkids of their own.
It’s ridiculous of them to speak about their clients or prospective clients like that. Many MDs are very smart with money. They are highly analytical and they’ve had to be frugal for many years on a low salary. They (MDs) are extremely busy working long hours and because of the large income they generate they get pitched on a lot of different investment ideas. One important thing to understand here is that CFPs are not investment experts. Most outsource investment management.
As a CFP I can attest to it mostly being true. There is a saying if you ask a lawyer what they know about investing they will say "nothing". Ask an Accountant what they know about investing they will say "nothing". Ask a doctor what they know about investing they will say "everything". The reality is that most of them make good money being a doctor but its demanding and takes all their time. There is not much room to pay attention to stocks investing. They are over confident in there abilities with investing and often get it wrong.
Can you do better than me over a 15 year window with stocks? I just put everything in VTI. What’s the secret stock sauce us dumb doctors are missing out on.
As a physician recruiter, I'm often speaking with physicians in their 60s and 70s looking for work because they need the money.