Manage Your Finances with Minimal Time

Physician's Money Digest, January15 2003, Volume 10, Issue 1

It's easy to make mistakes whenhandling your finances as a busyphysician. But most slips are dueto the fact that you just don't havethe time to give your financial affairsthe attention they really deserve andrequire. Consider whether the followingstatements apply to you orsomeone you know:

  • I really didn't take (or have) thetime to completely understand whatI was getting into, and it didn't workout the way I thought it would.
  • I didn't pay a great deal ofattention to my tax consequences,and I got unexpectedly hammeredwith a large tax bill.
  • It sounded good when the brokertold me about it. Only later did Ilearn that similar investments withless costs and higher returns wereavailable to me.
  • How could I lose money on abond? I thought bonds were safe.
  • I wish I had known about myannuity's (or mutual fund's) fees andpenalties before I had invested. Theannuity's (or mutual fund's) termscontributed to poor performanceand locked me into a sour investingcontract I could not get out of.

The list could go on and on.These things happen because, as adoctor, you are very busy—with yourprofession, your family obligations,and your personal interests. Makingsure your money is doing the best itcan for you is a complicated,involved, and time-consuming process.It's really not designed for thekind of part-time attention you areable to give with the other prioritiesin your life.

You should probably seek somefinancial advice. Of course, thereare many advisors who would professto guide you in the manner thatserves your best interests. Unfortunately,most of them operate in a"buyer beware" world (ie, they areselling, you are buying, and if theyget you to buy and you make a mistake,it's your tough luck). You areexpected to have all the knowledgeyou need to make the proper decisions.If you don't, you're the onewho pays for it. This dynamic makesyou want to hold onto these decisions,even though you know youdon't spend enough time on theseissues to make proper decisions.

DISCOVERING TRUSTS

To solve this problem, a new kindof relationship between clients andfinancial advisors has emerged. If youreally don't have the time or interestto do what is necessary to properlyhandle your finances, you shouldexplore this new model.

For centuries, trust companieshave been managing the financialaffairs of those who are unable—due to age, infirmity, etc—to handletheir finances for themselves. Butwhen a trust company acts in thisway, it does so as a fiduciary, not asa buyer-beware sales group. As afiduciary, the trust company isobligated by law to act in the bestinterest of its clients—and can besued if it does not.

Although most people think oftrust companies as entities that provideservices after death, most of atrust company's clients are still alive.You don't need to be sick, incompetent,or a senior citizen to take advantageof the kind of professional"financial caretaker" relationship thata trust company offers. In fact, if youdon't have the time to properly attendto your affairs, it is probably the idealrelationship you should have.

CHOOSING A GOOD FIT

If this financial relationshipseems to match your needs, thereare 2 kinds of trust companies thatyou should consider.

For years, the only trust companyoptions were through bank departments.Bank mergers and acquisitionsbrought increasingly largeand impersonal trust institutionsthat relied heavily on their banks'investment products to invest clienttrust assets. In response, a trendtoward the development of independenttrust companies as better fiduciaryalternatives started in the1980s, and continues today.

Independent trust companiesprovide the same type of "financialcare-taking" services as bank trustdepartments, and have the sameconsumer protection requirements.They maintain the same type ofcapital to back their work and insuranceto protect clients.

Unlike the larger bank trusts,most independent trust companiesare primarily owned by managementand the local community, whichmeans the critical decisions affectingclients are made locally. Independenttrust companies do not manufacturetheir own investment products andare not affiliated with entities that do,so they tend to be more objective andless susceptible to the conflicts ofinterest in recommending investmentsthan bank trust departments.They are also committed to high levelsof personal service, a stark contrastto the increasingly depersonalizedbank trust department services.

There are individuals who preferlarge trust institutions just as thereare individuals who prefer largebanks for their banking needs.However, there are also many individualswho prefer the more local,personal services of a communitybank for their banking. These individualswould likely find a morecomfortable home with the servicesof an independent trust company fortheir fiduciary services.

If you're concerned about not havingthe time necessary to dedicate toyour finances or are worried aboutmaking financial mistakes, look intohiring a trust company to get awayfrom buyer-beware relationships. Andbe sure to take a look at independenttrust companies; if there is 1 in yourarea, you might find exactly the kindof financial caretaker you desire.

Thomas W. Batterman is president

of the Association of Independent

Trust Companies, a

national organization of more

than 100 chartered, well-capitalized,

and insured members

who manage their clients' financial assets during

life and after death. For more information,

visit www.aitco.net.