Now, imagine this storyisn't about financialplanners. It's about agroup of doctors. Butthese doctors aren'ttalking about prescription drugs; theyare trading hot stock tips. One doctorbrags about the killing he made onsome tech shares. Should the other doctorswhip out their cell phones and calltheir brokers, stat?
Sure, as long as they don't mind thevery real chance they could lose thousandsof dollars. And don't expectbrokers to warn you against followinga tip from a well-intentioned friend.Brokers typically earn a commissionfrom closing the sale, not from talkingyou out of it.
Doctors are smart people, but theiryears of intense training focused onhealth and healing, not savings andinvestments. That's one reason theymay find their financial well-being atrisk, or find themselves with anoccasional bout of irrationalexuberance.
Another common mistakeamong physicians isto invest heavily in themedical sector. For mostdoctors, medical stocksseem like familiar territory.But that familiarity canbe deceiving. The stock marketplays by its own set of rules.A doctor had loaded up onHealthSouth stock just before its quick,steep decline in share price. Fortunately,this doctor moved his sharesout of this holding in enough time thathis portfolio wasn't completely devastated.Nonetheless, he still lost atremendous amount of money on thatparticular investment.
Becoming a doctor takes time, determination,and hard work. You can'tskip any steps along the way or take anyshortcuts. The same is true for financialplanning, particularly for doctors andother medical professionals. They face aunique set of challenges and have distinctneeds that are best addressed witha heavy dose of expertise.
Choosing an Advisor
Compounding the difficulties, medicalprofessionals often lack the timeto do the necessary researchto ensure investment success.Simply put, theywork in one of thebusiest, most demandingprofessions. When peoplechoose a surgeon, theychoose carefully. Likewise,physicians andother medical professionalsshould consider thefollowing tips as they ponder the bestway to manage their finances and selecta financial planner:
•Whether a financial plannerweighs your complete financial situation,not just your investments, ina comprehensive way. You should beconcerned with far more than just thereturn on your portfolio of investments.You may have debt from school loans,significant expenses like liability insurancepremiums, and questions aboutthe best approach for operating yourpractice and planning for retirement.
•Whether there is coordinationamong the professionals handlingyour finances. Many doctors have anattorney, an accountant, and a financialplanner. Ideally, these three providersshould be working together. By makingdecisions together, your professionalservices team will identify issues beforethey fall through the cracks.
•The experience and clientele ofyour advisor. Look for someone whoworks with medical professionals. Askyour friends for references. And be sureto interview at least three potentialadvisors. After all, your decision couldcost you—or make you—thousands ofdollars. It's worth the extra research.
•Whether you feel comfortablewith the financial advisor youselect. A good planner will take thetime to know you, your long-termgoals, and your background. They alsoshould be willing to explain financialmatters and make sure you are an educatedinvestor.
Richard M. Braverman, CFP
®, RFC, is principal
of Braverman Financial Associates,
which provides financial services to more
than 100 physicians through its medical
division. He welcomes questions or comments