Seek Out an Objective Financial Analysis

Physician's Money DigestMay 2006
Volume 13
Issue 5

Many of your patients maycome to you with theirguesses about what's ailingthem and the cause of their healthproblem, but most realize that they'renot equipped to diagnose themselvesbecause they neither have the skills northe objectivity to do so. They look toyou to do an objective, skilled assessment,using all appropriate diagnostictools and tests.

Personal finance and investing can beas complex as medicine. There are manymoving pieces: risk management, estateplanning, asset allocation, tax planning,retirement planning, and college planning.These pieces interact in complexways. Physicians who try to self-diagnosetheir financial life run into a problem,since self-diagnosis is not completelyobjective. We all strive to have a realisticview of ourselves and our finances,but it's not part of human nature to becompletely objective about oneself.

Some people let their ego run amuck,and they overestimate both the strengthof their own financial position and theirability to manage it. People who are successfulin their careers may become convincedthat their prowess extends intothe stock market. They may be convincedthat they can time the stock marketwhen numerous studies have shownthat no one possesses that wisdom. Theymay fail to recognize the reality of riskand skimp on life or disability insurance.Others have the opposite problem andsee their financial situation as more precariousthan it really is and sit on bigpiles of cash instead of investing it. Interestingly,physicians don't often do this;more often, they're overinvested inhealth care or tech stocks.

It's wise to have a skilled outsider—such as a financial planner, CPA, or alawyer—take an objective look at yourfinancial situation. A financial diagnosiswill cover your risk tolerance, currentinvestments and how well they'readvancing your goals, risk management,insurance, estate planning, and tax considerations.Most objective reviews usuallyturn up some significant gaps inplanning—even among people whohave some financial sophistication.

To ensure that you're getting anobjective analysis, make sure that theperson doing the diagnosis doesn't haveany motivations that compromise theirobjectivity. Someone who sells only oneproduct, whether it's a hedge fund orinsurance, is going to recommend thatproduct as the answer to your needs.Someone who can take a look at yourfinancial picture without being pulledin one direction by specific product recommendationsis in a position to bemuch more objective.

is a fee-based financial

planner and investment advisor in Lincolnwood,

Ill. An attorney, he also holds a master's

degree in tax law and is the coauthor of

a book, The Intelligent Guide to Your

Financial Future (Pen & Ivy; 2005). For more information,

visit He welcomes questions or

comments at 847-679-9180 or

David Strulowitz

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