Is your financial advisor meeting your needs? Theanswer to this question is critical to a physician-investor'sfinancial well-being. "A true trustedfinancial advisor will try to place himself or herself onthe same side of the table with the physician andensure that the entire financial team—CPA, attorney,insurance agent, as well as financial planner—is workingtogether cohesively," says Phillip Senderowitz,director of financial planning and investments atChepenik Financial in Orlando. "Too often actionstaken by one member of the team can offset or undermineactions taken by another. A trusted advisorshould be asking questions regularly about changes inthe physician's situation, unexpected expenses, etc."
Your advisor should have a good understandingof your goals and whether they are reasonable givenyour situation and risk tolerance. Furthermore, theadvisor should help to develop a plan for how you canexpect to actualize these goals.
For physicians, an "advisor should know how tooptimize the use of their practice resources as well astheir personal income and assets to provide themwith the lifestyle they want today and in the future," says Kenneth M. Segal, a financial advisor withAmeriprise Financial in Philadelphia. The advisor"should be looking at integrating all of those assetsin a number of different ways."
When a doctor starts their practice, they probablydevelop its structure according to their current situation(ie, tax needs, asset protection, retirement planning, etc)and may not reevaluate this approach as the practicegrows and changes, "which they probably should dofor legal and tax reasons," says Segal.
For example, small group retirement plans shouldbe reassessed. "Doctors will tend to put money in a401(k) plan because that is the most widely knowngroup retirement plan, but it may not necessarily be themost advantageous for what the doctors want toachieve for themselves and their staff," Segal adds.
Beyond practice structuring and retirement planning,investing in the market is another component tothe complete financial strategy that financial advisorsshould aid their doctor-clients in pursuing. Returnsalone are not how a physician should judge the abilitiesof an advisor, Senderowitz says. A balanced portfoliowith an appropriate mix of equities, fixed-incomeinvestments, and other investment vehiclesthat is tailored to a physician's investing timeline andrisk tolerance should be the goal of every planner'scollaboration with the client.
If the investment needs discussed above are notbeing met by your current advisor, it may be time toshop around for a new one. Recommendations from atrusted friend or family member may be helpful, butaren't always appropriate because each individual'sfinancial situation and goals vary, according to financialplanner Steve Yeager of SYM Financial Advisors.Yeager suggests building your evaluation around questionsin the following areas:
•Experience. Inquire about the advisor's education,background, and experience. Find out what professionaldesignations they hold.
•Compensation. Look for an advisor independentfrom conflict, product alliances, hidden fees, andcompensation structures.
•Compatibility. Try to hire an advisor who workswith physicians and request two client references.
•Access. Inquire about office hours and availability,especially at odd times (weekends, evenings), inlight of a physician's unpredictable schedule.
A financial advisor may be the most importantmember of your financial team. Take the time fordue diligence on your candidates for a financialadvisor and don't be afraid to ask the tough questions.