It’s very easy to generalize that all doctors are challenged by managing their finances (isn’t everyone challenged by this?). Recently, Rob Michel, Chief Investment Officer at Glen Eagle, which oversees more than $4 billion, took the time to sit down with Physician’s Weekly to set the record straight. Not only does he work with physician investors on a regular basis, but he is also married to a doctor. Here are some of his insights regarding the challenges that physicians face and how they should approach their personal finance management.
Why do you think physicians struggle with personal finance?
There is so much talk about physicians lacking personal finance skills, but this is not the case. My wife, a urologic surgeon practicing at UPenn, knows a great deal about solid financial management. The two biggest challenges she and many physicians have are related to time.
The first and more obvious challenge is that between hours in the hospital, the demands of managed care red tape, and commitment to family life, there is little time left over for personal finance.
The second challenge is that physician’s experience a significant income delay. After years of education, residents and fellows are paid low salaries given their skillsets. This puts many physicians in a position where they feel as if they need to catch up to their peers, in terms of wealth accumulation.
How do you recommend conquering the time barrier when it comes to money matters?
Anecdotally, many of our physician clients have had success when they develop an annual routine. For example, every September 1, they should request their credit report from all three agencies and review it for errors. Every January 15, they should meet with their accountant to make sure they are putting tax strategies in place.
Automating financial transactions is also crucial. For instance, credit cards, mortgages, and IRA contributions should all be set up as automatic bank withdrawals so that nothing slips through the cracks when life or work becomes hectic.
Finally, finding a good financial advisor or wealth management team can go a long way. Your patients often go to great lengths to find the best doctor because they know that having someone who is experienced matters. A great advisor can put your interests first and act as a fiduciary when helping you achieve your long-term financial goals.
What is the one thing you think physicians should avoid when it comes to their personal finance management?
Ignoring it. Even when your spouse is a financial advisor, don’t just hand off the planning and go about your day. Be present in the decision-making process. You don’t have to know the ins and outs of price/earnings ratios or cryptocurrency to put together and execute a strong financial plan. You need a strong team of advisors and good information.
The truth of the matter is that many physicians can go through life with poor financial habits because their lifetime earnings are high enough to make up for any lifestyle shortcomings. Doctors who realize that good financial planning is a constant, adaptive, and vital part of their life, however, can make the leap from being individuals who earn high incomes to individuals who build lasting wealth.