Is this is really a misconception? Of course. Doctors are not stupid; they're brilliant. Trained in pattern recognition, and absorbing and analyzing tremendous amounts of data, systematically, physicians come up with solutions that are most wholly appropriate for the patient.

 

Doctors are held to an extremely high standard. And they hold themselves to an extremely high standard; not only in terms of work ethic but also in terms of ethical treatment of their patients.

 

First, pressures on net income: bombarded on all sides by multiple types of forces that affect not only the amount and the timing of revenue collections but also in the amount and acceleration of expenses, and mandates and risks that they perceive — whether real or imagined. 

 

More over, despite the fact that this is probably the best time in history to be a physician because of all the opportunities to provide care and cure and comfort to patients, many physicians are not happy with the practice of medicine. This dissatisfaction often leads to financial over-reach to compensate.

Second, in money and finance physicians try to identify a pattern just like exists in their own field. But of course, investments and markets offer no more patterns than reading tea leaves.

 

Third, misplaced trust: when seeking a trusted adviser, they fully expect their adviser to have the comparable educational level in that profession that doctors have, and the same level of honor and ethics. It would be surprising for physicians to learn that CPAs, attorneys, financial advisers, insurance agents do not have the same, and are NOT held to the same educational nor ethical standard.

 

For example, there is no residency in wealth management for insurance agents, nor in investments for financial advisers, nor in trust and estate planning for attorneys, nor advanced tax strategies for accountants. This kind of thing has to be learned "on the fly", with no formal education available. This stuff is not taught in schools. It's not required for licensure or continuing education.

 

The physician, for example, is given the BAD advice for asset protection to buy the biggest house that they can. That only leads to an upside down cash flow situation.

 

Or the physician is often told to maximize their pre-tax contribution to a qualified plan but that often can lead to increased taxes later down the road. The physician is often told that equity is extremely important. So in order to build that equity, they'll buy their office real estate when in fact it is not necessarily in their best interest because they wind up cash poor in a non-liquid investment that frequently can lead to discontent among their partners, especially if the real estate is not valued at market value, especially if the real estate is owned by only a few and then the lease payments are paid by the many, especially if there is a downturn in the value of the real estate.

 

Fourth, doctors like the rest of us are bombarded with all kinds of popular media data points that may or may not be accurate, much of it inconsistent, most of it written by journalists and not by professional specialists. Not only that, finance journalists are heavily dependent upon certain resources that may have a conflict of interest, such as a brokerage house that wants more business and is promoting a particular style or idea.

 

So with all this publicly available "information" and all the intelligence and the work ethic that the physician has, with all their ability to take in, digest, analyze the "data", it's no wonder doctors may feel that it's really quite easy to consider a do-it-yourself approach. If it gets too complicated, then the physician is left to identify and determine who in fact is the most appropriate advisor to trust.

 

Fifth, with all the pressure the physician feels, all the discontent that comes from that pressure, and the lack of perspective (because the physician does not deal frequently with other cohorts of similar socioeconomic and education level that other professionals and business people do), the physician is relatively isolated leading to further discontent. This leads to the perception that some people are undeservedly achieving wealth that doctors feel they deserve.

 

So, then the physician often takes unknown or unnecessary risks to try to achieve out-sized returns. The results, more often than not, are that the risks exceed the returns, at least in terms of frequency — if not, in terms of absolute amounts.

 

Sixth, mistakes in business, investing, and financial matters are masked by the doctors' high cash flow and the mistakes are encouraged by media, by advisers and by the physician's own behavior.

 

Yes, it's a sad fact that although the median household income is seventy-thousand dollars and three percent of the American population is able to retire on that seventy-thousands dollars a year, the physician's median household income is close to three hundred-thousand dollars but only four percent of physicians are able to retire on that four hundred-thousand dollars a year.

How can doctors get out of that "stupid" pigeon hole? The solution is simple, but not easy. Go to my website or Call me for the answer.

 

 

 

 

Mitchell Levin, MD, CWPP^TM, CAPP^TM

Author: Cover Your Assets: How to Build, Protect, and Maintain Your Own Financial Fortress

407/922-468