As a doctor, managing your finances can be particularly complex. Between balancing a high-demand career, handling student loan debt, and planning for retirement, the need for expert financial guidance becomes clear. Working with a financial advisor can help you navigate these challenges and build a secure financial future, but finding the right advisor is crucial.
Before committing to a financial advisor, it’s important to ask the right questions to ensure they are the best fit for your unique needs as a doctor. Here are some key questions you should ask:
1. Do You Have Experience Working with Doctors?
Physicians often face financial circumstances that differ from those in other professions—significant student loan debt, fluctuating income, late career starts, and complex tax considerations. An advisor who has experience working specifically with doctors will understand these unique challenges and opportunities.
Ask your prospective advisor if they have other clients in the medical field and how they’ve helped them achieve their financial goals. Their familiarity with physician-specific issues can make a significant difference in the advice they provide.
2. Are You a Fiduciary?
A fiduciary is a financial advisor who is legally and ethically bound to act in your best interests. This is crucial because some advisors operate under different standards and may recommend products that benefit them more than you.
By working with a fiduciary, you can have peace of mind knowing that your advisor’s primary focus is helping you reach your financial goals without any hidden agendas or conflicts of interest.
3. How Are You Compensated?
Understanding how a financial advisor is compensated is essential in evaluating the type of advice you’ll receive. Advisors can be compensated in different ways, including:
- Fee-only: These advisors charge a flat fee, an hourly rate, or a percentage of assets under management. Their only source of income is from the client, reducing conflicts of interest.
- Commission-based: Advisors who earn commissions make money when they sell you specific financial products like insurance or investments. This may incentivize them to push products that aren’t in your best interest.
- Fee-based: These advisors earn a combination of fees from clients and commissions on products, so it’s important to clarify how this might affect their recommendations.
Make sure to ask for a clear breakdown of how your advisor is paid to understand whether their interests align with yours.
4. What Services Do You Provide?
Doctors often need more than just investment advice. You may need assistance with tax planning, estate planning, student loan management, and insurance planning. Be sure to ask your financial advisor what services they provide and whether they can address your specific financial concerns as a physician.
For example, if you are carrying a significant amount of medical school debt, you may want to work with an advisor who has experience in student loan repayment strategies and forgiveness programs. If you’re thinking about starting a private practice, you might need help with business financial planning.
5. What Is Your Investment Philosophy?
Your financial advisor’s investment philosophy should align with your own risk tolerance and financial goals. Ask about their approach to investing—are they focused on long-term growth, or do they take an active approach by trying to time the market? Do they prefer low-cost index funds, or are they proponents of individual stock-picking?
It’s essential that their philosophy matches your preferences. Doctors often have little time to actively manage investments, so you may prefer an advisor with a low-maintenance, diversified approach to growing wealth.
6. How Will You Help Me Manage My Student Loan Debt?
Medical school loans are one of the biggest financial burdens doctors face. An advisor experienced in working with physicians should be able to guide you through various repayment plans, refinancing options, and loan forgiveness programs such as Public Service Loan Forgiveness (PSLF).
Ask them to review your current student loan situation and explain how they would help you manage it. Understanding how an advisor can help you reduce your debt burden will be critical to your financial success early in your career.
7. What is Your Approach to Retirement Planning?
Doctors often start earning a substantial income later in life than professionals in other fields, meaning they may have less time to build up retirement savings. Ask your advisor how they will help you catch up on retirement contributions and ensure you have a solid plan in place.
A good advisor will help you determine how much you need to save, the best types of retirement accounts (such as 401(k)s, Roth IRAs, or SEP IRAs), and how to allocate your investments to meet your retirement goals.
8. How Often Will We Meet?
Your financial situation will change over time, and regular check-ins with your advisor are crucial to staying on track. Ask how often you’ll meet to review your financial progress and make necessary adjustments. Some advisors offer quarterly reviews, while others meet annually.
Make sure their level of involvement fits your expectations, whether you want a hands-off approach or more frequent interaction.
9. What Happens if You Leave the Firm?
It’s important to know what will happen if your advisor leaves their firm or retires. Will your account be transferred to another advisor? Will you have a say in choosing who that person will be? Understanding the continuity plan ensures you won’t be left without guidance at a critical time.
10. Can You Provide Client References?
Asking for client references is a great way to gauge the effectiveness and reliability of a financial advisor. Speak to other doctors who have worked with the advisor and ask about their experience—did the advisor help them meet their financial goals? Were they easy to work with and accessible?
This kind of feedback from peers can give you a clearer picture of what to expect and whether the advisor is the right fit for you.
Final Thoughts
Finding the right financial advisor is a crucial step for doctors looking to achieve long-term financial stability and success. By asking these questions, you can ensure that the advisor you choose has the experience, integrity, and approach that aligns with your financial goals as a physician.
Written by Pat Brown, MBA