Doctors lead very busy lives. They also have a fair amount of financial assets to invest, grow and manage.
At the same time, they rarely have the time to properly manage their wealth. And with so many other obligations, finding the right person or people to entrust with that job is a daunting task.
However, it’s a necessary undertaking. Below are a few suggestions on how to make it more efficient, more effective, and hopefully a process you don’t have to soon repeat.
Know what type of help you need
Just as there are an array of medical specialties, there are also different types of financial professionals. Likewise, there are areas of financial expertise that require specific education and licensing.
Therefore, one of the first steps in choosing a financial planner/adviser is knowing what services you’re interested in. Do you need help with:
- Planning for the future?
- Investing in stocks or other vehicles?
- Managing your wealth?
- Growing your assets?
- Estate planning?
- Minimizing your tax obligations?
There is some overlap between the different areas of financial assistance, but also many differences. Some financial professionals specialize in one specific area while others may have experience and credentials in multiple services.
The bottom line is to know the type of help you need and look for the individual with the right qualifications. In some cases, you may need to employ more than one financial professional.
Ask for referrals
One of the most effectives ways to find a financial adviser is to ask people you trust who they use. Talk to your fellow physicians about their experiences. If they’re satisfied with the results from their adviser, there’s a decent chance that individual can help you as well.
Also talk to other professionals whose opinion you trust, such as your attorney, your banker, and your hospital administrators.
When seeking advice, ask specifically what they like about their advisers (e.g., always returns phone calls, gets results, is very trustworthy, has great experience, etc.).
Also take note if anybody shares poor experiences with their adviser so you can avoid those individuals.
Do your research
Trusting somebody with your finances and hard-earned assets is not a relationship to be entered into lightly.
In addition to referrals, conduct a thorough online search for financial professionals that specialize in the services you require. You should also take the time to conduct interviews with potential advisers.
Questions you should ask include:
- How much experience do they have?
- What licenses and professional designations have they earned?
- Have they ever been disciplined?
- Do they have complaints against them by past clients?
- What is their approach as a financial professional?
- What sets them apart from other professionals?
- Are they independent or can they only offer one company’s products?
- Have they worked with other physicians?
- Does the adviser serve as a fiduciary?
The last question is an important one to know before you sign on with an adviser.
An adviser bound by a fiduciary standard is regulated by the U.S. Securities and Exchange Commission and/or state securities regulators. These advisers are required to put their clients interests above their own; they cannot, for example, make decisions for clients based on earning a higher commission.
Advisers not bound by fiduciary standards are only held to what is called the suitability standard. This means the adviser’s decisions only have to be “suitable” for the client, not necessarily the absolute best option.
Know how they get paid
Many financial professionals earn their money on commission, meaning they get paid by selling you specific products. Most insurance agents work on commission, as do many investment advisors.
Because they earn a percentage on what they sell you, many caution against working with commission-based planners because they have the incentive to oversell you.
There are also fee-based professionals, who are paid a percentage of the total assets they manage. A typical fee-based structure pays the adviser 1 percent of the total assets under management.
There are also advisors who work on an hourly basis.
There are pros and cons to each structure. The important thing is to know how the adviser earns their money before signing up for their services.
Avoid advisers who over-promise
A reputable financial adviser will put your needs above all else. To do that, they have to listen to you. If during your initial discussions the adviser is already selling you solutions without learning about your situation, that’s probably a red flag.
Also be wary of advisers who claim they “always beat the market” or “have a guaranteed system.” If they are achieving high returns, that means they’re also taking a lot of risk — with other people’s money. You may not want to be that aggressive with your assets.