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Financial Planning for Doctors: How to Put Together Your Team


Doctors tend to be better at managing the health of their patients than they are at managing the health of their finances. That said, most Americans aren’t great at managing their money, so doctors shouldn’t feel embarrassed. The difference between most people and highly-trained doctors, however, is that doctors tend to earn a lot in salary, carry a lot in debt, and thus have a complicated financial picture.

For that reason, most doctors should take financial planning seriously and hire a financial advisor. But where to start? How does one actually build a financial advisory team? Just like medical practitioners, financial experts are a dime a dozen and range widely in expertise. To help you get started building your ultimate financial advisory team, this guide includes:

  • An overview of the most common financial certifications and designations
  • Steps to identify your biggest financial needs and who’s best fit to manage them
  • Must-ask questions that will help you narrow down your list of prospects

Let’s get started.

The Different Kinds of Financial Experts

Have you ever had a patient expect you to handle all their health concerns? As in, he wants you to be his dentist, optometrist and plastic surgeon? Believe it or not, there is this level of ignorance in the world and the same could be said in the financial realm. No matter what you may assume, a financial advisor is not going to solve or be able to manage all your financial concerns. There are levels of expertise when it comes to finances, just like when it comes to medicine. Let’s break down the major ones.

Certified Financial Planner (CFP)

Hiring a Certified Financial Planner financial planner is a smart first step. Think of your CFP as your financial general — the captain or quarterback of your financial advisory team. Like a general practice physician, this individual is responsible for your overall fiscal health. Your financial planner will:

  • Review statements and ask questions to assess your financial wellbeing.
  • Help you set financial goals and devise an actionable plan to meet them.
  • Coordinate the efforts of your other specialists (depending on your situation).

CFPs can counsel clients on an array of financial matters, as they have completed courses on:

  • Budgeting
  • Insurance
  • Estate planning
  • Retirement planning
  • Investing
  • Taxes

Licensing requirements for CFPs include three years of professional experience in the financial planning industry. They are also tested on ethical and financial knowledge by the Certified Financial Planner Board of Standards.

CFPs can be fee-only advisors, paid by commission or a combination of both (known as fee-based). Fee-only advisors charge an hourly rate for their services. Advisors paid by commission earn their income from commissions on the investment and insurance products they sell.

Registered Investment Advisor (RIA)

There are different types of professionals who specialize in investment advice. For starters, a Registered Investment Adviser (RIA) will:

  • Buys and sell assets for their clients.
  • Advise clients about securities and investments.
  • Manage their clients’ overall investment portfolios and strategies.

RIAs make money through management fees. These fees are typically a percentage of the assets a client has invested with them. By law, RIAs have a fiduciary responsibility to act in their clients’ best interests, and all their recommendations must reflect that fiduciary commitment.

Investment Brokers

Like RIAs, brokers also specialize in investment advice. Brokers earn commission by conducting securities transactions on behalf of their investor clients. Full-service brokers may also provide retirement planning and tax advice. To become a licensed broker, you must:

  • Pass the National Association of Security Dealers exam.
  • Register with the Securities and Exchange Commission (SEC).
  • Maintain membership with the Financial Industry Regulatory Authority (FINRA).

An individual broker may also be known as a Registered Representative. This is a basic legal title the SEC gives to those who have passed a specific licensing exam called the General Securities Representative Exam (GRSE) — also known as the Series 7.

Tax Advisor and/or Certified Public Accountant (CPA)

Most of your financial decisions will have tax implications – both big and small. For this reason, it’s always a huge advantage to work with specialists who have in-depth knowledge of tax laws. (Especially when new provisions go into effect.) If you operate your own medical practice, you will likely require the services of a Certified Public Accountant (CPA) – a designation many consider the most difficult to earn. CPAs keep track of their clients’ money by:

  • Maintaining financial records.
  • Preparing taxes.
  • Auditing books.

Although CPAs can help you determine how to save and organize your assets, they cannot provide investment advice. They also assume personal liability for their work.

Licensed Insurance Professional

Every doctor needs to have an individual:

This will require working with an agent who is licensed by the insurance department of the state(s) in which he or she does business. Some agents may carry the designation of Chartered Life Underwriter (CLU). A reputable insurance agent will go beyond selling you policies. He or she will also conduct regular reviews to ensure your policies fit your changing needs. Insurance professionals earn a commission on the policies they sell. Unless they hold other financial designations, they cannot advise clients on:

  • Taxes.
  • Investments.
  • Other financial matters.

Some agents work exclusively with one or two companies. Meanwhile, independent agents may sell products from any number of carriers.

Retirement & Estate Planners

Your general financial planner may have experience with retirement income planning. If not, employ a specialist who can help you make smart decisions to save and grow assets for retirement. The same goes for your estate. Estate planning is the process of creating a written plan that provides instructions for both:

  • End-of-life care.
  • The transfer of your estate following death.

Because these are legal documents, you will need to consult an estate planning attorney as well.

Chartered Financial Consultant (ChFC)

One last designation you may come across in your search is ChFC, short for Chartered Financial Consultant. ChFCs typically specialize in:

This designation also allows them to offer some services provided by CFPs. In fact, many professionals possess both certifications.

However, one key difference between the two is that the ChFC doesn’t include a board exam like the CFP does.

Hiring the right financial professionals for your needs

Communication is key to effective patient care. Doctors must transfer sensitive information regarding treatments, lab results, and prescriptions into the right hands. In the same way, every member of your financial advisory team must be able to work together. Here are a few examples that explain why:

  • Most investments will have tax implications.
  • Your estate planning attorney should know about your life insurance policies.
  • Poor communication could lead one specialist to make a decision that has a negative impact on your overall finances.

Now that you have a better grasp of who does what, it’s time to discover the right teammates to build out your roster.

Know what type of help you need

The first step in selecting a financial professional is identifying what services you are interested in. Do you need help with:

  • Paying down debt?
  • Growing your assets?
  • Managing your wealth?
  • Planning for your future?
  • Minimizing your tax obligations?
  • Investing in stocks or other vehicles?

Of course, there will be some overlap between the different areas of financial assistance. Some financial professionals have a single specialty while others carry credentials in multiple areas. You don’t necessarily need a “physician-only” financial team. But you do want to find someone that has a solid understanding of your student loans. Selecting the best student loan repayment plan for your situation is easily the biggest financial decision you will make early in your career. Refinancing with a private lender instead of pursuing a loan forgiveness track can cost you tens of thousands of dollars. It’s critical to find someone that understands:

  • Income-based repayment (IBR).
  • PAYE vs. REPAYE repayment plans.
  • Private refinancing alternatives.

While it doesn’t hurt to work with someone who’s familiar with doctors, chances are there is more to your personal finances.

Start by asking friends, family, and colleagues for referrals

Perhaps the most effective way to find a financial adviser is to ask someone you trust for a referral. Talk to your fellow physicians about their experiences. If they’re satisfied with the results from their advisors, they may be able to help you as well. One of the most effective 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).

Also take note if anybody shares poor experiences with their adviser so you can avoid those individuals.

Perform thorough research to complete your due diligence

Finding others you can trust with your hard-earned money is a tall task.

In addition to referrals, you should thoroughly vet every financial professional you consider hiring yourself.

While it could take some time to vet your potential advisors, it’s a crucial step of the process. Trusting somebody with your hard-earned assets is not a relationship to be entered into lightly, and this will help you determine who has your best interests in mind.

Google the potential financial professionals

Before meeting in person, conduct an online search for financial professionals that specialize in the services you require.

  • Aside from their company website, what search results do you see?
  • Have they been mentioned or quoted in relevant industry publications?
  • Did anyone post any negative reviews on relevant review sites?

While you should be able to find a great deal of this information online, you should also take the time to conduct face-to-face interviews with them.

Meet with potential financial professionals in-person

Whether you think of it as an interview or a casual chat, it needs to be done.

Important questions to ask include:

  • How much experience do you have?
  • What licenses and professional designations have you earned?
  • Have they ever been disciplined for misconduct?
  • 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 advisor serve as a fiduciary?

The last question is an important one to know before you sign on with an advisor.

An advisor bound by a fiduciary standard is regulated by the U.S. Securities and Exchange Commission and/or state securities regulators. These advisors are required to put their clients’ interests above their own; they cannot, for example, make decisions for clients based on earning a higher commission.

Advisors not bound by fiduciary standards are only held to what is called the suitability standard. This means the advisor’s decisions only have to be “suitable” for the client — but not necessarily the absolute best option.

If you’re meeting with an RIA, ask to see their latest compliance examiner’s report. Typically, the state’s department of banking and financing will audit an RIA every three years.

What does their most recent compliance report show? Does the firm have numerous infractions against them?

Ask potential financial professionals for references

You already sought out referrals from people you trust. Now it’s time to double-check.

Reputable financial advisors will be up-front about other professionals that they share clients with, such as:

  • CPAs.
  • Attorneys.
  • Personal bankers.

Ask for these names and reach out to them. Also, ask for references from existing clients. If they struggle to provide a list of names, this may be a red flag.

Check their professional designations, certifications & registrations

Look for CFPs, ChFCs, and CFAs for financial planning and investment management advice. To be clear, series exams are not certifications.

In order to sell securities or give investment advice for a fee, advisors must have successfully passed:

  • The Series 7 (broker).
  • The Series 63/65 exams (investment advisor).

You can find this information along with any client-related disclosures on:

(Here, you can also find out if they have had any grievances filed against them by clients.)

Additionally, look for advisors with a minimum of 10 years of experience. The 2008 market crash was already over 8 years ago and you want a seasoned advisor who has experienced the full cyclicality of bull and bear markets.

Find out how they generate revenue

In addition to the expertise they possess, potential clients should also know:

  • How they make money.
  • How many companies an advisor represents.

Some advisors are independent and can offer financial products and services from any number of carriers. Others are captive professionals who only represent one company and the products it offers.

The advantage of an independent professional is having more choices. On the other hand, the restricted carrier will know more about that company’s products than an independent carrier that sells several different lines of financial products.

Consumers should also know the difference between a fee-only advisor and one who is paid on commission. The former will charge the clients a fee, either hourly or as a percentage of the assets they manage.

Those who are paid on commission earn their money from the carriers they represent by selling their products to their clients. Some people believe fee-only is best because there are no potential conflicts of interest, as there could be with commission-based financial professionals. 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 earn a percentage of the total assets they manage. A typical fee-based structure pays the advisor 1 percent of the total assets under management.
  • Advisors who work on an hourly basis.

There are pros and cons to each structure. The important thing is to know how the advisor earns their money before signing up for their services.

  • Do they charge a percentage of assets that they manage?
  • Do they charge a flat fee for planning?

If the answers to these questions are no, they are most likely being paid commission on the strategy and underlying products they are recommending. This is not a good situation to be in as advisors may be incentivized to recommend higher commissioned products.

You can find a fee-only financial advisor in your area through the National Association of Personal Financial Advisors (NAPFA), the leading professional association of fee-only advisors.

Avoid financial advisors who over-promise

A reputable financial advisor will put your needs above all else. To do that, they have to listen to you first.

If the advisor begins peddling solutions during your initial discussions before learning about your situation, that’s a major red flag.

Be wary of advisors who claim they:

  • “Always beat the market.”
  • “Have a guaranteed system.”

If they really are achieving high returns, that’s great. But it also means they’re comfortable taking a lot of risk with other people’s money.

Key takeaways

With great earnings comes great responsibility. But planning your financial future is not a one-person job.

That’s why doctors should build a financial advisory team that includes a:

  • Financial general (CFP).
  • Investment advisor (RIA and/or broker).
  • Tax advisor and/or accountant (CPA).
  • Retirement and estate planners.
  • Licensed insurance specialist.

But in order to hire the right individuals, you will first need to:

  • Identify your needs.
  • Look for credible referrals.
  • Conduct thorough research
  • Ask the right questions.
  • Watch out for red flags.

With your due diligence and little patience, you too can assemble the ultimate financial advisory team.