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Doctors Need and Deserve a Real Financial Plan

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This content is provided for informational purposes only and does not constitute financial, tax, legal, or other advice. Any strategies discussed should not be undertaken by any individual without prior consultation with an appropriate professional for the purpose of assessing whether such strategies are suitable for their particular situation.

What are your tips for surgeons looking to create an investment plan? What about primary care physicians?

No matter your specialty, every doctor will benefit from having a comprehensive financial plan, including a written investment plan that specifies short and long-term goals, savings amounts, accounts that will be utilized, asset allocation (mix of investments), and specific investments that will be used. The investment plan really should not look any different for a cardiothoracic surgeon than for an internist. From a financial standpoint, there are only three differences between a surgeon and a primary care physician.

The first difference is the length of training. A surgeon will take longer to complete residency and fellowship, getting a later start on paying off loans and saving for retirement. This will necessitate either working to an older age prior to retiring or a higher savings amount each year.

The second difference is the average income difference. In general, surgeons earn more than primary physicians. However, the intra specialty pay differences dwarf the interspecialty pay differences. I know surgeons making a low six figure salary and I know primary physicians making seven figures. There is no reason any physician needs to earn a below average income for their specialty if they are willing to work hard, negotiate well, and perhaps relocate to a less saturated area. Ownership and partnership opportunities also often lead to higher incomes. The higher your income, the easier it is to save large amounts of money. So, on average, this factor will help offset the later start for a surgeon.

The third difference is much less important, but surgeons generally have a higher risk of malpractice lawsuits, will spend more on liability insurance, and may wish to spend a little more time and money on an asset protection plan. But that really doesn’t affect the investment plan much at all.

There are two main ways to develop an investing plan. The first is to hire a financial planner to help you draft one up. This is likely to cost you $2,000-$5,000 but should not require too much time or expertise from you. If you wish for the financial planner to implement and maintain your financial plan (i.e., manage your assets), that will cost additional, ongoing fees, but you should still be able to acquire that service for less than $10,000 a year.

The second method is to write up the financial plan yourself. Most who do this successfully view financial planning and investing as one of their hobbies. In fact, it may be the best-paying hobby there is. They enjoy reading financial books and blogs, they listen to podcasts, they take online courses, and they discuss financial topics on internet forums and social media. These folks are often capable of writing their own investing plans, implementing them, and maintaining them. They save thousands in advisory fees each year, which can add up to real money once compound interest is applied over the course of an entire career.

However they decide to create their investing plan, every surgeon and primary care physician needs to get a plan in place as early in their career as possible. This will not only provide for a comfortable retirement, but it will ensure a secure financial footing throughout their careers that allows them to provide for their family, focus on their patients, and minimize their burnout.

Have a question? Post it in the comment section. The Medical Business column features questions from the Doximity community answered by physicians versed in finance.

James M. Dahle, MD, FACEP, FAAEM is a practicing emergency physician and the founder of The White Coat Investor, which has been helping doctors develop financial literacy and security since 2011. The White Coat Investor has created a step-by-step guide to help doctors create their own personal financial plans. Information can be found here.

Gif Illustration by Jennifer Bogartz

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