Last updated: 02/28/2024

Physicians have complicated financial needs when you consider student loans, cash flow to meet life goals like owning a home and having children, paying taxes, negotiating employment contracts, obtaining the appropriate insurance, saving for retirement, building wealth, and buying into or operating a practice. Physicians are also well-educated but also incredibly busy and may wish to spend what free time they do have with their family and on other personally important pursuits—not managing their finances.

According to educationdata.org, many physicians graduate with significant student loan debt, averaging $202,453. Additionally, 73% of medical school graduates have some form of student loan debt. While physicians earning potential increases as they progress through their careers and have higher-than-average salaries, residents just starting earn an average of $61,000, according to Inspira Advantage. High debt and a low starting salary mean physicians early in their careers often shift their priorities to managing basic expenses and paying down debt, pushing spending for big life events, like owning a home and saving for retirement to later in their careers. This can put them at a financial disadvantage and often makes their financial planning more complicated.

As your salary increases, the complexity of your finances will likely increase concurrently. But a high salary doesn’t come with a guidebook on how to manage money. Taking all of this into account, managing your finances as a physician can seem like a gargantuan task. This is where a qualified financial support team, including a tax professional, financial planner, and licensed financial or investment advisor, can come into play. Financial professionals can help build and execute a custom plan specific to your situation while analyzing and managing your risk. Here are 10 reasons doctors need a financial planner.:

1. You’re busy – Doctors are in a highly specialized, pressure-filled profession. In the Medscape Physician Compensation Report 2023, it was reported that doctors worked 50 hours a week on average. Managing the complexity—and sometimes burden—of your finances may leave little time for other critical things in your life. Handing over these responsibilities to experienced professionals and specialists gives you the freedom to pursue other things.
2. Shifts burden of financial planning to professionals –patients come to physicians because they are professionals, and highly trained experts in their fields. Similarly, moving your money management to experienced professionals—who are knowledgeable in many financial concepts and investment vehicles and keep up with the markets, changes in tax regulations, insurance, and healthcare regulations—can help ease the burden on you and your busy schedule.
3. Financial plans are customized to you – you spend a lot of your time with other physicians and may be tempted to take their advice on what to do with your finances, but don’t just follow the crowd unless your situation is the exact same (hint: it’s not!). You don’t prescribe the exact same thing for every patient, so don’t fall into this pitfall with your finances! Financial planners can build customized plans that account for your goals and dreams, compensation and other bonuses, lifestyle, dependents, cash flow, assets and liabilities, and other unique financial and personal considerations.
4. Doctors have unique financial considerations and concerns – doctors have expenses that many others don’t (e.g., malpractice insurance, high student loan debt, larger mortgages) and higher-than-average incomes (in 2024, the average U.S. household income was $59,428. vs. $265,000 for PCPs and $382,000 for specialists on average). Higher incomes come with different considerations—possibly a more luxurious lifestyle and more dependents who may rely on you or receive financial support from you—and your financial plan needs to reflect this if applicable to your situation.
5. Doctors need to protect their assets and overall estate – while patient lawsuits are a risk in healthcare, the appropriate insurance coverage can protect your assets from other litigation, like a divorce or dissolution of a business partnership. Protecting your estate through proper legal and financial estate planning can also help ensure it doesn’t pass through probate, reducing the stress and possible financial loss for your beneficiaries.
6. Doctors need tax-advantaged savings plans – these will help you start saving for your future and retirement, which may have been delayed by the length of your education and training and pay gap as you enter your field.
7. Doctors can fall prey to shady, unscrupulous sales tactics – you’re likely inundated with solicitors selling everything under the sun—from insurance and financial products to medical equipment and other business services. You need to have a trusted advisor (or team) who can help you wade through the muck and help you navigate shady tactics aimed at separating you from your money.
8. Can address your financial fears and make you feel more confident in your financial future – a high salary combined with little investment experience or financial planning knowledge and no help can be a recipe for disaster. Working with a fiduciary held to the highest ethical standards can further ease your mind. Fiduciaries are liable for everything they do and must act in your best interests. Your peace of mind is invaluable, especially when your goals, lifestyle, and future retirement is at stake.
9. Planning for the pay gap if you’re early in your career – as discussed above, doctors don’t come out of the gate making the maximum salary for their field. Your financial plan needs to address the pay gap as you exit medical school and residency and the delay in earning and saving from possible high student loan debt and the length of your education and training.
10. You may need a second opinion on your finances – physicians are no strangers to second opinions. Even if you’re a do-it-yourselfer, having another set of eyes on your finances can help increase your confidence in your plan and identify your blind spots—it may even further build your financial literacy by having a financial “specialist” to bounce ideas off. Even if you don’t solicit help from an investment advisor, a financial planner and/or tax professional can be an asset to your team.

A financial team that specializes in working with physicians’ finances can help you grow your wealth, reduce your debt, meet your goals, and achieve your dreams—allowing you to focus on what you’re good at and not worry about your money. It’s never too late to start building your financial health. If you want to learn about more personalized and advanced strategies, schedule a 15-minute call with our team.

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