Top 5 Financial Tips For Doctors From Morgan H. Smith Jr. IMBA CFP®

Beverly Hills, known for its excellence in products and services, attracts an incredible number of talented physicians from the best medical institutions in the country. Establishing a business in Beverly Hills can provide for exceptional opportunities. Unfortunately, many physicians are preyed on by financial sales folks who are selling products rather than giving objective investment advice.

Morgan H. Smith Jr. MIB CFP®, a partner at WorthPointe, has been providing financial advice nationwide for physician retirement plans and pensions, and their families as a fee-only fiduciary for years and has a significant number of physician clients in Beverly Hills and San Diego, California; Austin, Texas; and New York City.

Top 5 Financial Tips For Doctors

• Use a Fiduciary For Financial Advice. A fiduciary manages another party’s assets and has a legal and ethical obligation to put that party’s interests first. It’s much like the Hippocratic Oath for financial advisors, as it means helping clients make decisions in their best interest (the client’s), even if it means reduced compensation or no compensation for the advisor. Far too many financial advisors are providing advice at a lower standard, such as suitability, and investment clients can pay for this in expenses and performance.

• Use a Fee-Only Advisor. Many financial advisors get paid a commission to sell products and services to clients, which at the very least creates the perception of a conflict of interest. The nagging question that keeps coming up with doctors the most regarding commissioned advisors is: “Am I getting this advice because it’s actually the best advice for me or because the advisor is getting paid to sell that particular product?” A fee-only advisor gets paid by one person and one person only — the client — and takes no commissions from any products. If you ask the question, advisors may tell you they are “fee-based,” which is different from fee-only and most likely means they have a commissioned aspect of their business that may cause conflicts of interest. So beware; ask the question; and if needed, check the National Association of Personal Financial Advisors (NAPFA) website to see if your advisor meets the fee-only standard. For example, you can see Morgan’s profile at NAPFA here.

• Reduce Taxes The Smart Way. Physicians who are making a significant amount of income can reduce taxes by creating a combination defined contribution and pension plan. These particular plans need the highest level of actuarial expertise and portfolio management to help ensure you as the plan sponsor do not run afoul of the numerous DOL and ERISA rules and regulations. To see a case study, click here. These plans don’t need to be expensive or complicated and can start with a 401(k) and migrate when the time is right.

• Purchase Commission-LESS Life Insurance. Physicians are constantly getting bombarded with reasons to buy life insurance and annuities. Why is this? Because sales agents usually get paid big commissions to sell these products. Did you know you can purchase insurance with no commissions? Probably not, it’s somewhat of a secret because no one wants to tell you. You may in fact have a need for life insurance and using commission-less life insurance can greatly reduce the costs that can add up significantly over time. Planning in the context of an overall estate plan by a CFP® will help ensure you are getting the appropriate solution from a coverage and cost standpoint.

• Use Professionals Who Collaborate On Your Behalf. Doctors tend to be very busy and have speed conversations with their individual advisors at different times to solve specific tactical issues that need to be taken care of at the moment. The better way to do things is to ensure that all your professional advisors (CPA, financial advisor, estate planning attorney, retirement plan TPA, business attorney, etc.) come together as a team to think strategically and collaborate to solve issues together on your behalf. If this is not happening, it’s time to make a change. Otherwise, you can expect less than ideal results for your financial future.