Physicians’ Finances

Doctors & Physicians

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One of the major benefits of selecting a fee-only advisor is the freedom from the inherent conflict of interest that can arise when a significant portion of the advisor’s income comes from selling you financial products. The concern you should have as a potential client is whether or not the advisor is recommending a certain financial product because it enhances his/her bottom line and if the products recommended are truly in your best interest.

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Title for Three Doctors

Dave Niichel




Mickey Abeshaus


Why a Family Chief Financial Officer may be just what the doctor ordered.

When was the last time you examined your finances? No, really looked at them in regards to where you are today, what you’re spending now, and how your financial plan will determine your future lifestyle?

Let’s face it. Most physicians simply don’t have the time to pay close atten- tion to their finances. You probably know that a substantial amount of money is coming in, but with a busy practice, long shifts, rounds, and call, it can be hard to find the time to proactively manage it–let alone find the time for things you actually want to do!

Now add to that the fact that because you’re a physician, you face a unique set of financial challenges compared to other professionals. It’s no wonder more and more physicians are working longer than they expected.

Yes, physicians make plenty of money. But unless you have a disciplined approach to managing and saving, it’s easy to spend it away and not have enough left when it’s time to retire.

Challenges physicians face today:
  • You enter the workforce later than other professionals.
  • There are certain expectations of wealth and lifestyle associated with your profession.
  • You have a cash flow business.
  • You face more difficult asset protection issues.
  • The things that make you successful in medicine may work against you with your finances.

First there was college. Then medical school. Then residency, and possibly a fellowship. When you’re finally finished with your training and officially enter the earnings phase of your life, you’re about a decade behind most other professionals. And, you’re saddled with debt.

That means by the time you’re bringing in a lot of money, and can actually save some of it, you’re pretty far behind the curve in terms of saving for retirement and setting up college savings accounts for your kids. “What’s the big deal? I’m only in my thirties.” you may ask. The answer lies in the power of compound interest. Consider the following example. If you want to have $1 million saved for retirement, and you started at age 25, you’d need to put away $600 a month. Start ten years later, and the amount you have to save more than doubles to $1600 a month. The 10-year delay makes it that much harder to meet your goals.

You enter the workforce later than other professionals.

In our research, the physicians we spoke to said over and over again how they came out of residency with certain expectations of what they’d be making and the kind of lifestyle they’d be living. Think of it in terms of delayed gratification. Because they have worked so hard and waited so long to be earning real money, they often demonstrate the “caged lion” effect and spend money as if they were making up for lost time.

Society also has these expectations. You’ve heard the phrase “doctor car” or “doctor house.” Family, neighbors, and others expect to see you live a certain lifestyle just because you’re a physician. You’ll be asked to attend fundraisers, donate to charities, etc., etc. Of course, that is all wonderful, but it does impact your ability to save.

There are certain expectations of wealth and lifestyle associated with your profession.

A private medical practice is typically a cash flow business. It generates significant revenue, but builds little or no equity over time. Furthermore, physicians who are employees of groups or hospitals tend to build no equity at all. This means the value of your practice is primarily dependent on your ability to produce earnings.

If your largest asset is your future earnings, then your largest liability is your lifestyle. And that means that as you spend down those earnings, the value decreases. (See the chart below.)

You have a cash flow business.

Current Value of Future Earnings Over Time for a Private-Practice Physician.

As a physician, your greatest asset is the present value of your future earnings. As you consume your earnings, the value of that asset goes down.

When you consider how much money will pass through your hands in the span of your career, the numbers are staggering. Yet many physicians are left holding little at the end because they haven’t built any wealth independent of their practices.

Research indicates that because you’re a physician, you have a one in five chance of being sued—outside of your medical practice!1 The odds get even higher as you get older, because it’s assumed you will have amassed more assets. Unfortunately, society views doctors as having deep pockets, so you’re automatically vulnerable.

Part of the solution to this is to maximize your retirement plan. The more you put away each year, the more you have that is asset protected. There are some very important, but very simple ways to do this through retirement plans and other instruments, and an experienced financial profes- sional can help you with those decisions.

You face more difficult asset protection issues.

One trait that all doctors have in common is confidence. It’s what got you through college, med- ical school, and residency, and now makes you successful in your practice. You have confidence in yourselves and your abilities. And you’re smart. So, doing your own finances certainly seems reasonable, right?

Let us use an analogy with which you are undoubtedly familiar. The medical world relies on spe- cialists for their in-depth knowledge in specific areas of medicine. A practicing internal medicine doctor would never profess to be a capable anesthesiologist–without the proper training. So we suggest that as a physician, you are extremely smart and capable, and you probably could do an excellent job managing your own finances if you had the time, inclination, and training. But the fact is, most physicians don’t.

It’s also important to understand that investing isn’t about skill. It’s about emotion. And it’s extremely difficult for anyone to maintain objectivity and not make emotional decisions about their own money. That’s why we recommend finding someone who cares as much about your money as you do, has the time to do an excellent job, and also has the emotional distance to help you make the right decisions.

The things that make you sucessful in medicine may work against you with your finances.

While a financial professional makes sense, it’s hard to identify the right person. Part of the prob- lem is that there’s no uniform standard of care in the industry, and there are plenty of “quacks” out there who may have tainted your view.

We understand your frustration. In fact, our contention is that the traditional financial services industry is ill-equipped to handle the challenges you face as a physician. We believe you need an unbiased, highly trained professional who takes a holistic approach to wealth management, which includes estate planning, tax planning, life goals and more.

We call that person a Family Chief Financial Officer (CFO). A Family CFO is the cornerstone of a Wealth Management Team, which consists of all the financial advisors in your life, from your lawyer to your CPA. Working with this team, your Family CFO will sort through the complicated web of financial issues for you, putting together a custom-tailored approach that will take you from high income to independent wealth and well-being.

Note that a Family CFO doesn’t face the same conflict of interest as most financial planners or brokers. This person isn’t focused on making a short-term sell, which may be driven in part by commissions on products and services you don’t really need. The best Family CFOs are paid a predetermined rate and receive compensation from only one source: you. There are no strings attached, no lurking fees. You control your financial relationship.

The Family CFO.

This truly is a relationship—one that requires an emotional investment on both parts. A good Family CFO will learn about your values, interests, and aspirations, which can sometimes be a lit- tle uncomfortable in the beginning. Knowing that this person cares as much about your money as you do, it’s important to trust him as you work together to determine your needs and goals, such as retirement, education funds for your children, more free time for your family, etc. If you do, your efforts will be rewarded, and you’ll reach a point where you can release yourself from the burden of second-guessing every investment decision.

Your Family CFO will compile your financial team’s advice and put together a plan that focuses on your needs and goals, and ultimately, your long-term wealth and well-being. You remain your fami- ly’s CEO, making the big decisions. Your Family CFO just helps you make the right financial ones.

Unfortunately, the right Family CFO can be hard to find. The most important thing to look for is someone who resonates with your values. This isn’t a matter of finding someone who always knows the hot stock of the day. In fact, if you find someone you think is a good fit, ask that per- son how the market did that day. If he knows all the details, he’s not the guy for you. Your Family CFO needs to be focused on the long term. You’ll know you’ve found your Family CFO if you ask the previous question and he or she says, “I have no idea.” Sounds crazy, but I promise it works.

The Family CFO Relationship

Once you’ve found your Family CFO, he or she will guide you through a disciplined process, which includes a series of meetings to help identify your values and goals, establish a plan to help you meet those goals, and give you the ability to hold the course.

In the Discovery Meeting, your Family CFO will gather facts to understand where you are right now and where you want to go with your investments. This will include information from all of your financial advisors: accountants, attorneys, insurance agents, etc. This is where you’ll start to build your relationship and share a lot of important information about your values, goals, and interests. (See “Discovering What Makes You Tick Financially”)

Once your Family CFO has gathered that information, he or she will meet with a team of experts to develop a comprehensive plan that meets your objectives. Then, at the Investment Plan Meeting, you’ll review the proposed plan, look at specific recommendations and discuss them in detail.

When you have reviewed the proposed Investment Plan, and feel confident about the advisor you have chosen, it’s time to meet again and formalize a working agreement (the Mutual Commitment Meeting).

About 45 days after your Investment Plan is implemented, it is important to reconvene, review all the paperwork and discuss how things are going. From here, you will move into the servicing stage of your relationship, in which the two of you will have regular Progress Meetings to review your goals and your plan’s performance.

Working with your Family CFO

Like in a good doctor-patient relationship, it’s important to provide as much information as possi- ble to your Family CFO. And it’s more than just sharing which investments you currently own. You’ll sit down with your Family CFO in the Discovery Meeting and carefully pinpoint your values and goals, and answer questions you may never have really asked yourself before. Seven areas should be covered here:


    The first question your Family CFO should ask is, “What’s important about money to you?” This helps you both get to the heart of what you want to do with your money, and what you want your money to do.

  2. Goals

    You’ll spell out targeted goals, such as retirement, establishing college funds, leaving a legacy for your children, buying a vacation home, etc. If you don’t get specific with your goals, it’s hard to establish the right plan. Clearly stated goals will come in handy down the road should you get a whim to change directions. Your Family CFO will be able to remind you about what your intentions were, and make sure you really want to stray away from them.

  3. Relationships

    Who do you love? Who are you expecting to provide for? These questions will help you clarify your values and goals and find the right investment strategy.

  4. Assets

    Of course, you’ll also discuss the assets you currently have. A quantative review of exactly what you own establishes what we call your current reality.

  5. Advisors

    It’s important for your Family CFO to know who your key advisors are, including your attorney and CPA, but also any insurance brokers, private bankers, or others you’re working with, so everyone can be on the same page. In the past these advisors may have worked individually, but by working with your Family CFO, they’ll have important information they need to add tremen- dous value to your overall plan.

  6. Process

    This is where the two of you establish how you’ll work together. You might be asked, “In an ideal world (working with somone you completely trust), how involved do you want to be in the investment process?” Many people want to be more involved at first, but as trust in the work- ing relationship develops, and the investment plan gets well under way, it’s common to have much less contact with your Family CFO than you may have had with other financial advisors. But this is completely up to you and your Family CFO.

  7. Interests

    And last, but certainly not least, you should talk about what rounds out your life, understanding that your interests—like travel, sports activities, hobbies, etc.—often drive your financial decisions.

Unless a financial advisor understands all of the information outlined above, you might as well stick to “The 20 best funds to buy right now” articles. On the flip side, by delving deeply into each of these seven areas, your Family CFO will be armed with the necessary information to help you through the inevitable tough times. That’s because you’ll end up with a carefully conceived plan, called an Investment Plan, which will enable you to look beyond bumps in the road to your ulti- mate goals. Remember, this isn’t about money, it’s about your life.

Discovering what makes you tick financially

Once your Family CFO has a thorough understanding of your values and goals, he or she is almost ready to generate your Investment Plan. Because this is a long-term plan, one you should be able to refer back to time and time again, three specific topics need to be discussed in order to develop it correctly. These include:

  1. Understanding risk

    Risk means different things to different people. It is very important to have a discussion with your Family CFO about what risk means to you. How much risk are you comfortable taking? Are you strongly averse to risk? How do you feel about short term fluctuations in the mar- ket? This conversation should also include the topic of inflation, or the erosion of purchasing power, because in twenty years, a dollar won’t buy as much as it used to.

  2. Defining a time horizon

    Some investments are tied to a specific date. Are you planning on col- lege for your kids in six years? Do you want to buy a vacation home in ten years? When will you retire? To live a life without compromise, it’s important to keep in mind that life doesn’t end when you retire. Research shows that you’ll probably live another 40 years after retirement, so your invest- ments will need to keep working for you during that time.

  3. Stating a rate of return goal

    Once you both understand risk and define a time horizon, you need to discuss your expectations for a rate of return. You’ll be able to use this over time as a measuring stick to make sure you’re meeting your goals. This needs to be a rate of return goal that will make all of your life goals work.

Getting More Specific.

After you’ve covered this important information and your Family CFO has generated an investment plan, it’s time to sit back and trust him or her to manage your finances with your family’s best inter- ests at heart.

This is the hardest part, because it’s difficult to do nothing. Especially when the market is fluctuating and constantly in the news. But once your Investment Plan is implemented, it’s time to hold the course. Let go. No matter what is happening at the time (the “crisis du jour”), it’s important to not let your emotions take over.

Remember that you have a very defined plan which will get you to your goals, and blips in the market won’t affect it in the long run. By following the process of determining what’s really important in your life, and then implementing an Investment Plan that matches those things, investing becomes fairly simple.

But don’t confuse simple with being easy. It’s hard to watch what’s going on in the market and not respond. The good news is that investing, when approached with this disciplined process, is under your control. What really matters, and what ultimately determines your success over the long haul, is determined by your behavior—what you do and don’t do during market ups and downs—and only you can control that. (You can learn more about how behavior impacts your investment success at

In many ways, your Family CFO is your behavior coach. If you ever do get tempted to act in ways that may not be in your best interests, he or she can pull out the notes from your Discovery Meeting and point to your Investment Plan, using it as a touchstone to keep you grounded. Only if something drasti- cally changes in your life should you second-guess your investment plan. Of course, there will be peri- odic rebalancing with your investments when necessary, but no matter what the hot topic is around the water cooler or at cocktail parties, remember that your plan is there to get you to your goals.

So, turn off your favorite money programs, throw away your financial magazines (or read them pure- ly for entertainment purposes) and start looking for a great Family CFO who will help you put your focus in the right place. Doing this will enable you to spend less time worrying about your invest- ments and more time on what’s really important to you and your family. And guess what? Your investments will do better too.

Now, sit back and relax.




So who is Carl? After more than ten years working in the brokerage industry, Carl went out on his own to serve as the Family Chief Financial Officer (CFO) for a select group of families. In addition to his role as Family CFO, Carl also serves in a research capacity for multiple financial firms with offices in Arizona, Nevada, North Carolina, Georgia, and Utah.

Carl received a Bachelor of Science degree in Finance from the University of Utah, and he’s cre- dentialed as a Certified Financial PlannerTM. Married with four children, Carl enjoys spending time outside with his family. If you want to learn more about the Behavior GapTM, feel free to email him at



Since leaving his medical practice in 1997, John Stephens specializes in helping physicians and senior level executives build and maintain wealth independent of their businesses—serving as their personal Chief Financial Officer. He holds a Masters in Business Administration (MBA), Certified Financial Planner (CFP) credentials, and is a Chartered Financial Analyst (CFA) charter holder. John lives in Tucson, Arizona with his wife and children. A sports enthusiast, John enjoys following U of A athletics and participating in golf and cycling. John is also active in community youth sports and children’s healthcare advocacy organizations. You can email John at

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