Whether you’re just completing your training or you have a few years of practice under your belt, it’s important for all physicians to take steps towards securing their financial future. Even though physicians make significantly higher salaries than the majority of Americans, a physician’s financial health can face unique challenges, ranging from crushing student loan debt to complex employment contracts.
This can make it difficult for physicians to achieve financial health without the right resources. Below are five tips for physicians seeking to achieve and/or maintain their financial health going forward.
1. Find A Fiduciary
Not all financial advisers are created equally. In fact, the majority of financial advisers today aren’t even required to act in the best interest of their clients – instead they can manage your finances in a way that maximizes their fees and commissions at your expense. The only financial advisers required to act in their client’s best interests are Fiduciaries. Make sure to do your research and ask any financial adviser you’re considering if they’re a Fiduciary, all while making sure they have experience handling clients who are physicians.
2. Review Disability & Life Insurance Plans
While it’s never something we hope a physician would need to use, it’s incredibly important for physicians to have comprehensive disability and life insurance plans. Whether due to an accident, illness, or injury, physicians can’t know if these issues will occur and should plan accordingly. While most healthcare organizations offer their physician employees these plans, not all are equally comprehensive.
Some things to consider:
- Does your life insurance plan provide enough death benefits to provide your family with a comfortable lifestyle should the worst occur?
- Have you taken stock of your assets? These can help offset the amount needed should death and disability benefits run short.
- Have you reviewed your disability policy in detail? Most organizations offer a standard policy which does not take your specialty into account. If it does not, consider purchasing an own-occupation policy.
3. Get Student Loans Under Control
One of the biggest financial burdens young physicians often face is their student loan debt. With some graduating physicians starting their careers with over a quarter of a million dollars in loans, these financial burdens can effect a physician’s ability to purchase a home and adequately invest for their future. But their are multiple ways you can help mitigate the pressure of student loans, including:
- Loan Forgiveness Programs: Military Service, Public Service Loan Forgiveness Program, and the Indian Health Service all offer options to physicians seeking to have their training paid for or the loan at least partially forgiven for certain types of service/employment.
- Employer Student Loan Assistance: Many employers are open to negotiating with physicians to assist in paying off some or all of their loans in exchange for longer employment commitments.
- Paying Extra Toward Your Principal: Doing this can help you pay off your loans quicker and minimize the amount of interest paid over time. Put a little extra of your budget “cushion” towards your loans each month to help you achieve your goals.
4. Integrate Your Financial Advisers
Most physicians have multiple individuals they work with to manage their various accounts and needs (an accountant, broker, insurance representatives, etc) but rarely do they communicate with one another. Trying to manage so many accounts can be overwhelming for many physicians, which is why it is critical for you to have a central financial adviser that will communicate with your various financial representatives. This will allow you to get a full picture of your finances and help you make informed financial decisions.
5. Know The Financial Aspects of Your Contract
When physicians receive an offer from a prospective employer, their eyes nearly always go directly to the base compensation. However, this will give you an incomplete idea of what to expect once you begin practicing. Some things to review with a contract attorney and/or compensation analyst before you sign include:
- Is the wRVU multiplier in line with the national average or below it?
- If they’re offering loan forgiveness, is there a penalty for resigning before the end of the contract?
- How much does the employer contribute to your various insurance plans? Do they match any retirement plan contributions?
Key Take Aways:
- Research any individuals you’re considering hiring as a financial advisor. Are they a fiduciary? Do they have experience working with the unique challenges of physicians?
- Carefully review the financial aspects of your employment contract, including any loan forgiveness and employer contributions to get a full picture of your financial commitments.
- Make sure your various financial advisers can communicate with one another in order to help you make wise investment decisions that take in the full picture of your finances.