![]() Would you like to engage more physician prospects? Educate them about the 5 common financial mistakes physicians make, and offer strategies to avoid them. Mistake #1: Imbalance between spending and savings. Help physicians understand that for an investor time works like gravity. Explain that an early start on savings is like riding a bike downhill; conversely, a late start means pedaling uphill. We physicians already get a late start on saving because of our prolonged training period and the burden of medical school debt. After all the years of deprivation, many physicians feel it’s time to live it up once training is over. It’s easy to grow into and spend any level of income. The evolving field of neuro-economics suggests that biology may play a role in an individual’s propensity to save or spend. Some people are born “spenders” and others are born “savers.” While biology is not destiny, it takes self discipline for spenders to save—and for savers to spend. Discipline is like a muscle, and gets fatigued with prolonged use. Here are some ways to help physicians save more:
Mistake #2: Getting financial advice from the wrong people. Physicians have the intelligence to learn to build wealth, just as they can potentially manage any patient with any medical condition. However, physicians know that patients get better medical outcomes in the hands of specialists. You are the financial specialist. Surveys show that physicians working with professional financial advisors are most secure about their retirement plan. Only half of physicians do so. Many physicians turn to their colleagues for financial advice. I think of all the investment opportunities I heard about in the surgeon’s lounge. Most physicians who jumped into these schemes lost money. One financial advisor says that one of her major jobs is protecting her doctor clients from DDD’s—dumb doctor deals. Here are steps you can take:
Mistake #3: Failing to manage taxes wisely. You already know that proactive tax management correlates with the ability to build wealth. You also know that CPA’s work hard to assure that clients minimize their tax burdens in any given year. You see the bigger picture. You know that taxes will go up, and that contributions to a tax-deferred retirement account will, in fact, be taxed. Here are steps you can take:
Mistake #4: Failing to protect assets. Physicians carry insurance on their homes and their cars. They have a medical malpractice policy. They may even insure their smart phones. Still, many physicians do not insure their most valuable asset: their ability to generate income. Further, they may not see how the activities of their partners impact their ability to build wealth. When a life partner over-spends, or a business partner commits Medicare fraud, the physician can pay the price. Here are steps you can take:
Mistake #5: Ignoring the human condition. Nobel laureate Daniel Kahneman studied how people respond to changing markets including the 2002 dot-com bust and real estate boom. He concludes that investors make irrational choices. Your clients make predictable investing errors. It’s part of the human condition. If you have ever looked at optical illusions, you know how easy it is to fool the brain. Yet, even after someone proves that we have been tricked, our false perceptions persist. Here are some of the predictable errors that get in the way of building wealth; you see them every day.
Here are steps you can take:
You help your clients construct their financial futures. Educate physician prospects about known financial traps, and win the opportunity to help them build true wealth. © 2015. Vicki Rackner MD. All rights reserved. You are welcome to reproduce this post with the by-line below. Vicki Rackner MD is an author, speaker and consultant who offers a bridge between the world of medicine and the world of business. She helps businesses acquire physician clients, and she helps physicians run more successful practices. Contact her at (425) 451-3777.
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