Fahd Ahmad, MD, a long-time blog reader known to many of you as Rogue Dad, MD, is an academic pediatric emergency doctor at WashU who teamed up with one of my friends (and former residency faculty members) Kathy Hiller, MD at the University of Arizona to put out a paper highlighting the inadequacy of financial literacy among their trainees. Like much of the academic literature, this comes as no surprise to those of us working in this field, but it is good to see it documented and quantified. There is a lot of interesting data in this paper published in the International Journal of Medical Education and entitled:
An assessment of residents’ and fellows’ personal finance literacy: an unmet medical education need
Such a boring title, but that's academics for you. I would have called it “Residents Are Still Financial Idiots,” but that's why I have so few “real” publications. If you're interested in Dr. Ahmad's blog post on his paper, it should go live within a couple of hours of this post and can be found here.
The paper was the compilation of results of a survey of 20 questions about personal finance (gauging knowledge) and 28 questions about their own finances (gauging behavior.) They sent it out to 2010 trainees and got a 21% response rate. I don't know what to make of the response rate. I suspect it skews the data significantly since those who are more financially literate and those who are in a better position financially are probably much more likely to take the survey. So the average resident is almost surely in worse shape than the average of this survey. Which is terrifying. Since the average grade was an F. Yup. An F. 52% on the 20 question quiz. This wasn't a hard quiz either. Most blog readers would get 100% on it. Let's take a look at the questions. Yes, I'm a little biased since I did give a little input into the questions.
Financial Literacy Questions
Here's an easy one:
Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?
- More than $102
- Exactly $102
- Less than $102
- I don't know
96% got that one right.
This one was a little tougher:
Which account allows for tax-free withdrawals in retirement?
- Traditional IRA
- Roth IRA
- 401(k)
- 457
- I don’t know
65% got that one right. That's like, a D or something.
Then some of the questions were apparently really tough. Like this one:
A “no-load” mutual fund is one that…
- Carries no fees
- Carries no sales charges
- Does not contain high-risk securities
- Has no limits on the period of time in which it can be bought and sold
- I don't know
Only 13% got that one right. Sheer chance should have resulted in 25% getting it right.
Or this one:
Which of the following organizations insures you against your losses in the stock market?
- FDIC (Federal Deposit Insurance Corporation)
- FINRA (Financial Industry Regulatory Authority)
- SEC (Securities and Exchange Commission)
- SIPC (Securities Investor Protection Corporation)
- None of the above
- I don't know
Only 41% correctly selected none of the above. So 59% of doctors in training think someone insures them against stock market losses. That's kind of scary.
Financial Behavior Questions
So, how bad is the financial situation among our trainees these days? Let's take a look:
This only includes those with retirement savings, with student loans, and with a mortgage. Like usual, I'm disappointed the top student loan category was only $250K+. That means those with $251K (probably reasonable) are in the same category as someone with $550K (not reasonable.) As expected, most residents have little retirement savings. That honestly doesn't bother me. Doctor financial success comes from what you do with your attending income. An interesting data point in this chart is that resident mortgages tended to be in the $100-200K range, which isn't terrible, but bear in mind these residents are all in St. Louis and Tucson, which are relatively low cost of living areas.
Paying for Financial Advice
Here's another interesting bit, the question on how they paid for financial advice:
| How paid for financial advice† | |
| Advice was free | 114 (27.0) |
| Commission on purchased products | 28 (6.6) |
| Yearly retainer | 10 (2.4) |
| Asset under management (AUM) fee | 10 (2.4) |
| Combination of above | 22 (5.2) |
| Doesn't know | 10 (2.4) |
Bear in mind we're only talking about 46% of the docs here. So of those who got advice, only about 10% of them got it from a fee-only planner. The remainder either paid a commission, have no idea how they paid for the advice (i.e. they paid a commission) or think the advice was free (i.e. paid a commission.) So residents are almost entirely getting financial advice from commissioned salesmen.
Financial Assets
Here's some great news:
| Have an emergency fund for 3 month's expenses | 278 (65.9) |
| Can come up with $2,000 within the next month | 321 (76.1) |
| Have projected necessary retirement savings* | 168 (39.8) |
| Have retirement savings (any) | 262 (62.1) |
| Money set aside for children's college education (any)*‡ | 47 (38.5) |
I'm actually really impressed with this. These numbers are way better than the average American (who has a similar income.) 40% of residents have projected necessary retirement savings? I know I hadn't at their age. And 39% are already saving for college? That's pretty awesome.
Debt
| Have a mortgage (any)* | 137 (32.5) |
| Have credit card debt (any)* | 86 (20.4) |
| Have student loans (any)* | 299 (70.9) |
71% with student loans, 20% with credit card debt….no big surprises there for me. I'm surprised only 33% have mortgages though given the rush of most residents to run out and buy a house.
The Conclusions
The authors concluded that
We found serious deficits in financial knowledge in a broad range of topics and in financial planning among trainees at two academic medical institutions in the US. Trainees reported high debt levels, minimal retirement investments, and having difficulty with cash flow. In addition, trainees reported low levels of satisfaction with their financial status and were largely averse to high-risk investments, which generally have potential for greater yield for future expenses, such as for their children’s education or their own retirement. Nearly one-third of respondents reported difficulty meeting their monthly expenses and reported spending all or more of their income each month. Despite having an income similar to the national median income, and an expectation of a significantly higher future income after training, our study participants were less satisfied with their personal financial condition than the average US citizen.
They recommended that
Coursework about the basics of personal financial planning and important financial considerations relevant to medical practice and health insurance should be incorporated into the curriculum during medical school and graduate medical education….financial education for medical trainees could show long-term improvements in physicians’ financial health, both personally and in practice.
We recommend, at a minimum, that every trainee receive specific instruction in the following aspects of financial education during medical school and residency:
- How to make a monthly budget
- Debt/loan management and credit scores/reports
- Savings and retirement planning options
- Life, health, and disability insurance
- Estate planning strategies
I wholeheartedly agree. Kudos to Drs. Ahmad, White, Hiller, Amini, and Jeffe for their important contribution to the physician financial literature.
What do you think? What surprised you from the survey? What do you think should be done to further financial education among residents? Comment below!
We have a long way to go as an industry…
Can’t believe only 10% were using a fee only financial planner. If medical schools stepped up to the plate and actually taught some personal financial topics, even just an hour a week, physicians would be so much better off financially and less likely to be taken advantage of.
It’d also be nice if residency programs didn’t allow commission based salesmen to come and speak to their residents in person or via “free webinars” and actually vetted who they let in. What a concept..
Im optimistic that this will change in the upcoming decade as more and more physicians find sites like this one and hear from their peers the real way to plan for their financial lives and help them achieve financial independence.
Even at my shop, where I am giving talks and conflict of interest issues are always mentioned, advisors manage to easily reach faculty for fancy steak dinners to woo them to their companies.
I imagine the trainees are receiving emails also, but I haven’t heard of advisors being brought in and allowed to woo people. We’ve allowed one person to give the contract negotiation talk, but no wooing allowed.
While I do agree that financial advisors representing large companies should be vetted prior to speaking to medical students/residents, there are a few companies that do an excellent job with advising, teaching and “showing the ropes.” Sure, medical schools can do a better job at educating medical students with regards to personal finance, OR medical students could, as other college graduates do, take interest in their own financial future and put some leg work into learning about it. Personal finance is an industry. Yes, obviously these companies are looking to earn a profit. However for many young physicians, finding the right advisor is a small price to pay to learn some basics with someone they can turn to in order to run ideas by- much like they did during training. My point is – some of these advisers and some of these companies have the potential to offer an interactive sounding board to young physicians learning about personal finance and investment. After a year, many do not need the adviser anymore as they grow and learn.
The problem is most advisors don’t want business from young physicians with a negative net worth who are only going to stick around for a year. It’s a lousy way to build a maximally profitable practice.
I suspect residency programs let these salespeople in because the physicians in charge, i.e. the attendings and residency directors, are also financially ignorant.
^^^^^. this , all day long.
The solution to this problem is to have 5 questions on USMLE Step 1 be about financial literacy. I’m only half joking; the financial literacy rate (as defined as the average score on Dr. Ahmad’s quiz) would jump from 50% to 90% within 2 years.
You are absolutely right.
Funny thing is I am giving these talks and haven’t tailored them to my quiz, because there is so much high yield info the quiz doesn’t cover that I don’t even want to spend time on some of the less impactful stuff the quiz asked.
interesting idea but slippery slope to an incredible level of silliness. while i think everyone on this forum would agree that FL is essential the next year you’d have someone come in and say the same thing about another fad topic like a particular cultural competency. i’m not saying i’m against cultural competency but i don’t think it should be on usmle.
it’s too easy to fall into this trap of “everyone should know more about my pet topic” in medicine.
I think I probably agree with you. While financial literacy would skyrocket if it were tested on the USMLE, I’d be happy with an optional 2 week fourth year course in every medical school in the country and one lecture a month in residency. Docs need more of this than they’re getting, but they need far more medicine than finances. This has been reinforced to me this summer as I am studying for my board recertification. Medicine is way harder to learn than finances! The amount of material we have learned and forgotten because it only gets used every few years is astounding.
I was being a little facetious about the USMLE thing — I don’t think it should be tested in that way, but I do think students would go out of their way to learn the details of microeconomics if it were.
I think WCI’s proposal is more practical and relevant — personal finances are the ideal topic to be taught JIT — Just In Time. You don’t need to know it all at once, you just need to pick up the relevant bits and pieces as you go. I’ve spent zero time learning about having an LLC, but I’m about to give myself a crash course in it because of my blog.
I can recall a time midway through my residency at which I, too, would have failed that exam. Were it not for an attempted hard sale of whole life insurance, and my resulting frustration and subsequent education, I shudder to think who might be swindling me out of money as we speak.
The frustrating part is that (most) doctors are intelligent, responsible adults who can master personal finance in a few weeks or months of reading a few hours per day. No one seems to be broadcasting this message to medical residents. Quite the opposite, actually: financial advisors tell them to hand over the reigns of their personal finances to the pros.
I like Wall Street MD’s suggestion to add questions to the USMLE. Better yet, add it as an official part of the curriculum to medical residencies in this country.
Dr. C — requiring it be added to the curriculums is what I suggest. But adding it to the the USMLE will get the hyper first and second year students memorizing a lot more!
Unfortunately as a group we like to feel special or important. Advisors make us feel that way. Telling us how much money we make, how to protect it, and how to become rich. They don’t tell us how they are benefiting with us as clients.
Nice work doctors. It is surprising that you only got a 21 percent respect nsr if the study was done at your medical centers (only 2 right?). I would think by knowing the trainees more would feel inclined to answer.
As an academic clinician, I can tell you that a 21% response rate is pretty typical for a survey based investigation. You are also right to acknowledge that there will be some self selection bias in who responds. So, probably financial literacy is even lower among residents than this article found.
It’s great that your shining a light on this deficit of medical education. Thanks for the report!
You are right that our response rate isn’t atypically, but we should’ve been able to go higher.
I didn’t explain it in detail in the manuscript or my blog, but we were a little handicapped in how we did invites, and I know that reduced our response rate. Should’ve been able to hit 30% easily if not higher.
I talk financial stuff with my med students (I’m in private practice and I am one of the core peds rotation sites) all month. I think I talk about this stuff more than pediatrics. They LOVE it. They hang on every word. It definitely isn’t part of their curriculum.
I agree. My residents may or may not pay attention when I talk medicine. When I talk about personal finance they are all ears and have follow up questions galore.
They absolutely love it. I am fairly sure the residents enjoy my talks on finance way more than seizures or airway management or sepsis
Not necessarily true. I like learning airway management better than finance, but a typical resident has had a gazillion lectures on airway management and none on useful finance stuff. So it’s the fact that it is new, useful information that makes them so hungry for it.
Fair enough. Airway management is the clinical topic I most enjoy teaching, but as you mention, they get that from a lot of sources.
I’m the only faculty member in our department (maybe only one in the university, not sure) regularly teaching personal finance.
Next time, to get better response – try WCI’s suggested title
This doesn’t surprise me one bit. I graduated from residency less than 2 years ago and have been following WCI for 3-4 years, partly because no one was talking about financial issues during residency. I have offered several times to go back to my program and speak about financial issues during noon conferences. No one has ever reached out to me to accept the offer. I thought I had an idea of what to do when I graduated, but realized I still had so much to learn, especially becoming a “self-employed” physician utilizing a K-1 only to realize I would be better off forming an LLC and S-corp to be an independent contractor utilizing a 1099. This is quite unfortunate because it became apparent that the academic, employed, dayshift, metropolitan physicians were out of touch with private, self-employed, nightshift, rural medicine situation.
A good deal of what trainees need to learn in residency stage is universal, but they definitely need perspective beyond what they can get in the academic environment.
I should state that being in academics is not mutually exclusive with working nightshifts. Academic hospitals don’t have bankers hours.
Was “I don’t know” included as a correct or incorrect answer? “I don’t know” should be correct, if the person taking the test doesn’t know. 😉
It would be really interesting to give this quiz to early, mid, and late career physicians, as well. I’m afraid the results would be similarly appalling, but with probably somewhat better results in the more seasoned docs.
With so much focus lately on physician burnout, it’s surprising how little attention personal finance is given in the discussion. Empowering physicians to confidently understand and manage their money could make a measurable difference in reducing the burnout rate.
Cheers to Drs. Dahle, Ahmad, and Hiller for bringing the knowledge gap to the forefront!
-PoF
I actually TRIED to survey our university faculty at the same time I surveyed our trainees.
I was told I could not send a survey out to them by whomever controls that type of university wide circulation. I probably should have pushed harder because I’ve had other random surveys show up in my own inbox since then…
You may not have many “real” publications but you influenced this one and were mentioned in the acknowledgements.
It is not surprising but still a little disappointing that the financial illiteracy persists despite new resources like your blog and book. The results are right on target and it is good to have a formal paper showing the deficit.
Here is my less thorough review of the paper for any of your friends with a brief attention span: http://wealthydoc.com/blog/doctors-need-to-learn-more-about-money
WealthyDoc — I had not realized you already wrote about the study. Nice summary of the findings.
So I added this to my blog post re: why I think we had a low response rate:
–The GME offices (overseeing training programs) didn’t let us email invites directly to trainees and the IRB didn’t want me reminding people at conferences.
–At WashU, the invites/reminders came from an administrator in the GME office, making it more likely to be overlooked/deleted.
–At UofA, individual program directors had to send the invites, and we had no way to track if/when invites or reminders were actually sent. A lot of people may never have received an invite
–UofA also enrolled when the academic year changed, so some people left and new people came and could’ve been missed.
–Because we couldn’t send the invites ourselves, we couldn’t track who completed surveys or send targeted reminders.
–We included all potential trainees when making the response rate, even though some people may never have received an invite at UofA (or only 1 invite), artificially lowering our response rate
–In general it’s hard to survey physicians, even residents, for non-mandatory surveys, without a nice financial incentive. We offered Amazon gift cards via a lottery, but not a bag of gold.
We probably could have hit a 30% response rate (or higher) easily had we been able to send the surveys ourselves, but I don’t think the data would’ve changed dramatically
I am a trainee at your institution and don’t remember ever receiving an invite to this survey…I certainly would have taken it! But if it seemed to come from the GME it’s highly likely I deleted it without really looking at it. I’m excited to find out one of our faculty members is working toward improving student/resident financial literacy! Thank you!
We did the survey at WashU over 2 years ago (UofA was several months later and then it took awhile to get published). Were you a trainee at that time? If so then it just proves that the GME distribution requirement negatively impacted my recruitment. You should have received 3 invites to the survey.
Keep an eye out for the lectures — 3 of them in August and 2 more later in the year. I hope you (and everyone else) get something from them!
What are the topics of your lectures? I’m a chief resident this year, and during our intern orientation, I had one person ask me about some financial stuff while the rest of the people in the room looked at me like I was nuts when I responded. I’m by no means an expert, but I know more than the average resident does, and I want to give a couple of talks throughout the year on some of these topics.
WCI 101 — basics of money management, retirement accounts, projecting how much you need in retirement and how much to save, how to pick a financial advisor, mortgages, etc. Also added a little bit recently on FIRE. Nothing that is physician specific frankly. I do add a lot of personal touches, anecdotes, some interactivity, and things that make it more relevant and interesting. Despite the topics, I don’t think it’s a dry talk.
However we have others talk on loan repayment, contact negotiation, and practice structure in a way that is physician specific.
If most people in America are clueless about personal finance that would mean the professors and deans in medical school are likely to be equally clueless. How can they teach what they don’t know themselves?
There are a handful of people everywhere that have figured this out, they just don’t advertise it. And for those that don’t know but want to learn, it’s not hard to learn the basics and pay it forward.
Anecdotal experience. My attorney wife and tax lady, after my taxes were completed mentioned how I was to owe a lot of capital gains for the year.
I asked why, and it was because I sold a property (that I lived in for 2 years). I told them there would be no cap gains. They both said I was wrong.
So, this lowly appliance repairman was not to win out against the tax specialist and attorney. Thankfully she checked out what I said and called me the next day.
That’s crazy. I knew that rule when I bought my first condo in residency. Specifically, I knew I had to live in it for 2 of the previous 5 years. And that’s before I started educating myself in all matters personal finance. That’s home ownership 101 material.
It’s noble to try and educate kids in medical school about finances, but the real error of our society is students can get through K-12 and an undergraduate degree and not know this stuff.
Financial education in med school is great, but is only a bandaid to the deeper problem of parents, high schools, and colleges dropping the ball first.
Thank goodness for places like WCI.
Absolutely, however K-12 in many areas is already deficient in math and english and science in many school districs. If we can’t teach those then I think it’s unlikely we can get personal finance integrated, but those are precisely the students who probably would benefit the most from such education.
For those that make it to college or med school, I don’t think it’s a band-aid at all to start the teaching there. Apart from avoiding significant debt (that they may have already incurred), they are in a great position to start applying basic personal finance lessons.
We need more papers out there to get this into the curriculum. I tried to get into the med school my hospital is affiliated with and I was turned down….will try again! Also if this becomes a “thing” like physician wellness/burn out as become, we can get CME credit 🙂
It shouldn’t take this paper to get your med school to listen, but I hope it helps.
I fully agree this goes under the wellness umbrella — if they can talk about work/life balance they can talk about budgets.
It would be interesting to see how law school and MBA students would do on the same survey.
I’d expect the same results (despite hoping the MBA students would fare a little better).
My experience with MBA grads is that they get zero education in personal finance and are equally clueless. Many believe they can be the next warren buffet because of that MBA.
A one hour lecture can provide the basis for a financial education
How To invest in the stock mkt through indexing; what funds and what AA model suits you
Which insurances you NEED
What products to AVOID-annuities, whole life
Which few books can give you ALL the basics
Getting started on your RETIREMENT PLAN
Learning the RULE of 72 and compounding
How to calculate and reach a goal of FI
TRUST NO ONE as Andrew Tobias preaches
The Tobias book The Only Investment Guide You’ll Ever Need was my introduction to personal finance as a medical student. It cost me $10 and saved me thousands.
Cheers!
-PoF
Almost all the basics people need to know can be learned very easily through many well written books and websites like WCI.
An hour or two integrated into a curriculum will go a long way for those that are ready to learn/change, however you never know if you’ll be catching them at that point. So making sure they know where to go when they are ready is also important.
When I graduated D school I knew what a bank CD was and to SAVE money
Read Random Walk Down Wall Street and from that I KNEW that Wall St was an uneven playing field and INDEXING was the winning formula
Then Read Bogle Bernstein Swedroe and others to complete the basic education
Those here at this site at a young age are blessed to have all this info
AVOIDING MISTAKES is paramount
NEXT FRIDAY WATCH BURTON MALKIEL ON WEALTH TRACK WITH CONSUELO MACK
PBS 7:30 east coast
Thank me later
Is the suggestion that personal finance become some part of med school curriculum? I find this pretty odd since I’m sure you guys would be flaming someone who paid an FA a few thousand dollars to provide the same advice they would be receiving in this course or series of lectures. I know I wold be pretty irritated if part of my tuition was going towards a class such as this.
Donnie — yes, that is the suggestion. It’s already happening in some medical schools, and quite the opposite of what you state, medical students want the education.
If students were already going out of there way to learn this information then there would not be a need for the lectures. Medicine as a speciality has traditionally NOT talked about money/debt issues for physicians or income, but those barriers are slowly breaking down. Combined with the dramatic costs of medical education — with 50% of students with $200k in loans or more — and the fact that their entire financial futures are on the line with their decisions (specialities, loan choices), I consider it a duty for programs to start teaching this to students.
Students frankly waste a lot of time in traditional lectures teaching traditional topics. It’s reached the point where in many cases they watch remotely and rarely go in person unless required in the early years.
Medical education as a whole needs a lot of updating.
I am sure there are a lot of real world and practical skills not taught in med school that would be very useful to doctors, including finance and management. When you say “medical students want [personal finance] education,” I seriously doubt that it’s 100%. Further if they are as bad at understanding finance as you suggest, I doubt they also grasp that such education will likely come in the form of higher tuition, so they likely don’t even know fully understand what they are asking for anyway.
Speaking for myself, I subsidize enough people. I certainly wouldn’t want my money subsidizing the education of med students who are too lazy to learn about basic personal finance on their own. If they are in med school, they very likely have the means, the aptitude, and the opportunity to learn this material on their own.
Donnie, there’s a whole lot to unpack in that comment, including what seem like some intentional misstatements and some frankly unnecessary and inaccurate insults.
–I didn’t say 100% want it. However I wouldn’t be surprised if it’s 90% or higher.
–How is it this education coming in the form of higher tuition? Tuition isn’t set based on individual lectures, it’s based on the total cost of providing education. If the lectures are given for free, or substituted in for something less valuable even if paid for, then the students aren’t paying extra
–How are you subsidizing anything? I assume you mean income or property taxes? Medical schools are not highly subsidized by your taxes. Private schools aren’t receiving it and public med schools in many places are receiving less and less public money. You are subsidizing all of your local elementary and high schools with your property tax. Have you been complaining to them they should just make high school a trade school only and not teach anything beyond shop?
–Nearly everyone in med school has the aptitude to learn most/all of this on their own, but how is that relevant? They also have the aptitude to learn 50% of what they already are given in lectures on their own. In lots of med school the students don’t even go to the lectures in their first couple years anymore. They spend more time reading than they do in lecture halls. Certainly there is a component that has to be learned on its own — I have not suggested they replace anatomy as a course with personal finance — but you have to get them started.
–Why are you assuming laziness is the reason people don’t learn personal finance? A good majority of this country, including many with jobs, working long hours, and working professionals with higher degrees, lack some of these basic skills. Laziness is hardly why it’s overlooked. It simply isn’t taught to most people at a young age, and it’s hard to retain this information when you don’t have money or a job. You can teach this in grade school, but I’m guessing most 3rd graders won’t care or remember why they should save in a Roth IRA instead of a Traditional IRA.
It now seems like you are intentionally trying to misinterpret things. The cost of adding personal finance curriculum isn’t free. Adding an instructor and producing the materials necessary to teach a legitimate course on personal finance will cost money as I’m sure no one with the relevant knowledge and experience to teach such a course is interested in pro bono work for med students. The cost will then be borne by the students in the form of increased tuition. If less than 100% of the students want such a course, then the course will be subsidized for the ones that want the course by those that don’t. I am not suggesting I am currently subsidizing the teaching of personal finance courses in med school, but I am saying that I would be irritated if part of my tuition for med school went to teaching bone heads what an IRA is. While i didn’t go to med school, I do have a Ph.D., so do have experience in postgraduate education.
You can say that other programs can be cut and replaced with personal finance, but given my experience in academia, that is very unlikely. Programs have inertia and are very hard to displace, especially when the replacement is something that has nothing to do with the core curriculum. Further, if useless programs are being taught, then I would far prefer that these courses be eliminated, decreasing the cost of tuition, rather than replacing them with other non-core curriculum.
Yes, med students have the ability to learn medicine on their own, but that’s not really the point. People go to med school to get a degree just as much as they go there to learn the information, and students pay a significant sum for that degree. In my view, it is not appropriate to force non-core curriculum onto all students who may not want such information. Those that want it will seek it out. Those that don’t are lazy or uninterested. Seriously, what other options are there? People make time for the things that are important to them.
By the way, several of the questions on the questionnaire are poorly worded. For example, buying a bond is not lending to a company, it is buying a debt security in a company. You should seek a higher return from riskier investments, but it is not true that simply higher risk means that the returns are higher than less risky investments.
Buying a debt security is only trivially different than lending money. Getting docs to understand the difference between the two is the least of my worries.
There are people who think Apple is getting your money when you buy a share of Apple stock. Understanding how financial markets work is important. If people think they are lending money to a company when they buy a bond, they are likely to get really confused when they buy a bond at a premium in the secondary market and discover they do not recoup their entire initial investment when the bond matures.
More generally the wording of survey questions is important and can skew results.
I don’t dispute what you’re saying. I’m just saying I’m happy when a doc understands that bond yields and bond prices move inversely. I don’t have any expectation that most docs will ever read a bond book like Thau’s or Swedroe’s. I certainly hope that someone who considers himself smart enough to buy individual bonds would understand the consequences of purchasing a bond at a premium. I generally recommend against the purchase of individual bonds, with the possible exception of treasuries sold at issue.
The quiz questions were taken from FINRA — I did not develop them (WCI and I may have developed 1 of them, but I think that’s it).
I’ve already developed lectures and am giving them for free to med students, residents, and fellows at my institution. Our five part lecture series this fall is 100% pro bono. It doesn’t cover everything, but that obviously isn’t possible nor is it necesssary. However if through these lectures you get people to realize what they don’t know and get them to start learning or asking questions on their own when they otherwise wouldn’t then I consider that a success.
WCI is getting paid (no idea how much, a couple grand most likely) every time he delivers his talks (albeit with more expertise and reputation behind it). So sure, having him come in and teach a course isn’t feasible. If my own institution wanted to pay me for this then I would gladly do it. If anyone else out there wants to bring me in to talk to your trainees — I’ll charge 50% of what WCI charges. 🙂
Academia has a TON of inertia, and I work for an institution that in many ways prides itself on some of that inertia, and even we were willing to start integrating this into the curriculum. It’s up to to the people creating the curriculum to decide what should be a core component of the curriculum. If a substantial portion of doctors are entering practice with high stress levels because related to business/personal finance issues, then I absolutely think the education system needs to provide them that education.
If someone doesn’t want to learn the material they can skip the lecture, the same way they can skip grand rounds on some esoteric topic or a noon conference on how to manage ventilators from a pediatric ICU attending when they are about to graduate a pediatric residency and enter primary care.
While I agree in a perfect world that *some* of this material would be taught earlier, there is also some of it that is relevant to physicians specifically (contracts, loans, practice structures).
And the fact that there are so many financial advisors out there *specifically* targeting physicians is proof that the physicians need to be taught some of this before exiting training, because the financial advisory world sees a large group of suckers.
So yes, you could pare down medical education curriculum to the barebones of what you need and maybe shave a year or so off of it — I think people already advocate for that. Yearly tuition won’t go down, though maybe total tuition would go down, and room for electives and personal finance education go by the wayside. Same thing for residency/fellowship programs. However the length of the residency isn’t dictated by the # of noon conferences — it’s based on the # of years it takes to gain clinical expertise. If it takes 5 years of residency clinical work with some surgery lectures to become a general surgeon, there are still gaps in the schedule, because most important training isn’t in the lecture hall, it’s in the OR. They have open lecture spots to fill because conference isn’t their main way to learn, so they need to find other, relevant things. If they slash surgery residency to 3 years then maybe they don’t have time/space for finance lectures, but the conferences are not the deciding factor.
In this business you quickly learn the money isn’t in giving live lectures. I’d probably be better off staying home and working a shift or two than traveling across the country and giving a talk. If you’re willing to talk for free you would quickly be overwhelmed by all the travel and talks. I’m amazed how many people invite me to give a Grand Rounds thinking if they pick up the coach ticket and a night in the hotel that I’d jump at the opportunity. Must be a lot of docs out there willing to do that or something.
Lol — you’re literally describing the academic business model. Flying around the country to give lectures is actively encouraged — being a visiting lecturer and delivering Grand Rounds is actively encouraged to burnish the CV and help attain promotion. I’ve never actually been invited — I assume the really big names may get honorariums, but lowly people like me probably wouldn’t.
I guess when one cares more about their nest egg and their vacations than their CV then one wants more than a coach ticket to take two shifts off!
My residency has “wellness” conferences and personal finance is one of the topics. Unfortunately, the only thing they seem to want to talk about is student loans.
Danielle — tell them it’s not enough.
Student loans are obviously a huge issue when everyone has $200-400k in debt, but they may only talk about that because they don’t realize you want (and truly need) to learn about other topics.
Teaching med students about personal finance and debt after they’ve already well into the program seems much too late to me. it’s not like they can suddenly opt out after realizing how much debt is involved. It really belongs in a high school curriculum when life long buying and spending habits are being firmly established.
College recruiters and guidance counselors push hard for college (long before medical school comes into the picture). There’s little exposure to any alternatives or discussion of the financial burdens that come with taking on five or six figure debt as an 18YO.
Given that only about 50% of college students graduate within six years (much less earn decent incomes after graduation), it’s hard for me to see how that kind of one-sided advice is serving them well. Those same recruiters and counselors are actively paying off their own student loans and making poor financial decision while giving exactly the same advice they received themselves.
Many of these kids shouldn’t be going to college in the first place. There’s many alternatives.
Chris — I agree the earlier the better. However already having student loans doesn’t mean it’s too late. It’s pretty hard to avoid all loans, and the cost of school is already what’s in people’s faces the most when they go into school. It’s the rest of it they don’t get. There is way more to debt than student loans, however, and while some of what I propose teaching is specific to medicine, a great deal of it is applicable to everyone.
If people were getting this as mandatory education in high school and college then this need wouldn’t exist. If I taught high school biology instead of working in medicine I would be trying to teach this to high school students instead.
Great paper, and I hope this gets more attention in the academic world. I hear many physicians complain about the death of physician independence. In my view, it starts and ends here. A generation of physicians well positioned financially can afford to take chances and chart their own path. Patients and physicians will be better for it. I’m willing to bet more people would be willing to join me in primary care as well…
Less financial stress opens doors to explore different paths — that’s why the entire FIRE community exists. Primary care can be a wonderful job, but if have a mindset that you need a $500k salary then you’ll close a lot of doors fairly quickly.
I’m not sure how much attention the paper itself will receive — IJME wasn’t my first attempt at publishing it. There were some better known journals that weren’t interested. We’ll see if it spurs any change. I think this will help places that have people that are already motivated, but not sure how much it will do at a place where no one is asking for it.
Yeah, I’m not sure there is enough buzz to turn a lot of heads. A bigger sample size and connecting financial pereceptions/literacy with specialty choice might get bigger name editors to pay attention.
Fully agree w/you — I most likely needed a response rate of 50%+ and a few more centers for the bigger name journals.
I’m willing to try to modify and update this and do this across more centers if others want to collaborate! The questions could be tweaked a bit and some other things added to improve the outcome data. I can go back through my rejection letters to see what the other journals wanted. 🙂
This is a well thought article. It is very informative. Thank you for sharing. Well my take about this, resident should be aware about their finances and how to overcome it to be free from all those loans.
HS — thanks. I think loan management is paramount, but sometimes it’s the giant shiny object distracting people and making them forget there are a host of other things to worry about as well. Shining a light on those other things, in addition to the loan management, is helpful for everyone.
NOTHING WRONG buying individual MUNI BONDS
Great idea to create a portfolio of them in your taxable account and eventually enjoy monthly checks TAX FREE
One of the best moves I ever made
The default rate on investment grade munis is miniscule
Why White Coat is against them is befuddling
Sure there is. You’re taking on an uncompensated risk. The diversification and liquidity is well worth the 15 basis points it’ll cost you. You still get monthly checks TAX FREE, but without anywhere near the hassle. Sure, default rates are low, but they’re not zero. The main benefit is avoiding hassle and gaining liquidity. For anyone curious, the 10 year default rates from 1970-2011 were:
Aaa 0%
Aa 0.03%
A 0.03%
Baa 0.16%
Ba 2.80%
B 12.4%
CaaC 11.6%
By comparison, corporates look like this:
Aaa 0.50%
Aa 0.54%
A 2.05%
Baa 4.85%
http://www.municipalbonds.com/education/read/77/default-rates-of-municipal-bonds/
If taking a tiny bit of default risk and giving up liquidity to get a few more basis points of yield is worth the hassle to you, then go buy your own muni bonds. Doesn’t bother me a bit.
If we expand medical school to include everything that we *should* know, it’s going to be a 6 year curriculum. Some things, like finance, require self-learning. I’m sorry, but residency programs should provide noon lectures on the topic (I know ours does).
Also, many of these basic topics (such as creating a budget) should be taught in high school, and are a failure of a much larger education system than medical school.
If I had to choose the educational model, I think an optional course in the last half of MS4 + 1 hour a month in residency would be ideal. This doesn’t need to be a major part of the curriculum. You need far more anatomy than finance, but you do need more than 1 hour on student loans as you leave school.