I recently had
the opportunity to submit a guest post to the blog of an emergency physician, Ilene Brenner, who also happens to be the author of a new book How to Survive a Medical Malpractice Lawsuit: The physician's road map for success. Hopefully I'll get through the book soon so I can review it, as she also sent me a copy to share with readers. Thus far it looks great. At any rate, I helped her out with figuring out a backdoor Roth by email recently and she invited me to submit a guest post to her blog. At the time I wrote it, I had just gotten excited about the fact that a new Terminator movie was going to be coming out soon, so I took the title from a frequently used line in that series. At any rate, it's a post designed to help doctors get excited about taking control of their financial lives. I hope you enjoy it. Here is an excerpt: 
Hi there, this is a guest post on the important subject of Doctor Finances. It is by the writer of a fantastic website The White Coat Investor. The advice, while geared towards MDs is really great for anyone who wants great advice on investing.
Come With Me If You Want To Live!
The Terminator science fiction franchise was perhaps best known for the famous Arnold Schwarzenegger phrase “I’ll be back.” However, another common phrase is used in each of the movies as the protagonists meet for the first time- “Come with me if you want to live!” Sometimes I feel like screaming that line to doctors that I see doing stupid things with their money. Sure, it’s dramatic, and I’m not going to save anybody’s life by providing a few personal finance and investing tips, but it really irks me to see wonderful people who have dedicated their lives to healing the sick and injured get taken advantage of repeatedly. Doctors have a terrible reputation for mismanaging their finances. There are several reasons why.
First, like athletes and artists, their high income is due to a particular talent, skill, or highly specialized knowledge rather than their business acumen. By the time a small business owner has an income similar to that of a doctor, he has become very familiar with the business world and its pitfalls. Not so for the doctor. He may be over 30 years old and never had a real job prior to being thrust into a top 5%, or perhaps even 1%, income….
So, what is the solution? How do I help people to “live” financially if they do choose to “come with me?” Medical school is rapidly becoming more expensive. Student loans are no longer subsidized, and low interest student loans are a thing of the past. The average student loan debt is now over $200,000, and $400-500K in student loan debt for a single doctor is no longer unusual. Physicians are losing autonomy and for many specialties, incomes are falling, even without taking inflation into account. However, by optimizing their personal finances and investing, doctors can still enjoy the “good life” and obtain financial independence, that will allow them to practice medicine and live their lives in the way they choose to, rather than being a slave to their debts, their employers, and their own bad financial decisions.
Read the rest here, then come back and let me know what you think. Why do you think docs are so terrible at managing money? How can we help our colleagues who are financially clueless? Which Terminator movie was the best? Comment below!
Were you tired writing part of this? The fourth and fifth reason paragraphs are both missing verbs.
I have never seen a Terminator movie; the first is rated R so there has never been a draw.
It’s like choose your own adventure. You can insert any verb you like. 🙂
Wow, Star Wars AND Terminator! Just in time for valentines day! 😉
I could have run that column on divorce today….
I don’t think doctors are alone in mismanagement of their finances, it’s probably accentuated b/c of their income. Our learning comes from our parents and most parents think it’s not appropriate to talk about money. This starts the problem and grows by our focus on working on the Important and Urgent and neglecting the Important but not Urgent. Read Procrastinate on Purpose by Rory Vaden
What we have done to work on this problem is we created a group where we mentor 6-8 4th year dental students each year to teach the business side of dentistry. It covers everything from brand awareness to financial management. We now have another group that has been started to mentor 2nd & 3rd year pharmacy students to do the same thing. I think if we will take an active role in teaching others we can make an impact. It’s always better to borrow information than pay retail.
No Terminator for me either.
1. Overconfidence. I know many, many doctors who think that because they are great at one thing (medicine), they are great at other completely non-related things. Like trying to pick stocks.
2. Terminator 2. Saw it at the theater when I was 12 and still one of my favorite movies of all time.
Terminator 2….easily the best Terminator!
Most docs will never retire in comfort as they are not educated and many think they are smarter THSN the mkts and gamble on stocks and other foolish endeavors
Financial education should be part of high school curriculum
Maybe they should read how a second grader beats wall st
THE Terminator. No discussion required.
All you need is to read a few great books and use the internet to further research other subjects
Just learning passive investing will save them hundreds of thousands over 40yrs
That’s the good start malkiel and bogle gave me and millions of others
First film was outstanding. I was working as an undergrad in a neuroscience lab when our post doc came in wearing a huge grin saying “I’ve just seen the greatest B movie of all time”
Second film fun (especially a buff Linda Hamilton), but not groundbreaking.
Subsequent 2 films mostly CGI drivel. Typical Hollywood flogging a franchise
Fun link
http://terminator.wikia.com/wiki/The_Terminator_%28film%29
On various other pages on your site, you’ve nailed why doctors are bad with money. My favorites are:
a) assuming it is very complicated or time-consuming, and they can’t bother b/c they are too busy or dedicated to their “calling”
b) the big jump from college/medschool/residency salary to attending salary means a “green” person getting a lot of income
c) trusting so-called “experts” simply because they are used to working with actual experts, and fiduciaries at that
Terminator 2 is by far the best. End of discussion.
I think this article makes 2 key points.
1.) Having a skill that allows you to make a lot of money is entirely different from having the skills of knowing how to manage and invest money.
2.) The medical profession is guided by the basic principle of first do no harm. Most professions have similar ethics. Financial services, not so much.
I say all the time that the worst financial advice I ever received was to make sure you get a referral to a financial advisor from someone that you can trust. Being that most people have no idea how to manage their own money, how would they no if their advisor is doing right by them or not? Having the expectation that the advisor will be professional makes you go in with your guard down. Having a trusted referral makes you lower your guard even more. This absolutely happened with us. We ignored our instincts for a few years, even when we began to smell a rat until we finally decided to do our own due diligence far too late.
ChrisEE,
I’m sorry you have had a bad experience, we all have with almost every profession that exists. I think it’s a little irresponsible to say that those in the financial world intend on doing harm. Free market rules apply and all bad apples will be fleshed out. Mistakes happen and no one is perfect. Do your due diligence but a trusted referral has got to be the first place to start. Please accept my apology from the financial industry for your experience, but don’t give up on seeking expert advice. By the way expert advice doesn’t have to be which type of stock you need or when you should get in or out. People who are dealing with financial matters on a daily basis might give you insight on what someone else in a similar situation has done that could result in a financial windfall for you. A great motto as it pertains to finance for physicians should be: Be involved but always be willing to learn.
Russ,
I stand by my comments.
If you are saying get a referral from a trusted AND knowledgable source like this site then I would agree with your comment. However, my point is that most people confuse the ability to make money with the ability to know how to manage it. They are 2 entirely different skill sets. This is not my opinion. Read The Millionaire Next Door or any of its sequels for tons of examples.
If you then take a referral from someone you trust (whether good or bad) you will tend to leave your guard down. I am not stating that ALL in the financial industry are bad, but there is an inherent conflict of interest and you must do due diligence and not be lax.
ChrisEE
Would love a guess post from Ilene Brenner on minimizing malpractice risk and a couple high points from the book!