Imagine, if you will, that you are presenting at Morbidity and Mortality (M&M) Conference, except that in this case, you are not discussing a patient care episode gone bad. You are presenting your own personal financial decisions.

For those who are not familiar with an M&M conference, it is usually one of the better meetings you attend during your time at an academic medical center. Sometimes it is like watching a traffic crash in slow motion. Except the person at fault in the accident is standing in front of a group of his peers trying to explain his rationale. All kinds of cases are presented but typically they consist of complications, unexpected deaths, and poor management decisions. These days the person responsible for the case is often deliberately obscured, but in the “good old days” it was just you in front of everyone whose professional opinion mattered to you trying to defend your care. Let's imagine this Financial M&M is like that.

Presenting doctor:

“At this point, my wife and I met with the financial advisor. He told me this whole life policy was even better than a Roth IRA because it came with a death benefit.”

Gruff attending in the back row:

“What is the likelihood that someone attempting to sell you a whole life policy is someone you should be taking financial advice from?”

Later in the meeting…..

Presenting doctor:

“At this point I calculated out the return on my portfolio for the previous 5 years and found it was 7.3%.”

Chief resident in the front row:

“Wasn't the return of the stock market over that five year period 12% a year? What was the average expense ratio of your portfolio?”

You get the picture. M&M meetings are great because they reinforce a few important things

  1. Although there are often multiple right ways to do something, there are definitely wrong ways to do it.
  2. Poor decisions have serious consequences.
  3. You should make every important decision with the thought in your mind that you may later have to justify this decision to a group of smart people. If you do so, you'll make better decisions.


A sign outside my local Edward Jones office. Obviously, I disagree.

A sign outside my local Edward Jones office. Obviously, I disagree.

My Trip to Arkansas

I had the pleasure of traveling to Arkansas a few months ago to meet with medical students, residents, and attendings. That's State #43 for me if you're keeping track at home. Although I returned home tired (as usual) it was a very enjoyable trip. I gave a presentation about getting that critical first year as an attending right (financially speaking) at General Surgery Grand Rounds. This immediately followed their M&M conference. I was really hoping the questions directed at me would be a lot easier than those directed at the chief residents presenting the M&M cases. Thankfully they were.

The night before I presented to a very unique MS4 class, the Business of Medicine, organized by surgeon Jason Mizell. 95 of the 160 MS4s at the University of Arkansas Medical Sciences enrolled in this optional class. I hope to see a class like this offered at every medical, dental, and law school in the country.

That evening, I had the pleasure to meet 20 or so young attendings at certified financial planner Sarah Catherine Gutierrez's house. She is an hourly-rate financial planner who has been advertising on the site for some time. When I first met her, she was charging just $75 an hour, a ridiculously low fee. The current fee of $200 an hour is still one of the lowest I've seen for this type of work. (By way of comparison, Allan Roth of the “Second Grader” fame charges $450 an hour.) Sarah's firm, Aptus Financial, sponsored my trip out there, paying my expenses and speaking fee. I hope Sarah's model catches on like wildfire, but fear it will go the way of the dodo. You see, most financial firms are in the business of gathering assets, not giving advice. If you can gather $1 Billion and earn 1% on it, then your firm earns $10 Million a year and will stay in business. But if you are only giving hourly advice, and referring elsewhere for investment management, then you never get those AUM fees, “the best passive income there is.” Like a physician, if you stop giving advice, the income stops coming in.

[Update prior to publication: Dr. Mizell and Mrs. Gutierrez have submitted a guest post about the Business of Medicine course. It'll run in a couple of months.]


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However, the services provided are pretty unique. Since she is so inexpensive, she has already done 250 financial plans in her short career. (Many asset-gathering type advisors may only do 50-100 in their entire career.) That gives her a knowledge and ability that is pretty rare. I get dozens of questions every day by email, blog comment and forum post. After just a little while, I had very good insight into the concerns, questions, and financial situations of physicians and their trainees.

Doing 250 financial plans in a short period of time does the same thing. We all have the same questions and once you know the answers, you can provide them very efficiently. So now plans that used to take 20 hours to prepare only take 2. But the best part is that the approach is not the usual “I'll give you a fish” but rather a “I'll teach you to fish.” You can bring in your laptop and she'll sit by you and show you how you can open an account at Vanguard and place your own trades. She also does “second opinions” on financial plans and portfolios provided by other advisors. As you might imagine, she gets to see a lot of very angry physicians in her office as she explains that they've been paying $20K+ a year to underperform a simple index fund portfolio. When we parted ways, I told her that she had no idea how much I want her model to be successful. There are other hourly rate advisors out there, the Garrett Network being the most famous. But there aren't very many that specialize in doctors. Rant over and back to the story.

So I sat down and we had a little “fireside chat” with these young doctors. Since they were all Sarah's clients, they didn't have any stupid questions. Those had all long since been answered. So we discussed the intricacies of finding happiness, entrepreneurship, and optimizing of our financial situations. I hope they all found it as inspiring as I did. I could have stayed up until midnight, although my voice probably wouldn't have held out that long.

I also had the opportunity to sit down with Financial Planner and oncologic surgeon Ralph Broadwater, MD, CFP, AIF. He bought me lunch after my presentation and took me to the airport. I was excited to talk with him because he is such a rare commodity. There are a fair number of docs who have become financial advisors. But there are precious few who still practice medicine. Obviously, given that I do this site on the side and still practice medicine as my main gig, we share an affinity there and I wanted to hear how he balanced his life. That was all very interesting to me, but probably not to you. What you might find interesting, however, and perhaps the most unusual thing about Ralph's firm, The Arkansas Financial Group, was their AUM fee structure. Most AUM fees start high and come down way too slowly. These guys do charge a reasonable quarterly financial planning fee, but their AUM fee looks like this:

  • 0.90% on the first $125,000 of Managed and Advisory assets
  • 0.65% on the next $125,000 of Managed and Advisory assets.
  • 0.47% on the next $250,000 of Managed and Advisory assets
  • 0.34% on the next $500,000 of Managed and Advisory assets
  • 0.25%  all assets in excess of $1,000,000

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Let me tell you what I like about this. First, they'll take you with no minimum. This is important for any physician focused advisory firm because when you most need the advice is when you don't have squat. Second, the fee, even on a tiny sum, never hits the “industry standard” 1%. Third, they spell out whether the reduced percentage applies to all the assets, or just the assets over the last threshold. Few advisors spell this out in their ADV2. Fourth, I love how rapidly the rate decreases. By the time you're over half a million bucks you're basically down to roboadvisor-like fees. On your first million, you're basically paying 48 basis points on your first million, then 25 basis points after that. That's going to be competitive with even the cheapest flat-fee advisors (and there aren't enough of those either.) At the time of this writing, our financial relationship consisted of lunch and a ride to the airport, but hopefully by the time of publication I'll be able to bring him on as an advertiser.

At any rate, a great big thank you to those who hosted me in Arkansas and to the hundreds of physicians and trainees who attended the three meetings. I know your time is valuable, and I hope I didn't waste a second of it.

What do you think? How would you like to be leading an M&M discussion about your finances? What do you think the future of hourly rate financial planners and lower cost asset managers is? How important is it to you that an advisor specializes in physicians? Comment below!