Christopher Burton, MD
There is a new book out by Christopher Burton, MD, a PM&R doc who is also expanding his career as a speaker, author, and coach. It is entitled Personal Finance for Physicians. When I found out about it, I emailed him asking for a review copy and he sent me the mobi file (it's only available on Kindle.) That is the extent of our financial relationship.
The book is extremely short and basic, for better and for worse. One of my partners confessed to me the other day that she couldn't quite get through my book (about a 4 hour read). Suffice to say she can get through this one. I took me less than a half hour, including the email I sent Dr. Burton about it with some suggestions for the next edition.
The downside of a short book, of course, is that you can't put as much information into it. For this reason, most regular readers of this blog aren't going to learn a great deal from the book. But hey, it's less than 5 bucks and will take less than an hour of your time. How many pearls do you want for that kind of an investment?
Personal Finance for Physicians Is Pro-Advisor
Unlike most personal finance books written by physicians for physicians, which generally advocate a more do-it-yourself approach, this book heavily advocates the use of advisors. In fact, the first chapter is “Building Your Team.” He recommends both temporary team members, like a realtor and mortgage broker, and permanent team members including an accountant, an asset protection attorney, an estate planning attorney, a tax attorney, an insurance advisor, an investment adviser, and a financial planner. He gives recommendations on how to select each of these people and what their role is.
Personal Finance for Physicians has Short Chapters
He then has short chapters on retirement, insurance, investments, estate planning, real estate, and asset protection. He isn't as negative on cash value life insurance as I would like, but he does emphasize the importance of using index funds.
A Few Issues with the Book Personal Finance for Physicians
Aside from a different point of view from me (much more pro-advisor and recommends individual health care stocks for physicians for instance), the book had just a few minor errors. It states that revocable trusts are useful for asset protection. Unfortunately, that's not true. They are mostly for avoiding probate. The general rule of asset protection is a creditor can't take something you've given away (like an irrevocable trust.) You haven't really given away anything in a revocable trust.
The tax chapter mistakenly lists the estate tax exemption limit at $1 Million. It is currently at $5.34M ($10.68M Married) and climbing. It also mistakenly suggests the IRS can take more money depending on where you live. While it is true that estate tax burdens vary by state, it's the state tax commissions that care, the IRS doesn't.
The book, like many others, mistakenly recommends a SEP-IRA over an individual 401(k) (actually doesn't mention an individual 401(k)). As regular readers know, the 401(k) not only allows you to max it out on lower income, but also allows for a Backdoor Roth IRA. It is slightly more complicated than a SEP, but worth it for most doctors.
The book also states trusts are taxed at your regular tax rate. They actually have their own set of tax brackets. I suspect these minor issues will be fixed in the next update. That's one nice thing about e-publishing. You can fix little things like these very quickly.
Overall, the book is a quick and easy primer to some of the personal finance issues physicians face. I think it is too basic for most who will find and read this review, but for the vast majority of doctors who will rely heavily on advisors and who don't like reading personal finance or investing books, this book just might be perfect. You can buy your copy today on Amazon.
Have you read the book? What did you think? Comment below!
Finance is finance for all
A book for physicians is just to sell a product
Any of the bibles on finance will suffice and have you the basics
Well, 5% is different. Most people don’t start their careers $200K in debt, have difficulty finding tax advantaged accounts for all their retirement savings, or have a big fat target on their back both for financial professionals and for potential litigants.
?huh 5% what
I’d rather do it myself than have a team do it for me. I don’t want that many hands in my pockets, thank you.
On the Team side of it though, would having a tax accountant and perhaps an attorney help?
So much of our planning is based around minimizing taxes (often more than maximizing returns), I’m sure they perhaps earn their keep?
I’m more putting this out there regarding if anyone else has a team beyond themselves and if so how much it helped?
I know you had an article a while back comparing different people to do your taxes and at the end Turbo Tax won out – but I’m sure from a tax planning perspective there are some ways around it.
I think everyone probably needs an attorney at times. Many doctors choose to use an accountant for tax planning and/or tax prep. If that’s a “team” then I don’t think it’s all that uncommon.
More and More, you see physicians/clients with a team of professionals that they work closely with. This has been true with majority of our clientele. This is quite common among physicians who have their own practice.
You don’t need lawyers. Try to avoid them at all cost just my two sense they complicate everything and bill u for something that should have taken 1/8 of the time they will take.
Thank you Jim for taking the time to review my e-book. The tax error you pointed out was changed in a previous update.
The more financially savvy readers of your blog will find the book introductory. As you pointed out, it is geared for those who haven’t taken the time to learn about personal finance, which unfortunately is a large percentage of physicians. I often share the e-book with the medical students and residents I speak to, so that they can start thinking about the basics of their finances and avoid many common mistakes. (For those with Amazon Prime, you can also borrow the book for free.)
A couple of your readers have commented on their preference for the do-it-yourself approach. I felt the same way for many years. But as I started additional business and invested in real estate, I found that having the right experts on my team actually saved me time and money.
There are many ways for physicians to approach their personal finances, and you have to find the one that works for you. But regardless of your preference, it is essential to invest the time to learn about this topic.
Thank you for taking the time to write and to educate physicians on finances. As you know, there is a huge need there.
Dr. Burton makes a good point. I think that it is key to realize that your adviser has to be working for you, and in your best interest. When they are selling products or collecting assets for the purpose of charging asset-based fees (or are getting compensated through some type of revenue sharing arrangement), it does not matter who they are – their advice will not be adequate or complete.
I know many CPAs and large CPA firms who sell products and provide investment advice for asset-based fees, and their advice is always suspect because they are not motivated by looking at their clients’ entire financial situation. They do a lot of marketing though, and some people prefer to pay a lot of money for being treated like royalty (vs. actually getting the best advice). Often, accountants are nothing more than tax preparers, and I rarely see them providing tax planning advice. My clients sometimes complain that despite paying their accountants good money, their accountants are not doing any proactive tax planning, which is key for high earners such as doctors and dentists. I also found that most CPAs are not knowledgeable when it comes to retirement plans as well, thus we had to start offering retirement plan consulting services ourselves.
In short, if you do work with someone, make sure they are a fiduciary without any conflicts of interest who are working for you exclusively. Such advisers typically use holistic approach, and they look at your entire financial situation. They have to be well-versed in many topics, including tax planning, retirement plans, investment management and insurance. Holistic financial planners always get compensated either by hourly fees or by flat retainers, so they in the business of providing high quality advice, and are not motivated by product sales or the amount of assets.
[Editor’s Note: This comment is posted by an IUL salesman who has used sock puppets on this site, including masquerading as a physician on multiple occasions. It provides a good lesson in why you should be very skeptical of anything you’re told by commissioned salesmen as they are clearly ethically challenged and willing to lie in order to present their products in the best possible light.]
[Repetitive badgering comment deleted.]
[Editor’s Note: This comment is posted by an IUL salesman who has used sock puppets on this site, including masquerading as a physician on multiple occasions. It provides a good lesson in why you should be very skeptical of anything you’re told by commissioned salesmen as they are clearly ethically challenged and willing to lie in order to present their products in the best possible light.]
In regards to asset protection, that’s just more of an argument for the benefits of IUL.