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Choosing an Advisory Firm – Wealth Management for Medical Professionals

The financial planning requirements of healthcare professionals are in some ways similar to and in others, vastly different from the planning needs of professionals working in a corporate environment. “How can I avoid making investment mistakes that cost money or trigger tax penalties? At what point should I pay off my remaining education loans? How do I maximize my pre-tax savings?  Should I buy in to a practice, and if so, when?”

Here are six tips for making smart choices with your next, and hopefully last, financial advisor.

Find an advisor who will pledge to put your best interests first

If you’re like many people, your financial advice may come from a combination of sources: your insurance agent, your investment broker, your buddy, your business partner, CNN. Perhaps you have a trusted financial advisor who seems to have done a decent job – so far. But when the stakes are high, where do you find answers you know you can trust?

Though many advisors claim their advice is free from conflict of interest, this is not always 100% true. In fact, it may surprise you to learn that true fiduciary advisors – those who pledge to always work in the best interest of their clients – make up just a small part of the financial services industry.

This one simple question could make or break your current and future financial relationships: Does the person or firm managing your money pledge to always work exclusively in your best interest? Ask your advisors – are they willing to act as your fiduciary advocate – today? Will they put their promise in print? If the answer is no, you may be in the wrong hands.

Confirm that your advisor is not just dabbling in your specialty 

Healthcare professionals earn money differently than most of the U.S. population. Statistically, they also tend to spend it differently, and can have a higher risk of “retirement regret” since it’s easier to earn large incomes than to accumulate actual wealth over time. 

Wealth planning is not one-size fits all. Once you’ve determined that your advisor will act as your advocate and fiduciary, be sure they can also demonstrate a crystal-clear understanding of the unique financial challenges that come with earning a living in the healthcare field.

A well-matched advisor will have a deep knowledge of tax and savings strategies, physician debt service and available debt resources, insurance analysis and practice 401(k) plan design. Just as importantly, he or she will also indicate a willingness to work in your best interest, right alongside your other professional resources like attorneys, practice managers and CPAs.  

Ask your advisor to justify the cost of the investments they recommend

“Fee transparency” in the investment industry could be considered an oxymoron. Don’t accept this. Even when an advisory firm can clearly illustrate their fee schedule, challenge them on what they do to reduce fees on your behalf.

One answer may be the use of lower-cost institutional funds that are largely unavailable to retail investors or would cost more if purchased through retail channels. The presence of institutional funds in a portfolio may indicate that an advisory firm is laser-focused on the cost of the investments they recommend. 

Ask questions to make sure your next advisor is making a living on the quality and implementation of their advice, not on product sales or egregious fees, and that cost savings are negotiated for your bottom line – not theirs.

Choose an advisor who has seen (most of) it before

When your advisor has a depth and breadth of experience in your chosen industry, you can expect fewer surprises. Such advisors already understand many of your priorities and habits – the good and the others- and know how to make provisions for them.

Is your current advisor equipped to counsel you in student loan refinancing or payoff options, design a retirement plan for your practice, evaluate the pros and cons of alternative investments your buddy’s broker is pitching, and offer financial input on life settlements, syndicated hospital shares, practice buildings and surgical centers?  Or will they be learning these things right along with you?

Expect your next financial advisor to appropriately and expertly weigh in on each of the financial decisions that come with your career, and to introduce you to experts who can pick up where their expertise leaves off.

Choose an advisory team with both education and experience

Just like in the healthcare industry, credentials do matter.

Look for advisory firms with a team full of degreed folks like Certified Financial Planners® (CFP®), Financial Paraplanner Qualified Professionals™ (FPQP) Chartered Financial Analysts® (CFA), Registered Investment Fiduciaries® (RIF®), and also JDs, MBAs and CPAs. Advisors commit long years to earn these degrees and designations, and many designations require adherence to industry-leading standards of professional behavior and ethics in addition to subject matter expertise and continuing education.

Get to know your future advisory team before you commit

It isn’t easy to hide the evidence of a job well done – or for that matter, a job poorly done. Attend a social or educational event hosted by a firm you are considering, and chat with the people who know what it’s like to be a client of that firm.  
We want to meet you.  For more information, have a conversation with an advisor by calling 800-888-7968.

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