Wealth Management for Medical Professionals

July 23, 2021

Estimated Reading Time: 8 minutes

Wealth Management for Medical Professionals

If you are a doctor, you already know that being a medical professional is a high-stress job. If you are not a doctor, you should probably know that being a medical professional is a high-stress job.

Physicians are often too busy practicing medicine to be able to adequately manage their finances. Apart from their lack of time, doctors are often targets for exploitation due to their high income and limited financial education throughout medical school. A trusted wealth advisor, especially a fee-only, fiduciary advisor, is strongly recommended for physicians to create the financial plan that manages investments, expenses, and tax strategy in a way that achieves their long-term financial objectives. Here is a checklist to ensure that you choose an advisor that is right for you:

A Checklist: What a Physician Should Look for in a Financial Advisor

1) They Offer the Services You’re Looking for

The first step in finding a financial advisor is determining your personal financial goals. Of course, it is important to hire a qualified, competent advisor, but you must first decide whether they are the right fit for your financial needs.

For example, if the advisor says they only work with clients on a short-term basis or charge one-off planning fees, they are probably not the best fit for a physician who is looking to protect their wealth for the long-term.

2) Fee-Only & Fiduciary

It is also important to understand how the advisor is compensated. If they are commission-based, they may be motivated by the commission they receive from buying or selling a certain stock, rather than by your best interest. Fee-only financial advisors charge a fee based on the assets under management, which allows them to provide unbiased investment recommendations and select from a greater number of investments.

Some financial advisors hold themselves out as brokers. Brokers follow a standard set of rules called the Suitability Standard, where an investment must be deemed ‘suitable’ for an investor, given their situation. Brokers are generally not fee-only advisors, and may receive commission for recommending ‘suitable’ investment products to their clients.

On the other hand, a fiduciary follows the Fiduciary Standard, which is a legally-binding obligation to prioritize your interests above their own. Fiduciaries are required to always act in your best interest, and generally are fee-only advisors (although some do charge added expenses for one-off financial plans or insurance plans).

A fee-only fiduciary advisor will give you the most transparency into the logistics behind your wealth managements strategy while minimizing any conflicts of interest that may come into the equation from recommending specific investment products.

3) Fairly Priced

Doctors quickly transition from earning nothing to earning six figures. They also receive little to no financial education during their medical school and residency years. Some unscrupulous individuals may see this as an opportunity to provide financial advice at a significantly higher-than-market rate.

Fee-only financial advisors charge a percent fee based on assets under management. While the median fee for working with a fee-only advisor is around 1.12%, there are some advisors (including Chicago Partners) who charge lower amounts.

The benefit to having a lower-fee advisor is clear: you keep more of your capital in your portfolio, which compounds over time. Higher fees increase the drag on a portfolio, which may have to take on more risk to target the same expected return as a lower-fee advisor’s portfolio.

4) At Least One Top-Tier Designation

It is recommended to choose a financial advisor with at least one top-tier designation, such as a CFA, because these advisors are the most educated, experienced, and dedicated to their craft. Each designation represents the culmination of years’ worth of studying and experience. For example, a CFA charter holder will have had to pass three levels of tests to receive their designation, which takes a minimum of three years.

At Chicago Partners, we value knowledge and experience to create a more empirical approach to wealth management. Our team of financial advisors includes professionals with the following designations:

• Chartered Financial Analyst (CFA)
• Certified Financial Planner (CFP®)
• Chartered Alternative Investment Analyst (CAIA)
• Licensed Attorneys (J.D.)
• Certified Public Accountants (CPA)

5) Gray Hair

Financial advisors, like doctors, are experienced specialists. It is important to hire a financial advisor who is generally experienced, as well as familiar with the unique financial situation of physicians.

While an older advisor is not a silver bullet to success in wealth management, an advisor with decades of experience means they have had experience dealing with stressful financial situations, including the 2001 dot com bubble and the 2008 financial crisis. While these events are few and far between, in the case of a black swan event like the above, having an advisor with experience in these events can provide some much-needed perspective during these moments.

6) Knowledge of His Limitations

Even professional financial advisors do not have expert knowledge of all areas of the market. For example, a Chartered Financial Analyst (CFA) or CFP® may not have expertise in the legal considerations of estate planning. They have specializations in certain types of investments that they have mastered over time. Make sure that your financial advisor is transparent about their specialties and knows how to use them in your best interest.

7) Experience Managing Wealth for Physicians or Other Medical Professionals

Just as treatment varies patient-to-patient, wealth management varies client-to-client. A one-size-fits-all approach works neither in medicine nor finance.

Confirm that your wealth advisor has experience working with physicians and understands the nuances that come with your profession. Your advisor should be aware of your debt, insurance expenses, income, and goals for the future as they create your comprehensive plan for long-term financial health.

8) Access to Institutional Funds

Institutional funds are usually broadly diversified and have a higher minimum investment required for new investors. They also carry lower expense ratios (fund manager expenses) than more widely available retail funds. For a physician who wants a long-term, low-risk plan, finding a financial advisor who has access to funds like the Dimensional Fund Advisors (DFA) can be highly beneficial.

A good financial advisor can help ease one of the many stresses in a physician’s life. Because of the unique financial situation that most doctors find themselves in, it is important to find a financial advisor who understands your goals and will work with you and for you to manage, grow, and protect your wealth.

Regardless of who you choose as your advisor, making sure they are a fee-only, fiduciary advisor will position you for success over the long term, while giving you peace of mind in knowing they are always working in your best interest, toward your objectives.


Important Disclosure Information

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.

July 23, 2021

Estimated Reading Time: 8 minutes

Wealth Management for Medical Professionals

If you are a doctor, you already know that being a medical professional is a high-stress job. If you are not a doctor, you should probably know that being a medical professional is a high-stress job.

Physicians are often too busy practicing medicine to be able to adequately manage their finances. Apart from their lack of time, doctors are often targets for exploitation due to their high income and limited financial education throughout medical school. A trusted wealth advisor, especially a fee-only, fiduciary advisor, is strongly recommended for physicians to create the financial plan that manages investments, expenses, and tax strategy in a way that achieves their long-term financial objectives. Here is a checklist to ensure that you choose an advisor that is right for you:

A Checklist: What a Physician Should Look for in a Financial Advisor

1) They Offer the Services You’re Looking for

The first step in finding a financial advisor is determining your personal financial goals. Of course, it is important to hire a qualified, competent advisor, but you must first decide whether they are the right fit for your financial needs.

For example, if the advisor says they only work with clients on a short-term basis or charge one-off planning fees, they are probably not the best fit for a physician who is looking to protect their wealth for the long-term.

2) Fee-Only & Fiduciary

It is also important to understand how the advisor is compensated. If they are commission-based, they may be motivated by the commission they receive from buying or selling a certain stock, rather than by your best interest. Fee-only financial advisors charge a fee based on the assets under management, which allows them to provide unbiased investment recommendations and select from a greater number of investments.

Some financial advisors hold themselves out as brokers. Brokers follow a standard set of rules called the Suitability Standard, where an investment must be deemed ‘suitable’ for an investor, given their situation. Brokers are generally not fee-only advisors, and may receive commission for recommending ‘suitable’ investment products to their clients.

On the other hand, a fiduciary follows the Fiduciary Standard, which is a legally-binding obligation to prioritize your interests above their own. Fiduciaries are required to always act in your best interest, and generally are fee-only advisors (although some do charge added expenses for one-off financial plans or insurance plans).

A fee-only fiduciary advisor will give you the most transparency into the logistics behind your wealth managements strategy while minimizing any conflicts of interest that may come into the equation from recommending specific investment products.

3) Fairly Priced

Doctors quickly transition from earning nothing to earning six figures. They also receive little to no financial education during their medical school and residency years. Some unscrupulous individuals may see this as an opportunity to provide financial advice at a significantly higher-than-market rate.

Fee-only financial advisors charge a percent fee based on assets under management. While the median fee for working with a fee-only advisor is around 1.12%, there are some advisors (including Chicago Partners) who charge lower amounts.

The benefit to having a lower-fee advisor is clear: you keep more of your capital in your portfolio, which compounds over time. Higher fees increase the drag on a portfolio, which may have to take on more risk to target the same expected return as a lower-fee advisor’s portfolio.

4) At Least One Top-Tier Designation

It is recommended to choose a financial advisor with at least one top-tier designation, such as a CFA, because these advisors are the most educated, experienced, and dedicated to their craft. Each designation represents the culmination of years’ worth of studying and experience. For example, a CFA charter holder will have had to pass three levels of tests to receive their designation, which takes a minimum of three years.

At Chicago Partners, we value knowledge and experience to create a more empirical approach to wealth management. Our team of financial advisors includes professionals with the following designations:

• Chartered Financial Analyst (CFA)
• Certified Financial Planner (CFP®)
• Chartered Alternative Investment Analyst (CAIA)
• Licensed Attorneys (J.D.)
• Certified Public Accountants (CPA)

5) Gray Hair

Financial advisors, like doctors, are experienced specialists. It is important to hire a financial advisor who is generally experienced, as well as familiar with the unique financial situation of physicians.

While an older advisor is not a silver bullet to success in wealth management, an advisor with decades of experience means they have had experience dealing with stressful financial situations, including the 2001 dot com bubble and the 2008 financial crisis. While these events are few and far between, in the case of a black swan event like the above, having an advisor with experience in these events can provide some much-needed perspective during these moments.

6) Knowledge of His Limitations

Even professional financial advisors do not have expert knowledge of all areas of the market. For example, a Chartered Financial Analyst (CFA) or CFP® may not have expertise in the legal considerations of estate planning. They have specializations in certain types of investments that they have mastered over time. Make sure that your financial advisor is transparent about their specialties and knows how to use them in your best interest.

7) Experience Managing Wealth for Physicians or Other Medical Professionals

Just as treatment varies patient-to-patient, wealth management varies client-to-client. A one-size-fits-all approach works neither in medicine nor finance.

Confirm that your wealth advisor has experience working with physicians and understands the nuances that come with your profession. Your advisor should be aware of your debt, insurance expenses, income, and goals for the future as they create your comprehensive plan for long-term financial health.

8) Access to Institutional Funds

Institutional funds are usually broadly diversified and have a higher minimum investment required for new investors. They also carry lower expense ratios (fund manager expenses) than more widely available retail funds. For a physician who wants a long-term, low-risk plan, finding a financial advisor who has access to funds like the Dimensional Fund Advisors (DFA) can be highly beneficial.

A good financial advisor can help ease one of the many stresses in a physician’s life. Because of the unique financial situation that most doctors find themselves in, it is important to find a financial advisor who understands your goals and will work with you and for you to manage, grow, and protect your wealth.

Regardless of who you choose as your advisor, making sure they are a fee-only, fiduciary advisor will position you for success over the long term, while giving you peace of mind in knowing they are always working in your best interest, toward your objectives.


Important Disclosure Information

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.