Most advisors prefer to work with higher-net-worth people, and for many advisors, medical doctors and dentists constitute a key client group. However, others shy away from doctors as clients because of the stereotype that they’re cheapskates or won’t follow the advice they’re given.
How true is this image? Can financial advisors provide real value to doctors and build strong bonds with them? Have the economic changes in the medical profession, highlighted by the Affordable Care Act, made it easier or more difficult for advisors to efficiently serve medical professionals?
To explore this issue, we spoke with eight advisors who have chosen to work with doctors. Here are their views—and some tips on how to turn brief consults into relationships.
“Fascinating and Fun” Clients
What Your Peers Are Reading
Newly retired after 40 years of specializing in the financial needs of physicians, Gene Balliett asserted that “it’s widely believed that doctors are impossible to work with, but I didn’t find them difficult at all. The more I was around them, the more I admired them.”
Doctors initially came to Balliett with investment questions because of his experience as senior editor of Medical Economics and editor of Physicians Management magazines. For 11 years, he and his wife, Dee, a mental health counselor, gave seminars on financial planning to medical groups all over the Western Hemisphere. We have known their work for a long time, and they’re now regarded as pioneers in the field.
“My favorite clients were absolutely fascinating and fun to be with,” Balliett told us. “Like any other career group, it’s a mix. The most successful doctors tend to be quiet, very nice and hard to pick out in a crowd.”
“Will I Ever Be Able To Retire?”
Obamacare is just one of the growing pressures on physicians, noted wealth manager Todd Bauerle of Bauerle Financial Services in Lake Mary, Fla., who took over Balliett’s practice after his retirement.
“‘Can I put away enough money to ever retire?’ That’s what I keep hearing from them,” said Bauerle, a financial planner for 30 years. “The changing nature of their profession keeps them awake at night: the electronic records requirement, the changing reimbursement schedules. How will they keep up? How will they stay profitable?”
High medical-school bills have some doctors wondering whether they will ever catch up, let alone have money to invest. They’re also likely to have bright children who want to go to top schools, making the pressure to afford college more intense.
Several of Bauerle’s doctor clients have sold their private practices and are now employees of a hospital or other corporate health care provider. “This removes the stress of trying to run a business with variable income,” he said. Building a financial plan becomes simpler, especially with succession planning out of the picture.
Whether employees or self-employed, doctors need advance planning more than ever. “Before, they usually made enough money that they could mess up and start again a few times,” Bauerle pointed out. “Now they don’t have that luxury. So they need to get on board and move forward with a comprehensive financial plan.”
“Doctors Tend To Be An Alpha Bunch”
“I enjoy working with docs because they tend to be logical and analytical,” observed Tom Orecchio, principal and wealth manager at Modera Wealth Management in Westwood, N.J. “They like to be involved in the process, even if they’re delegating a lot of the decision-making.”
These clients aren’t for an advisor who operates at a leisurely pace. “They tend to be very engaged, and they expect me to be engaged,” Orecchio said. “We’re very responsive in our client service; I return their emails and calls promptly.”
He pointed out the importance of confirming up front that you and a prospective client are on the same page. “Our investment philosophy is that we want to get the returns of the market,” he explained. “We’re not chasing alpha. Doctors—especially surgeons—tend to be an alpha bunch. If we feel we can’t get through to them through education, then it’s not a good fit.”
“A Crazy Lifestyle”
Carolyn McClanahan is an MD and a CFP who had been an emergency room and primary care physician for 13 years when frustration in seeking life advice inspired her to found Life Planning Partners in Jacksonville, Fla., in 2004. “For the most part, doctors are regular people,” she contended. “But one big difference is that they have a crazy lifestyle and schedule, so a planner who can accommodate that will work better with them. We make appointments whenever they want, in whatever form they want: video, phone, in person. We work evenings and weekends with them.”
The difficult road to a medical diploma has often created a different type of frustration for younger doctors. “They had to go through a lot of delayed gratification to get where they are, so they’re ready to spend a lot of money when they finish residency,” McClanahan said. “When you plan for them, you have to honor that need so they can enjoy life without going overboard.”
Changes in health care have already begun to alter this situation. “People are coming out of med school with huge student loans. They’re still doing well, but making somewhat less money,” she said. “It’s been easier with the younger doctors, because most of them are more realistic. If they can wrap their heads around not spending too much and putting some money away now, then we’re starting them off on the right path.
“It depends on their specialty. ER doctors, trauma specialists, oncologists—some of them have a very cavalier attitude about life because they’ve seen so many horrible things happen to people. It’s sometimes hard to get them to save or spend wisely. To help them maintain a sense of perspective about it, we tell them it’s important to enjoy life now, but to plan for disability when you can’t work in the future.”
Helping doctors cope with their “crazy lifestyle” is a priority stemming from McClanahan’s own experience in the ER. “We feel it’s very important to do what we can to prevent physician burnout,” she said. “For example, we’ll help overworked physicians scale back their hours so they remain able to work for more years in the future.”
Following Peers’ Financial Advice
Physicians tend to follow their friends, which sometimes gets them into trouble. From his 40-year perspective as an advisor, Balliett confided, “Doctors pay a lot of attention to others in the profession, treating them with reverence. They listen to other doctors about things that the other doctors don’t know a damn thing about, like tips on stocks.”