1. Insurance and retirement planning are top priorities. Sixty-seven percent of advisors said their doctor and dentist clients were most concerned about retirement planning, followed by 63% who said personal risk reduction (life and disability insurance). Half of advisors cited debt reduction, and two in five advisors tax management.
2. They struggle with financial planning. Far and away the biggest impediment to medical professionals’ meeting their financial goals was time to focus on financial planning, cited by 77% of advisors. Add to that the survey’s finding that exactly 0% of advisors characterized their medical clients as highly disciplined planners. At best, 40% said doctors and dentists among their clientele were disciplined, while 58% found them to be informal planners.
3. They're laden with debt. Fifty-eight percent of advisors surveyed said their doctor and dentist clients carried average student debt of $200,000 or more. Only 14% said their medical clients were free of student debt. Fifty-one percent of advisors said managing debt was hampering their clients’ ability to reach their financial goals.
4. They are willing to take risk in their portfolios ... Doctors and dentists are focused mainly on asset appreciation, according to 83% of advisors in the survey, while only 17% put a priority on capital preservation. Seventy-six percent of advisors said their medical clients preferred to take calculated risks for the opportunity for higher returns in their portfolio, while only 44% who would take career risk for potentially higher success.
5. ... But less so in their lives. Seventy-four percent of advisors said their medical professional clients were concerned about managing personal risk, such as disability, versus 26% who said their clients’ priority was managing professional risk, such as malpractice. Doctors and dentists are risk averse with regard to their careers, preferring to stick to their current career track versus making changes for potentially higher success, according to 56% of advisors.
6. They hold tight during market turmoil. In times of market volatility, medical professionals demonstrate patience and resolve, making no changes to their investment portfolios, according to 48% of advisors. “I didn’t see any clients move to cash,” Northwestern Mutual financial advisor Andrea Koryn said. “In fact, I had more conversations about identifying opportunistic investments in the current environment.”
In early March, just before widespread lockdown mandates went into effect in response to the coronavirus pandemic, Northwestern Mutual polled its advisors who served clients in the medical profession to gain insight on doctors’ and dentists’ perspectives on wealth and risk management.
Forty-three Northwestern Mutual advisors responded to the poll. The firm gather additional qualitative commentary in June to provide context for the results through the lens of the ongoing health and medical crisis and its effect on the financial security of medical professionals.
“Faced with the dual health and financial crisis, the first half of 2020 has been uniquely challenging for medical professionals, both personally and professionally,” Brian Henning, vice president at Northwestern Mutual, said in a statement.
“However, our advisors have noted that their clients have been resilient when it comes to riding out market volatility and triaging immediate financial needs regarding ongoing debt reduction commitments in the face of income disruption.”
Surveyed advisors’ medical clients were 59% male and 39% female, and were about equally divided among baby boomers, Gen X and millennials. Seven in 10 were married or had a domestic partner.
See the gallery for six things advisors need to know about the particular needs and concerns of this high-earning client niche.
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