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From Burnout to Balance - Part 1 Thumbnail

From Burnout to Balance - Part 1

From Burnout to Balance – Three Part Series for Physicians – Part One

 

This week’s article is the first in a three-part series. It is part of what I utilize in my practice helping physicians move from burnout to balance. With that, let’s dive right into it! Oh, and I will keep each one of these brief as I know you have plenty to do.


RECOGNIZE YOUR FINANCIAL SITUATION IS DIFFERENT

As a physician, your financial situation differs significantly from the average individual. Your profession demands an extended period of education and training, which means you started earning substantial income later in life. This delay gives you a narrower time frame to save for the future. It also requires you to have a heightened awareness of potential financial hazards like high fees and taxes.

 

Moreover, your income level, considerably higher than the average person’s, places you in a higher tax bracket. While this income allows for comfortable living, it also means a significant portion of your earnings is dedicated to taxes and Uncle Sam. This factor must be a key consideration in your financial planning.

 

The lure of a high-income professional is hard to resist for many salespeople calling themselves financial advisors, and as a result, you’re likely exposed to countless sales pitches. These can come from various sources – family, friends, associates, and even strangers. While some may offer genuine opportunities, others might be riddled with hidden costs and conflicts that eat away at your wealth while enriching themselves.

 

Finally, your expertise lies in medicine, not business. Your passion for healing and saving lives didn’t come with an inherent desire to learn the intricacies of personal finances and taxes. This lack of knowledge isn’t a flaw – it’s simply a reflection of where your priorities lie. Recognizing these unique aspects of your financial situation is a first step toward effective financial planning.

 

I lied. This is the final part. I wanted to share some data from my world on the average fees investors pay at various asset levels.

  • For a $2 million portfolio the average cost is $30,000 each year.
  • A $3 million portfolio costs you $42,000 year after year.
  • Finally, the annual charge for a $5 million portfolio rings in at $65,000.

 

Just for perspective, listed below are the annual all-in charges for my clients and they include my annual flat fee of $10,000 a year and the average portfolio cost (while I don’t charge separately for investment management, I cannot make internal fees charged by investment companies disappear).

  • $2 million portfolio costs $18,000 (savings of $12,000 a year)
  • A $3 million portfolio costs $22,000 (savings of $20,000 a year)
  • Lastly, a $5 million portfolio comes in at $30,000 (savings of $35,000 year after year)

 

I share this comparison as I have a feeling you and I charge similarly – based on our knowledge, experience and the actual services we provide. I have a feeling you don’t charge based on what a patient is worth, so I don’t understand why you pay your old school financial advisor in a similar way.

 

Next week we will talk about ways to avoid Tipping Uncle Sam!

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