Physicians undergo years of training to prepare to treat illness and save lives. That same preparation is important for effective management of one’s finances.
Alex Kilian, a financial professional, joined the firm in 2016 to work with physicians and medical practices on their personal financial planning and wealth management needs. He describes the importance of comprehensive planning and explains some of the challenges physicians may encounter.
Everyone at some point needs financial planning – what complexities do physicians face that differ from the non-medical industry?
Physicians spend more time getting educated (medical school, residency, and fellowship), so their “earning years” are often significantly shorter than someone who would have started working right after receiving their undergraduate degree. Some specialties can also be physically demanding, and the burnout rate is fairly high. While a business professional might have a 40-50 year career, a physician is realistically looking at working around 35 years with a lot more student debt.
Another aspect to consider is that a physician’s earnings during their career are relatively flat. While a business professional would typically expect to receive raises as they advance in their careers, and oftentimes other perks like stock options or employee stock purchase plans, a physician will generally earn a similar amount throughout their career from start to finish. Of course, there are opportunities to buy into surgical or imaging centers that pay a dividend, but from a production standpoint, a physician’s income is limited by efficiency.
What does a typical meeting with you look like? What are the major points you like to cover?
I’ve come to learn that physicians are often pressed for time; it’s important to make our meetings efficient and meaningful so that at the end we have an action plan. The first meeting is a general discussion to get a good idea of their circumstances and goals. We address the wealth management spectrum: retirement planning, tax planning, estate planning, insurance, and investments. From there, the discussion determines where the pain points are, and the action plan prioritizes where we need to dig deeper and make some real changes.
What are the most important or most common challenges facing your physician clients?
In my experience, many physicians fail to think about paying themselves first. After going to school for so many years, physicians tend to make big purchases to reward themselves, like buying a large house, instead of paying down high-interest student loans and living like a resident for a couple years longer. Replacing a portion of your income when retired requires a significant nest egg and a savings mentality that starts with putting away money from the time you receive your first paycheck.
In addition, not having a balance between different savings vehicles can pose a real problem by limiting tax strategies in retirement; it’s important to save pretax, after-tax, and tax-free dollars.
What’s the one message you hope physicians will take away from spending time with you?
The importance of stepping back and looking at the big picture before attempting to blindly cure any ailments cannot be overstated. Attempting to piecemeal together a plan without addressing the full spectrum from the beginning can present real problems, as each area (tax, investments, estate plan, and insurance) is directly correlated. Additionally, a high-earning, busy physician is oftentimes a prime target for financial deception in their personal and business lives. It is important that your advisors are properly vetted, and they truly have your best interests in mind.
Meet the Author
Senior Wealth Manager
Alex Kilian, CFP®
Alex joined Aldrich in 2016 to work exclusively with physicians and medical practices. At one point, he considered a medical career but instead chose to help physicians manage their own financial health. Now working primarily with corporate executives, business owners and medical professionals, he guides his clients through their complex wealth management needs, including financial…
- Financial planning and consulting services
- Estate planning
- Insurance analysis