(503) 841-5840 [email protected]

After four years in the making, we finally published Finity Group’s first book, Financial Planning Basics for Doctors, now available on Amazon!  Written by Marshall WeintraubMichael Merrill, and Cole Kimball, the book covers essential financial planning topics that are pertinent to physicians and dentists.  While doctors are the target audience, the content is applicable to everyone who is motivated to achieve financial independence.   All proceeds from the book will be donated to Charity: water.  This week’s post is an excerpt from the introduction of Financial Planning Basics for Doctors.  

Introduction to Financial Planning Basics for Doctors

Welcome to Financial Planning Basics for Doctors. As the subtitle references, many doctors do not receive a formal course in planning their finances throughout their medical education. Because of this, they will turn to outside sources to learn about constructing their financial plans. Some of these are excellent, while others may not be geared toward doctors in training or the initial years that follow. This is an important period in the lives of new doctors and their families, as planning in the years leading up to your transition and immediately afterward is instrumental in establishing good habits for long-term financial success. With this in mind, we set out to create a holistic financial planning reference that speaks to the men and women of our medical community. 

This book is written with the goal of saving doctors the most precious resource we possess—time. We will examine the purpose of financial planning, the nature of a doctor’s financial situation, typical pitfalls, risks doctors face, behavioral finance, and much more. To begin, we must set a baseline understanding of three important questions: What is financial planning? Why is it important? What makes a doctor’s financial plan different?

What is Financial Planning?

On a basic level, financial planning is the process of using your current and future resources to maintain your desired lifestyle through your career and retirement, as well as prepare for any surprises along the way. This includes decisions that may be difficult to come to, including when you would like the ability to retire and how much you wish to provide for your family if something were to happen to you. The planning process begins with assessing the current state of your assets, debts, income, expenses, spending habits, risk exposures, dependents’ needs, economic factors, employment, concerns, and goals. 

The last one mentioned—goals—can be thought of as your purpose, financially speaking. What is the purpose behind your monetary decisions? Some readers may have a hard time answering this. Many doctors are not practicing medicine for the money and, if it were up to them, would prefer to work as long as possible, professing their love for the job and helping patients. Others may find it difficult to visualize what impact their financial decisions today will have on their future, and since the future is not here today, planning for later in life is dismissed until another time. In many cases, doctors would like the option to fully retire or scale down to part-time, perhaps staying active in medicine through donating their time to underserved populations. Whatever your goals may be, they will not be accomplished accidentally. Achieving them requires a well-designed outline and intentional effort. 

After reviewing your current situation and future goals, you will need to understand the various strategies available to further develop your financial plan. It is easy to wander between options during this stage, potentially losing motivation to fully commit to any one course of action. If you find yourself in this rut, recognize it and take a moment to pause. Pick a strategy that shows the greatest promise to fulfill your goals in a manner consistent with your values. Taking even a small step is better than not moving forward at all. After selecting a strategy, you can now implement, monitor, and periodically revise your plan over time. 

Building a comprehensive financial plan is broad in its scope. The most common thought that comes to mind with the term “financial planning” is saving for retirement. This is similar to saying a healthy lifestyle requires exercise, which is true but would be an incomplete description. Financial planning is far more dynamic than just saving for retirement. We will cover retirement planning in depth but will also address many other areas that affect your financial well-being. These include risk management and debt management strategies, with student loans receiving plenty of attention. This book will also examine tax challenges, home ownership and financing strategies, and college funding for your children, among other subjects. 

Why is Financial Planning Important?

In the past, older generations could rely on employer pensions for a decent amount of their retirement income. Social security was better funded, further providing a source of income for a retirement that often lasted five to fifteen years. These factors, combined with a less complicated financial landscape, resulted in a lower need to plan one’s finances ahead of retirement. 

Many of these elements have changed since the middle of the last century. Only a small fraction of employers now offer a pension. Of those that do, many of these plans are not adequately funded to pay the promised benefits. Social security, which was never intended to be the primary source of retirement income, is increasingly uncertain for the generations to come. The demographics of what retirement will look like are also changing, with people living much longer than in the past. It will not be uncommon for doctors today, especially those early in their careers, to have at least a twenty-year retirement. With less employer and governmental support, Americans are now increasingly responsible for providing for themselves in retirement. Many will face the very real possibility of outliving their savings if adequate planning is not started well in advance. 

In addition to a delayed start to retirement saving, doctors face a number of other factors that complicate their financial plans. Balancing large student loan payments with a home purchase is one example. Unlike other important skills, like how to drive a car, how to effectively manage your finances is usually not something parents teach their children. It is rare for children to have an accurate sense of their parents’ incomes, expenses, liabilities, and investments and how these function within their lifestyle. Without much financial background, if any, many doctors begin their student loan balance at age eighteen without a plan to manage this or the large six-figure income they will earn ten to fifteen years later. If we combine these with the lack of financial education most doctors receive in training, we understand why financial planning is not only important, but also why there is such a large need for comprehensive education in the medical community. 

 What Makes a Doctor’s Financial Plan Different?

Remember, for a moment, back to that fateful spring day of your high school senior year. The procession of gown-clad teens followed by an eruption of caps tossed in the air marked a turning point. Until then, you and your cohort took similar classes and shared extracurricular interests. Your lives then began to diverge as some joined the labor force at eighteen, others at twenty-two. Only a few who walked alongside you back then may be wearing white coats with you today. With your educational and occupational life vastly different from the average American, we would not expect your financial life to fall in line with everyone else’s either. This is indeed what we find. Longer workweeks and more stressful environments are not the only themes that separate you from non-doctors. Financial differences extend to your training time, student loan balances, and incomes, to name a few.

According to the 2017 US Census Bureau, only 11.4 percent of the population held a graduate or professional degree, with doctors being a subset of this select group. Doctors commonly delay saving for retirement by a decade or more due to their training, yet many would like to retire near the same age as the average American who retires today at sixty-two. This creates a catch-up aspect not required of other careers. In addition to devoting considerable resources for later in life, doctors bear larger student loan burdens and the hefty payments that come with them. The average student loan balance of a graduating doctor is $190,000, which can translate into monthly payments of $2,000 or more. Fortunately, this can be absorbed within the median doctor salaries of $217,000 (primary care) and $316,000 (specialists), representing the top 5 percent of households and nearly four to six times the national average. Higher incomes cause larger tax bills, given the progressive nature of our income tax system. As this sinks in, we realize the financial profile of a doctor could not look further from that of an average household.

Why Write this Book?

Our team is part of the financial planning industry and collectively represents a specialized practice with a clientele of doctors and their families. We understand financial planning is more complicated than ever, and the abundance of literature can cause confusion, particularly if sources take conflicting views or are not geared toward doctors. For these reasons, we feel a responsibility to the medical community to provide this book as an educational resource. 

The material that follows is not intended to be specific recommendations but rather serve as a framework you can use to make informed decisions about building your plan. For financial planning enthusiasts, this title may join several others on your crowded bookshelf. Other readers may be taking up this book as their first foray into the financial world. We will not assume you have any background knowledge about planning and will begin each topic with the basics before getting to more advanced details. Regardless of how financially literate you are, we hope all readers are able to take a few ideas away from these pages.

While we aim to provide a thorough summary of many financial planning subjects, we acknowledge there is always more we can include. We welcome questions and appreciate any feedback you have by emailing us at info@thefinitygroup.com

Without further ado, let’s dive in!

About the Authors

Marshall Weintraub, CFP®

Marshall’s practice focuses on the special planning challenges doctors and their families face. His areas of professional interest include student loan management, home buying, and investment portfolio design. In addition to this book, he has written personal finance articles for the American College of Cardiology. Marshall graduated from the University of Washington, where he endured an 0–12 football season. He remains a cautiously optimistic Huskies fan. 

Michael Merrill, CFP®, ChFC®, CLU®

Michael Merrill is a senior partner and financial advisor at Finity Group and one of the original founding members of Finity Group. He’s directly involved in a wide scope of the firm’s operations, most notably leading marketing efforts and setting a tone of integrity and diligence as the head of our compliance supervision department. Michael also maintains a personal financial planning practice, serving the needs of high net worth families by directly assisting in the development and maintenance of their financial plan strategies. His professional certifications include CERTIFIED FINANCIAL PLANNER™, Chartered Financial Consultant® (ChFC®), and Chartered Life Underwriter® (CLU®).

Cole Kimball, CFA, AIF®

Cole serves as the Chief Investment Officer at Finity Group and as a financial advisor to his clients. After graduating from the University of Colorado Boulder, he started his career on the institutional side of finance working at different boutique broker-dealers before transitioning to the advisor role. In his free time, Cole enjoys being active and taking advantage of all the outdoor opportunities the Pacific Northwest has to offer. In the winter, there is a good chance you will bump into him on the mountains snowboarding, and in the summer, biking around town.