You're a "Little Doctor" and nobody cares about you

If you've been in medicine for 10 years or more and you're certain that you're making steady progress toward important goals like sending your kids to a good school and enjoying a decent life after you've stopped practicing, I would say it's because you've either:

A. Figured out how to do an excellent job of managing your personal finances on your own, or

B. Stumbled upon a decent financial advisor who can help you with "A".

But if your a young doctor, and you want to work with an advisor who will help you build, maintain and enjoy financial security for your family, you'll have to do more than stumble upon an advisor, you'll have to actively search for one, and it's going to be difficult to find a good one. Here's why:

  • Most "financial advisors" aren't really "advisors" at all. In fact, almost all of them are salesmen. According to the National Association of Securities Dealers (the NASD), there are more than 700,000 people licensed in the United States, and all of these people - be they brokers, registered reps, or agents - are in some way part of the product sales pipeline.
  • Real financial advisors are scarce. Those that charge a fee for their services and are mainly in the business of financial planning (as opposed to preparing taxes or practicing law) number only 2,000 according to the National Associaton of Personal Financial Advisors (NAPFA), the elite membership organization for fee-only planners.

That means your odds of bumping into the real thing at a dinner party are about 1 in 350.

Now, let's assume that you were at the "right" dinner party, and you managed to stumble upon one of Medical Economics' "150 Best Financial Advisors for Doctors" (with odds of less than 1 in 4,500). You might breath a sigh of relief, until you realize that you don't have enough money to get his/her attention. Nope. Of the 150 advisors on the Med Ec list, 114 of them cite a minimum investment of at least $100,000, with the average minimum investment running just over $600,000.

So you say to yourself, "No problem, I've got almost $200K in my 401k because I've stuffed about $45,000 a year into it for the last four years of my practice."

But there's a little wrinkle here that most consumers are not aware of. When an advisor says they have a $100,000 or $500,000 minimum, they mean that their firm must be able to work with - and bill on - that dollar amount, and money in qualified accounts (like 401k's, 403b's and deferred comp) is basically un-billable since the advisor cannot directly debit the account, and most of them do not bill directly for services.