Physician’s Ultimate Decision Guide on Choosing a Financial Planner – Part 1: Why You Might Not Even Need a Planner

There are many physicians who do wonderfully without a financial planner. The obvious benefit is that you save money on fees and expenses. The obvious drawback is that you don’t know what you don’t know, and physician-level mistakes can be extremely costly.

One of the worst reasons to DIY your own financial planning is because you are too frugal to invest in valuable help. I’ve been guilty of that in the past and as a result have made planning errors in my own financial life that an objective financial planner would have caught – thankfully nothing egregious. After earning my Certificate in Financial Planning and passing the CFP exam, it became far clearer to me how much I didn’t know about financial planning and how many blind spots we all have in our personal financial planning. Although I personally have yet to use a financial planner, I plan on hiring one to protect me and my family from those blind spots.

But as someone who has been DIY for most of my financial life, I know it can work. You will and should expect to make financial mistakes, and you will learn from them. But with humility, a thirst for knowledge, and a genuine passion for personal finance, you can absolutely learn to do this with minimal guidance. If the following are true for you, you may be able to successfully DIY your financial life:

• You have been consistently saving more than you spend, and you have a clear track record of being able to stay within budget consistently for the past 10 years.
• You have a healthy perspective about money and the role it plays in your life. You recognize its importance, but you don’t obsess over it at the expense of more important aspects of your personal and professional wellness.
• You have consistently taken a calm and deliberate approach with your money decisions using a long-term perspective. You rarely if ever make rash or impulse decisions with your money based on current events, short-term goals, emotions such as fear or greed, or what all your peers say you should be doing.
• You have a genuine interest in understanding federal and state income tax systems and payroll taxes. You’ve used that knowledge to plan and estimate what your tax bill will be in the coming tax year and plan the year’s spending and investing accordingly. When the 2017 Tax Cut and jobs Act came into law, you figured out in 2018 what it would mean for your 2019 financial situation and did a reasonable job planning in retrospect.
• You similarly stay on top of changes that affect retirement savings accounts and policies. For example, when the 2022 SECURE 2.0 Act passed, you learned that 529 plans have become more versatile thanks to the new ability to do partial rollovers to your child’s Roth IRA after 15 years.
• If you have student loans, you have been staying on top of the hopelessly complicated loan repayment system and the dizzying policy changes ever since the CARES Act in 2020 created the COVID-related payment pause. You are making payments with a plan toward pay-off or loan forgiveness, all while hedging for potential changes in policy or law that would change everything.
• You have been self-educating yourself on protecting yourself from catastrophic risk like death, disability, job loss or a lawsuit, and you’ve taken care of these risks on your own in a timely manner with appropriate insurance or savings.
• You have taken/are taking a proactive approach to estate and legacy planning, including wills to establish guardians for your kids, durable Power of Attorney documents, Advanced Directives, and perhaps a living trust to avoid probate.
• You enjoy reading and learning about economics and market history and basing your investing plans off this knowledge rather than whatever CNBC is reporting at any given moment. You also enjoy learning about behavioral economics and have a healthy understanding of key cognitive biases such as loss aversion and recency bias that have an outsized influence on our money-making decisions.

If that’s you, congratulations, you’re a financial nerd! You will probably be just fine managing your finances by yourself or with minimal guidance, and I hope you can join me in educating our fellow physicians on financial wellness. Feel free to skip the rest of this series.

If that’s not you, congratulations on being normal! Most physicians have far more meaningful pursuits to occupy their time and energy than this stuff; if that’s the case for you, investing in a trustworthy financial planner can bring real value to your life while you focus on what’s important. Read on in Part 2: Knowing What Type of Physician Client You Are.