By Michael J. Searcy
If you are a long-time reader, or client, you probably remember that I started my career some 30+ years ago working with young doctors finishing up their basic medical/dental education or while in specialty training. I remember visiting the medical and dental schools and witnessing the same repetitive activities by what I call the wolves. These are people in the financial services business who hold themselves out to be “financial advisors” or “financial planners” but every solution they present happens to be high priced insurance products. While I agree that disability insurance and life insurance are pretty important for a young (and older for that matter) doctor, there are appropriate and efficient ways to get this accomplished.
Consider this experience we recently had with new clients who are two young, married physicians in practice. They met an “advisor” in medical school training who was affiliated with a major life insurance company. He sold them disability insurance and told them that coverage with a definition of “pure own occupation” (specialty coverage) was not available. What he didn’t disclose was that while this coverage was not available from his company, there were several other excellent companies during this time frame making that type of coverage available. They now have insurability problems but because they were not told the whole picture, they are stuck with less than ideal coverage.
When they began their careers and started making money, they needed life insurance so their “advisor” sold them high priced savings plans with a death benefit. Rather than dispute what type of coverage he sold them, I believe there is a more important part to this story. There was no consideration given for everything else they needed to be doing to achieve their life goals. The advisor did not consider retirement plan funding, and the couple had not bought enough life insurance coverage, they had not set up a college fund for their two children, had not set aside an adequate emergency fund, had not established their next vehicle fund or a plan to pay down student loans. A competent, non-conflicted advisor would have taken all of these goals and needs into consideration before obligating them to a high priced life insurance policy.
Here is what I want you to remember as you are approached by the wolves while in medical school:
- Find an advisor who looks at your whole picture and understands how the pieces work together and impact one another
- Find an advisor who understands there are many things you want to accomplish in your life
- Insist upon your advisor being independent and embracing their fiduciary responsibility to always do what’s best for you
Remember, when a man only has a hammer, everything is a nail. You need someone who has an entire tool kit and knows how to use it to help you accomplish YOUR life goals.
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The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.
