HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
Last weekend I spoke in Sonoma, at an event co-sponsored by the Northern California chapter of the American College of Physicians and the Sonoma Valley Hospital. I would like to thank Drs George Meyer and Brian Sebastian for the invitation.
There were several questions and observations of note. First was that most of the attendees were young and female. It has been my impression from early on that female physicians are more careful with their money than males. I have never heard or read of a female physician doing some of the bonehead things males have done with their money, causing them to lead a life of never-ending debt or bankruptcy. I asked a friend who knows far more physicians than I do, and he could think of only one female physician who “might” have had bad financial problems.
I suspect the reason is that the female physicians who are not comfortable with handling money recognize this and are appropriately risk averse. One person asked “Is this because of androgens (and their known effect to induce (over) aggressiveness)”? My impression: Yes.
The flip side of this is that there are male physicians who should just stick to the practice of medicine and let their wives manage the money. I can think of several very excellent physicians here in Columbia who do this and things work out fine. This advice, of course, also applies to non-physicians. I have never read that the gene for financial success resides on the X chromosome.
One physician asked where she could get advice; in the context that the group she will join has a financial advisor. That would certainly be a reasonable place to start, but I would add two points. Always remember that, in the end, your money is your responsibility, you are your best financial advisor. Secondly, search out senior physicians who have accumulated wealth. Note: They may or may not be the most prominent physician in town. Remember, in this situation, you want the one who is careful with their money and a good investor. They will be delighted to help a young physician.
My greatest frustration is inability to get my message to the younger physicians, before they develop bad habits. Also, the earlier they get the message, the more time for their greatest investment friend, compound interest, to do as much of the heavy lifting as possible.
There is a direct correlation between age and interest in my advice; the older the physician; the more the interest. Without exception, the most common comment I hear after someone has read my book or heard a talk is “I wish I had known that twenty years ago”.
The real question, of course, is why does this happen? I can think of three reasons. First is to take the comment at face value; older physicians have made the mistakes I warn against, they have personally experienced the problems. Secondly, I think that medical students, house staff and fellows are busy, and have so little to invest, that they really don’t care to spend the time. Unfortunately, they do need to spend the time. As they say “Money doesn’t come with instructions.
Lastly, I blame this obvious lack of self-interest, bordering on an overt disdain for an intelligent discussion of money, on the academic medical establishment. Money is never as important as your patient or your integrity, but it is important, especially when you don’t have enough of it. To quote from the second edition of my book The Physician’s Guide to Investing: A Practical Approach to Building Wealth, “It is almost as if the academic medical establishment wishes to keep physicians financially barefoot and in the kitchen”.
I again ask that everyone, especially those in a position of influence, to do what you can to help our young physicians receive instruction on how to invest the hard-earned fruits of their labor. It just breaks my heart to see physicians forced to work after their skills have waned just to make ends meet.
RMD
On April 13, Mr. Obama unveiled his proposal to cut the budget deficit; raise taxes on the rich.
RMD comment: I hope this didn’t surprise you. Mr. Obama ran on a platform of taxing the rich and the redistribution of wealth, and he is even willing to use our health care system to do it.
As I have emphasized before: your Traditional IRA/401k, is a “hostage” to future tax laws. If the top marginal rate goes up 5% (or more), the value of your IRA loses an identical amount. One can make an argument to systematically drain your retirement account. It will hurt because you must pay the taxes now, but it could be less painful if taxes rise later.
Should you do a Traditional to Roth IRA rollover? I have not, but it is an important consideration. The positives: If rates go up; you are now in a tax-free account. The negatives: 1) As above, you pay the taxes now. 2) The government could renege, change the rules, and tax the money. I admit, this is very unlikely, but the chance is not zero.
Barron’s, 4/18/11. “Crime and Punishment in Putin’s Russia. Russian authorities jailed a lawyer who named names…He dies in custody and a tax official he accused now seems to be living beyond her modest means.
Police claim the complex scam was pulled off by a sawmill worker and a burglar…in cahoots with four others, all of whom are now dead. One had a fatal heart attack…a second fell from a balcony, a third plummeted out a penthouse window…All of the bank records police needed to trace the loot were in a truck that crashed and exploded in 2008.
RMD comment: Remember when Khrushchev said “We will bury you”? Now in Russia, if you cross “The Man”, he will bury you.
My point: Americans are naïve. Not many countries share our sense of fair play, follow the rule of law, and respect private property. If the President doesn’t call out the Marines when countries nationalize (steal) multi-billion dollar investments from the oil companies, he certainly won’t call them out for you.
This is in response to a comment in the last letter about how the hospitals and physicians in Tyler, TX in the 1940s and 50s rallied around a colleague who contracted polio and ended up in an iron lung, by letting him read their EKGs to support his family.
“Physicians are giving up their practices because medicine is no longer economically feasible. In 2002, 75% of practices were physician owned. In 2009, it was less than 40%. We are no longer a collection of friends working together, just a bunch of interchangeable cogs that the government, through the hospitals, use to keep the population happy…I have no doubt that within my lifetime independent physicians will be the minority, and salaried physicians, or more probably nurse practitioners, will be the standard of care”.
OO, TX
RMD comment: I agree. The establishment wishes to eventually have all physicians be their employees, and thus directly under their control.
1) Placing limits on the hours that can be worked is just one way the system stifles the physician work ethic and self-reliance. I am concerned we are turning out physicians more interested in when their shift ends than taking responsibility for their patients. If a patient is crashing when your shift ends—it’s the next guy’s problem.
In New York City, people are sent into hospitals with a schedule of when house staff is supposed to be off. They will page the doctors, and if they are still working, the hospital is subject to stiff fines. It is hard to believe this has become a part of medical training in America.
2) The average physician graduates with $150K of student loans, with no financial smarts as collateral. Rather than take the chance of being independent, they are delighted to take a salaried job, where all they need to do is show up, not worry about their overhead or hiring employees, and take all of the 401K matches they can get.
Bottom line: you get what you pay for. If these are the kind of physicians the system wants, this is what we will have. Remember also that the rich, potent and powerful will always have access to the best physicians; it is the little guy that will suffer.
The US dollar continues to tank (see chart, next page) and the precious metals continue to make new highs. People are trading in their rapidly-depreciating paper money for real things. I again recommend you have as much of your wealth as you are comfortable with (at least 10%) in the precious metals, with specie (coined gold and silver) in your personal possession as the core investment of your entire portfolio.
I highly recommend The Brilliant Disaster: JFK, Castro, and America’s Doomed Invasion of Cuba’s Bay of Rigs (Rasenberger, Scribner). It is a detailed history of the event; and a solid analysis to show how arrogance and not making your own decisions results in disaster. It also shows that the start of the buildup in Vietnam was a direct result of the failure in Cuba, namely, JFK (and brother Robert, the only person he trusted after the Bay of Pigs), had to show the Commies that he was tough and couldn’t be pushed around.
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