After a severe ski accident last year kept him off work for a month, David Saenger took stock of his financial life.
Even though he was ultimately able to avoid having to make a disability insurance claim, the scare of that happening so early in his career (he's now 44) made him thankful for the diligent saving he's been able to do and the moves he's made to shore up his most important financial asset: himself.
"Like a lot of specialty practices, we went through a huge shift that is still going on," says Saenger, a Eugene, Ore., cardiologist. "We had our own cardiac lab that we were running ourselves and it was working very well."
But when reimbursements were cut about six years ago, his salary tumbled about 40 percent. His group of specialists then joined a hospital and his income is higher today than before the change.
Both of the experiences, he says, taught him that his earning potential — financial advisers call it "human capital" — is by far his biggest wealth-building tool.
To be sure, there are still plenty of good ways to invest and minimize taxes, advisers say, but investments can't move the needle, so to speak, as much as saving more can. And by developing a good wealth-building strategy, Saenger can focus on what he loves the most.
"I enjoy [practicing] so much and really like having a purpose," says Saenger. "I do a really good job and enjoy it so much that I don't even think about retiring."
Mid-career to younger physicians like Saenger are coming to grips with the same realities hitting other professions, that wealth is something that's built, not guaranteed.
Calling early retirements a "fantasy" even for many of today's physicians, former neurologist turned author and investment adviser William Bernstein warns that practicing for a few decades and then expecting a portfolio to last through today's longer life expectancies simply won't work.
"It used to be that physicians had fairly predictable income paths, but current industry trends suggest that traditional income paths are less reliable," echoes Paula Hogan, a Milwaukee fee-only financial adviser who has several family members and clients who are physicians. She says she's a big believer in the human capital phenomenon.
If you're among the physicians feeling a little shaky about creating wealth, there are still some good strategies you can employ.
Think long term
Physicians who personally feel their earning potential is uncertain should think about taking a more sober asset-allocation strategy when deciding how much of their long-term savings to invest in stocks and equity-based mutual funds, Hogan says. They should also consider other long-term issues, such as where they expect to be in five years, or how the shifting market may affect them and prepare accordingly.
"Give even more thought to how your career could unfold and how you would like to position yourself as the industry changes," she says. "Some will switch to a salaried environment from a more entrepreneurial setting. Others might switch to an administrative role, or even an encore career."
Hogan advises physicians to stay networked in their field and thoroughly check out compensation arrangements and performance metrics if they move to a salaried position.