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Our physician-focused personal finance column returns by popular demand. This month: How to build just the right team of advisers.
Like a lot of young physicians, Joseph Mazza didn’t have what you’d call an attractive portfolio when he began his hematology/oncology practice at the Marshfield Clinic in central Wisconsin nearly four decades ago.
There were four children to rear with wife, Virginia, and a busy practice to attend to, not to mention his clinical research.
As their savings began to grow, however, the couple knew having a financial adviser would pay off. Senior colleagues recommended one, and the couple invested a token sum.
That was 25 years ago. Today that same adviser is quarterbacking the Mazzas’ entire financial game plan, investing the portfolio as it gradually comes out of the retired physician’s retirement plan.
Michael Markin, managing director of Markin Financial Group of Wachovia Securities in Eau Claire, Wis., helped the couple prepare for the retirement they wanted: a mix of part-time clinical research for Joe as well as time for several philanthropic ventures for both of them. Markin is also an accountant, and has advised the couple on a host of tax and estate issues over the years, coordinating with the couple’s attorney.
“Mike had been doing work for so many physicians here that we knew from the start he could ill afford to make a lot of mistakes. Word gets around pretty efficiently here,” says Mazza. “Today, we lean on him for everything.”
Don’t have decades to build that kind of trust in one adviser? No wonder. The rapidly changing demands of a healthcare career require you to have your own personal finance back-office from day one, staffed with a team selected as carefully as your practice staff was.
Start by hiring a financial adviser - a primary-care provider for your money - who can not only help select investments but also help plan your overall financial life, from managing debt to saving for college costs to retirement issues.
Already have a broker who’s picking great investments? You still need an overall adviser to look at the big picture and tell you when to call in a specialist (estate-planning attorney, insurance specialist, a CPA, a real estate expert). One moniker to consider - Certified Financial Planner - assures the adviser meets education, experience, certification testing, and ethics criteria set by the Certified Financial Planner Board of Standards.
You should build your team with a financial planner first; he’s the quarterback. Other professionals may indeed become integral teammates but your whole financial planning strategy could be skewed unless you have someone at the helm trained to look at the big picture.
Start with an attorney, for instance, and you could run up pricey billable hours asking basic planning questions that a financial planner would include in an asset-based fee. Start with an insurance specialist and you could find yourself wrapped up in complex annuities before you’ve had a frank discussion about tax planning.
“Who you hire is the most important decision - more important than the investments they pick,” says Chuck Jaffe, author of “The Right Way to Hire Financial Help: A Complete Guide to Choosing and Managing Brokers, Financial Planners, Insurance Agents, Lawyers, Tax Preparers, Bankers and Real Estate Agents.”
“If you pick a bad adviser he can do much more damage than typically what can happen with one bad investment pick.”
Some firms market solely to physicians, others have a significant percentage of physician clients, and others don’t have any physician clients. While it isn’t essential to work with advisers who only work with doctors (in fact it might be better to look for broader expertise depending on you and your spouse’s overall situation), you also want to avoid being someone’s guinea pig, experts say.
As the team takes shape, each member’s contributions will vary depending on your level of assets and your practice model, of course. Entrepreneurial physicians who buy up medical office buildings might justify an ongoing retainer relationship with their attorneys; others will find it more cost effective to hire expertise as it’s needed.
Along the way, don’t delegate too much or too little to the adviser, says Paula Hogan, founder of Hogan Financial Management in Milwaukee.
“A lot of doctors either don’t trust at all or they trust too much,” Hogan says. “It’s better to trust and verify.” That means keeping tabs on the team, and at times forcing everyone in the sandbox to get along.
Attorneys and accountants are often skeptical of financial advisers and sometimes resist the team approach, says Michael Hatch, a principal with The Sterling Group, a Pasadena, Calif., financial planning firm. He adds that it’s important to know how attorneys and accountants will charge for their time spent with planners: Some charge by the hour for this time, others don’t.
How do you keep the team on the same page?
Frequent face time with the entire group probably isn’t cost-effective or productive, but keeping each member up to speed on new investments or estate-planning moves is vital, advisers say.
That can lead to conflicts, of course. Constant disagreements among team members can be a big distraction and result in paralysis on the physician’s part, experts say. But keep in mind that some extra pairs of ears and the raising of questions you wouldn’t think to ask is why you assembled the team in the first place.
Janet Kidd Stewart is a freelance writer based in Marshfield, Wis. As a contributing columnist for the Chicago Tribune, she writes a weekly, syndicated retirement column called “The Journey” that appears in Tribune newspapers across the United States. She holds bachelor’s and master’s degrees from the Medill School of Journalism at Northwestern University. She can be reached via firstname.lastname@example.org.
This article originally appeared in the January 2009 issue of Physicians Practice.