How rare are financially savvy physicians?

[fatlittlepig]

From my observations of my colleagues in my group- the physicians I work with are particularly unsophisticated not only when it comes to investing, but also general personal finance, savings etc. This probably does not come as a surprise to the members of the forum, however I wonder how rare are financially savvy physicians? I don't know a single other physician who is investing and saving aggressively. Since graduation from residency approx 10 years ago, I have managed to pay off loans, pay off house, amass NW 4+ mil, honestly it was not difficult at all to do.

Also I am interested in hearing your stories about physicians you know who not financially savvy.

 

[pulmdoc]

Between my wife's group and my own, I would consider 4 out of the 18 other docs financially interested and knowledgeable. Obviously small sample size but conforms to expectations.

[nachos31]

How often does it come up as a topic of conversation? I find that oftentimes the financially "savvy" ones are the ones who tend to keep quiet about financial matters when others are discussing/bragging about something so you only hear from the ones making poor decisions. The quiet ones seem like the kind of millionaires from the Millionaire Next Door. So I don't think they're necessarily that rare, I just think they're mostly quiet. Don't get me wrong, there are plenty of poor financial decision makers out there.

Interestingly, I find that most of my colleagues drive small and/or old cars as well as often bike to work (weather permitting)--which to me is a litmus test of sorts for how they might be handling their finances. I assume this means they are making prudent decisions elsewhere if they are making them in regards to their transportation. I'm a PCP in a clinic with ~20 PCPs in Minnesota; I would assume (again) that this would be different (due to stronger negative peer pressure) in the realm of specialists and/or in other parts of the country.

Of course, I could be wrong and maybe they blew all their money when they invested solely in Turing Pharmaceuticals and now can only afford bicycles and Honda Fits.

Having this community here at WCI is very helpful for me. Not sure if I would have been one to try to keep up with the Joneses if I hadn't stumbled across WCI, but now I definitely try to keep up (in terms of financial prudence) with the Dahles.

[Kamban]

fatlittlepig wrote:

From my observations of my colleagues in my group- the physicians I work with are particularly unsophisticated not only when it comes to investing, but also general personal finance, savings etc. This probably does not come as a surprise to the members of the forum, however I wonder how rare are financially savvy physicians? I don’t know a single other physician who is investing and saving aggressively. Since graduation from residency approx 10 years ago, I have managed to pay off loans, pay off house, amass NW 4+ mil, honestly it was not difficult at all to do.

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Depends on the peer group and age group. I know a lot of older Indian physicians who had their own practices and have  invested aggressively in real estate, franchises and so on and are multimillionaires.  They have also made money by selling their practices to the local hospital for a tidy sum.

My former employer who owned a multispeciality group, which later became a primary care group made up of predominant Medicaid patients when all the specialists left, still managed to sell the practice, buildings and land for $30 million + to one of the local hospitals who wanted those patients. Wonder what the hospital saw worth having in his practice, but they did see something.

The younger group of Indian physicians are more likely to employed and earning average salary. Some invest with the extra money they save but most just believe the 401K is all that they need.

[jhwkr542]

I would consider maybe 1 other person (and me of course!  8-) ) in my 14 physician group to be financially savvy.

[Zaphod]

Im at a small private group and while not everyone is the same level, they are all doing well by any measure. One guy does have north of 500k in the bank just wasting away, but he also has several homes and renting them, assume some money in the market, but hes the least savvy and hes probably set. Everyone else is much more savvy. Owner is multimillionaire, other guy is also very smart and socks everything away. I have talked with all my friends about money when possible and they seem to be doing great as well but I guess you never know. Only have one friend that seems to have extended himself with lifestyle choices.

When we talk about money the younger generation seems amazed at how the one above us seems so financially non savvy and making poor decisions. Maybe that was a bug of not having high student loans and being forced to buckle down early on. I wouldnt have had much reason to get myself educated without the weight around my neck for sure.

[jfoxcpacfp]

Following this thread with interest. The generational trend, at least in our practice, is that the younger doctors tend to be more well-rounded in terms of knowledge and the older doctors tend to be big savers, but not necessarily savvy with an overarching plan. I see doctors who are amassing wealth but don't know what to do with it, iow. Also wondering: how do you define financially savvy? How much wealth you have built, or how much you could have built given your resources?

[Lithium]

This is a topic that is very rarely discussed in my group of ten docs.  I Have no idea what anyone's NW is; I am certainly curious.  I have been to several colleagues' houses, which are usually in the $500k - $1 mill range.  On the rare occasions we discuss subjects such as savings and investing some are more quiet than others.

I am probably one of the most but I have stealth wealth down to a T.  I have a decent house (smaller than my colleagues') and take nice vacations) but day to day I still don't live that differently than a resident.

[Craigy]

I'd say pretty rare.  It really depends on your definition of financially savvy. Financially conservative?  Probably a good portion but I don't know if that's a majority or not.  Shrewd business investors?  Maybe one or two in ten.

Running his or her own practice tends to make a doc savvier, but even then there are plenty of docs running offices with tons of cash flow but wonder why they're not making any money.

As said above, the money is so big that you can make a bunch of financial mistakes and still come out smelling like a rose.

Many docs think they are very financially savvy but in reality are just throwing cash around.  I don't know if it's a local phenomenon or not, but I see this a lot with Indian docs who seem to have a big business machismo but their investments don't always pan out.

The rarity is one reason docs are so heavily targeted by people looking to spend their money for them, i.e. insurance salesmen, wives, pharmaceutical reps, you name it.

[Kamban]

nachos31 wrote:

How often does it come up as a topic of conversation? I find that oftentimes the financially “savvy” ones are the ones who tend to keep quiet about financial matters when others are discussing/bragging about something so you only hear from the ones making poor decisions. The quiet ones seem like the kind of millionaires from the Millionaire Next Door. So I don’t think they’re necessarily that rare, I just think they’re mostly quiet

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I have found out that people who make their money slowly and steadily tend to be quiet about their wealth. Discussing it openly causes quite a bit of heartburn. Most docs and other middle class/ upper class people are more likely to reveal their annual income more easily then their wealth.

I have revealed more about my finances in this forum than I have in real life to my friends and immediate relatives (excepting wife). The only people in real life who know are the bankers who have provided the loans for the commercial real estate investment and need annual tax returns and personal financial statements, and the core group of people with whom I invest in these properties.

[DMFA]

I actually happen to be surrounded by quite a few.  We don't talk about our own worth or holdings much, though.  If I took a poll, however, I'd imagine probably the same proportion as the rest of the white collar population.

[TheHappyPhilosopher]

I think there is this stigma that physicians are particularly bad with money and unsophisticated, but I don't think they are any worse than the general population. I know some very savvy ones, and some complete basket cases. And I've seen everything in between. We just have more money than average to make mistakes with. The doctors I know make the same financial mistakes everyone does. That said I know many who have retired in their 50's with more money that they knew what to do with.

[conniebird]

Rare in my experience, but I've found a nice small group of savvy ladies and we chat often about finances.

 

I moderate a large group on facebook (female MD finance group) about 8K and would say the knowledge base is pretty low.

[DMFA]

conniebird wrote:

Rare in my experience, but I’ve found a nice small group of savvy ladies and we chat often about finances.

 

I moderate a large group on facebook (female MD finance group) about 8K and would say the knowledge base is pretty low.

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I really appreciate you moderating that group btw.  My wife always asks me "hey, have you seen this yet?" with your presentations and such.  Helps me bridge the gap since I don't like lecturing her (and obv neither does she!).

[fatlittlepig]

I guess I will clarify my definition of financially saavy---

My definition will be someone who is like me--  

• lives below their means (saving aggressively, >>50% take home)


• invests aggressively (not risky investments per se, but investing large amounts of money monthly)


• avoiding real estate, and other questionable investments


• avoiding financial advisors/products


• DIY mentality, very limited amount of outsourcing

I don't know an single physician in my group who regularly invests in the stock market outside of their 401K.

there is a member of my group who asked me what compound interest is.

multiple members of my group have asked me how to set up their 401K

I can pretty easily get a sense of someone's financial knowledge, since my group tends to be pretty informal and open about such matters.