Physician Finances: What Our Bankers Want Us to Know

Who else feels like physician finances get complicated really fast?

Most of us know, but still live through it, that the decisions we make in the first few years of practice can influence the rest of our lives far more than we appreciate.

Recently I sat down with some acquaintances who are bankers working with physicians. When I asked them “if you weren’t afraid to hurt physicians’ feelings, what would you tell us?” this is what came back.

These people spend their careers watching physician finances. The biggest risk is not picking the wrong investment. It is not even high taxes. It is just not paying attention to the right things at all.

What’s Not Discussed in the Doctor’s Lounge

Comparison is real. Physicians talk about wins, but we don’t tend to talk as much about:

• the deal that didn’t work out
• the rate that was not quite what was implied
• the investment that underperformed expectations

“Don’t believe everything you’re told” is advice worth tattooing somewhere visible. Rates, deals and financial structures vary enormously depending on individual circumstances. What worked for the person across the doctor’s lounge from you might be completely irrelevant to your own situation.

Ask holistic questions about your own goals, your family, your timeline. Not what others claim to be doing.

Some Classic Moves (We All Know Someone)

There is a pattern, and some of us follow it. Residency ends, the income arrives and then: a bigger house in the best neighbourhood, a vehicle that maybe costs more than our debt load would theoretically suggest, renovations that were supposed to be modest.

These can be very reasonable decisions individually, but it is easy to have all of them happen at once after years of delayed gratification. And collectively, it is expensive. This is the definition of go big or go home, and it’s not wrong, but it can have long-term implications on things like when you’re able to retire.

The opposite end of the spectrum is spending money trying to save money. Spending four hours researching a rate difference that nets you $5 in savings when your hourly billing is $350 is not financially prudent. When you think about it, it’s absurd. We are not trained to think about our time as an asset, but it is the most valuable one we have.

The last one is specific but surprisingly common: check whether you still have joint accounts with other people, including possibly your parents. It is usually a relic of convenience. But it is worth a look to see if your mom or dad is still on your bank account (it’s apparently more common than we think).

What Actually Helps in Physician Finances

Unsurprisingly, the key in physician finances is starting to plan before you need to is the overwhelming recommendation.

Two or three years before a major expense is not excessive. Family dynamics and supporting loved ones, practice ownership, parental leave, buying a new home: most of these are foreseeable.

Starting early when we can gives us a leg up when the time comes. It gives us the opportunity to make choices that actually suit us, rather than panic buying or panic selling because we haven’t prepared and suddenly have to make a big decision under pressure.

Get the legal basics done. Yes, it can feel time-consuming and a bit annoying, but we have to do it. Wills were the big one that came up. The number of Canadian physicians practicing without one is surprising. Having a will sets you and your loved ones up for something you hopefully won’t have to deal with anytime soon.

Build a financial team that talks to each other. Accountant, lawyer and banker in separate silos creates friction and ultimately costs you time. A colleague once had to physically transport paperwork between advisors who would not communicate directly. This is not easy. This is not streamlined. This is not time efficient. But it is an easy setup to fall into, one that we can and should avoid.

The Short Version

In physician finances, the question worth asking is not “what are others doing?”

It is “what do I actually need, and when, for myself and my family?”

The decisions that cost Canadian physicians the most are not dramatic. They are often kind of boring:

• lifestyle inflation in the first few years
• legal documents that never got done
• a financial team that doesn’t communicate directly
• a habit of comparing ourselves to colleagues who are only sharing the highlight reel

Do the boring things early. Get the will done. Find a team that talks to each other. And stop spending four hours on a $5 question when your time is worth considerably more than that.

Dr. Kate Boehm, MD, MEd, FRCSC is a reconstructive plastic surgeon and the founder of DuplicateMeMD. She stubbornly believes that practice management is the key for female physicians to get time back.