In addition to advising medical nonprofits, another major focus of MEDIQUS is providing financial services to individual physicians.
Here’s a good snapshot of how that can look…
Meet Bob & Dr. Pam Smith*
Bob Smith and his physician wife Pam (not their real names) were living on the west coast with their two children.
Pam had reached a place in her career where she was restless. She thought, “I’m making a lot of money, but I want to do something different, something more.” Eventually she decided, “I want to go into academics and pay it forward.”
Obviously, such a transition raised huge financial questions for the Smiths, among them:
- Can we afford the reduction in income that will come from quitting a lucrative private practice, moving to the east coast, and teaching at a med school?
- How, if at all, will our lifestyle need to change?
- Do we need to reconsider our retirement timetable?
How did Bob and Pam find MEDIQUS?
Even though Bob and Pam had been working with a financial advisor for years – and even though Bob had experience working in the banking/financial industry – these new career considerations sparked uncertainty.
Their portfolio’s performance hadn’t exactly been great. Not only that, the fees the Smiths were paying were on the high side.
Pam happened to be a volunteer board member for one of the nonprofits served by MEDIQUS. She was familiar with some of the work MEDIQUS delivered to the organization and wondered if we could help them.
A Common Doctor Dilemma
Over the last decade, in our interactions with physicians, we’ve discovered many who are just like Dr. Pam. The details vary, of course, but at some point, they find themselves wondering, “Am I doing the right things financially?”
Maybe they got a suggestion from a respected colleague, but a different recommendation from a trusted friend. Perhaps they found an article online that’s got them scratching their heads. Between all of these—and maybe more—it’s hard for physicians to know if they’re on the right track.
Oftentimes they’ll lament, “If only they had covered wealth management in medical school!”
At MEDIQUS, we know the feeling. It’s not a lack of information. In fact, there’s often too much information! It comes down to filtering and wisdom; knowing whether a piece of information will help you reach your unique goals or distract you from them. Many doctors just don’t have confidence about what to do or the time to research all the possibilities.
And so, we guide them. We can’t—and wouldn’t ever—tell a client what to do. But we can show them various alternatives, lay out the consequences of each, and let them make the decision.
That is exactly what we did with the Smiths.
How did MEDIQUS help?
We first listened to their desires, concerns, and questions.
We then presented possible scenarios and options based on the things that Bob and Pam were wanting to accomplish.
Specifically, we talked about:
1. Retirement
What would this potential career change do to the Smith’s retirement plans and portfolio? Specifically, due to the lower salary that comes with a med school teaching position, would the Smiths need to start taking distributions from their portfolio right away to supplement their income? Or, should they aim to live on Pam’s new salary and wait until she actually retires to begin taking money from their portfolio?
We provided the Smiths with eight different scenarios for portfolio distribution to help them see what the impact would be, depending on their retirement year. Seeing they had multiple options gave the Smiths more comfort and a greater sense of financial security.
2. Survivorship
In addition to addressing the retirement question, we also looked at the area of survivorship.
What would happen if Pam were to pre-decease Bob? Would he be able to maintain his standard of living? Would he still be able to accomplish their financial goals (such as fund their children’s wedding expenses, help with college expenses, etc.)?
We were able to reassure the Smiths that between what they had saved and the life insurance they had in place, they would be able to achieve those goals.
3. Investments
Finally, we talked with Bob and Pam about their investments. We looked first at their overall strategy.
Because of their prior experience, bonds were a focus point for them. One of their specific questions was, “Should we keep purchasing individual bonds or should we buy into a bond mutual fund or an exchange traded fund of bonds?”
We walked them through the pros and cons of each option and explained the various expenses that funds charge. (Some investors recoil at paying such fees thinking, “I’ll just buy the bond myself.” But an individual can’t buy the range of securities with a $10,000 investment that a fund company can buy with a $100 million investment. Companies cut a different deal for entities that write huge checks.) In short, we helped the Smiths understand bonds better.
We did the same thing with their stock portfolio. They had numerous individual stocks their advisor had recommended. As to the question of how well those stocks were performing compared to the overall market, it was a flip of the coin.
We showed Bob and Pam the benefits of investing in asset classes—whole categories rather than trying to sharpshoot single companies on the rise. (That’s seldom a winning strategy. For every person who brags about the Apple stock they bought for a nickel back in 1982, there are 10 people who blush at their investment in whatever.com—that “sure thing” startup that went bust in 2000).
After analyzing their overall strategy, we also pointed out that some of the Smiths’ investments were proprietary in nature. That is, their advisor had a connection to the funds in which he had invested their money. We see that approach as a conflict of interest.
At MEDIQUS, we don’t offer proprietary funds like that or recommend such investments. Often, those kinds of portfolios can conflict with what’s in the best interest of the client.
Where are they now?
The Smiths are in the southeast! They made their big move by selling their home and buying a condo in their new, adopted city. Pam is teaching med students and loving it.
Their cash inflows are very different now. The outflows haven’t changed much. Their daughter has married, and their son is studying overseas. The Smiths still spend a fair amount of money, but they have a clear plan of what they’re spending on, why they’re spending on it, and how they’ll change their spending going forward.
Following our initial consultations, the Smiths decided to become MEDIQUS clients and have now been with us for three years.
We helped them adjust some of their investments—as well as the types of investments they have. They’ve adjusted their risk profile from buying individual stocks and bonds to investing in asset classes. Most importantly they’ve gone from being uneasy about a big career change to making that change and feeling more confident than ever about their financial goals and strategy.
As Bob put it, “We thought we were just doing an investment review. Now we know there’s a lot more to the whole wealth management process that’s smart to do.”
If, like Bob and Pam, you have big dreams you’re not sure you can fund…
Or you have concerns about your portfolio and/or retirement strategy and would like a thorough review of your financial plan…
Give us a call. We would love to help.
*This case study, while based on an actual client’s experience, is for illustrative purposes only. It is not a guarantee or indicator of future results. Results can differ substantially.
This document does not constitute advice or a recommendation or offer to sell or a solicitation to deal in any security or financial product. It is provided for information purposes only and on the understanding that the recipient has sufficient knowledge and experience to be able to understand and make their own evaluation of the proposals and services described herein, any risks associated therewith and any related legal, tax, accounting or other material considerations. To the extent that the reader has any questions regarding the applicability of any specific issue discussed above to their specific portfolio or situation, prospective investors are encouraged to contact MEDIQUS Asset Advisors, Inc. or consult with the professional advisor of their choosing.
