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Get your financial advisors to communicate

By Carrie Coghill-Kuntz

When I recently went to the pharmacy to fill a prescription, I was reminded of a common complaint: doctors have terrible handwriting.

As I tried to decipher my physician’s scribble, it hit me that his chicken scratch did not necessarily result from inherently poor penmanship, but was the natural result of two factors: (1) doctors are extremely busy, and thus write quickly, and (2) doctors and those in the medical community have their own language.

While the average person may not recognize “Hydrocodone” or “Metformin” even if written beautifully, it’s obvious to doctors and pharmacists what these terms mean even when scratched on a prescription pad in a form resembling hieroglyphics.

As a financial adviser, what interested me about these two observations is that I also see them manifest themselves when physicians deal with the very important topic of financial planning – that is to say, doctors are often way too busy to focus on their finances or communicate effectively with their advisers. And when doctors and financial advisers do talk, they often aren’t on the same page.

Fortunately, there is a cure for this dilemma.


First, let’s diagnose the problem accurately – it’s certainly not a matter of knowledge or financial IQ. Most doctors I talk to are very financially savvy – they can easily recite the necessity of diversification, are fluent in the lingo of the market, and can hold up their end of conversation about the latest economic news.

So it’s not a matter of information, but an issue of time and comparative advantage – clearly it doesn’t make sense for a physician to micro-manage every aspect of his or her financial life.

And even though most doctors have the ability to, doing so in today’s complex environment would require an incredible amount of time and diligence. In years past, setting up a diversified portfolio of stocks, bonds and real estate, and then calling it a day may have been sufficient. But today, with the quickness and uncertainty of modern markets, and the complexity of new, alternative investments like hedge funds and private equity, you just can’t do it alone.

In addition, doctors and finance types often speak different languages – they may think they’re using the same terms, but it pays to make certain and spend the extra time making sure.

For example, I recently began a new client relationship with a physician and his wife. When I asked about their estate planning, they replied, “It’s all taken care of, we just had our wills revised.” Fortunately, I pressed some more – because I found out that although their documents had in fact been revised, their attorney never bothered to check and change the titling of assets and changes of beneficiaries to ensure the documents would be properly executed. Most people don’t realize that asset titling and beneficiary designations take precedent over the will.

Thus even when both parties are very intelligent and successful, miscommunication about details and definitions can easily result.


And even if you have a good, communicative relationship with your financial adviser, there’s another wrinkle – you probably have a bevy of advisers – on your path to becoming a successful physician, you’ve accumulated a variety of different investment accounts, attorneys, advisers, insurance agents, and accountants. These many advisers often work independently, repetitively, or even worse, at cross-purposes.

How in the world do you get them all on the same page? It’s a situation I’m sure you encounter in your practice – patients have multiple doctors and, whether the numerous doctors are across the hall or across the globe, there’s certainly the possibility for information to be overlooked.

For example, here’s a common scenario I encounter as a financial adviser. Last year, I executed several transactions in a physician’s account that generated a sizable taxable capital gain. In explaining to the client the tax implications, he replied, “Don’t worry about it, I have tax loss carryforwards that will offset any tax gains generated.”

Yet, during our last meeting in May, 2008, the client expressed his dissatisfaction with his accountant because he actually did not have any tax losses to help offset the gains; therefore, he owed a large tax bill. Without someone quarterbacking the coordination of advisors, physicians are way too busy to be trying to stay on top of all aspects of their financial lives and serve as middle-man between all their advisers. As in this case, it ended up costing time and money.


Here are tips for getting your financial adviser to communicate effectively – with you and with your other advisers:

Diagnose the problem. Before you can communicate about a plan, you need all the relevant information and documents. The first step is very basic – gather all your existing documents and get organized. If you’re too busy – hire someone to do this for you. Organization is the building block upon which a solid financial plan is built.

Be open to help. You have the ability and intelligence to be a successful investor on your own, but it’s a matter of priorities and time. With investments, tax planning, estate planning, and insurance – looking after your finances could be a 2nd full-time job. Recognize that help is necessary.

Practice preventative medicine. Don’t wait until the end of the year to evaluate your portfolio. People often evaluate their investments on a yearly basis, looking at overall returns from Jan. 1 through Dec. 31. But performance doesn’t have to follow this strict calendar – if there’s a problem in your portfolio in March, why wait?

Get referrals. Work with advisers who have worked with doctors and understand their needs. Ask other doctors for advice.

Accurately assess your situation. Many physicians fall into the category of “mMillionaires” – a rapidly growing class of investor – they are “middle class millionaires” who have sizable assets in the $2-10 million range, but still do not live the worry-free lifestyle of the upper-wealthy. Find advisers who understand this new phenomenon.

For example, the recent news about IndyMac’s failure and concerns about other possible bank failures has led many to wonder about how to diversify even within their cash and money market assets. FDIC insurance up to $100k may sound reassuring, but many doctors are mMillionaires with cash assets far exceeding that limit.

Take a holistic approach. Make sure that someone is quarterbacking the coordination of your advisers. Physicians typically don’t have the time. This person should be a Certified Financial Planner99 Practitioner because they have been educated in the areas of investments, insurance, taxes and estate planning. You want one adviser who sees the big picture and can provide a holistic view of your financial and retirement planning

Share information. Of course you should take precautions about privacy, but you should give each adviser authorization to talk and exchange information – they all need to be on the same page. Due to the confidential nature of this information, this should be done in writing.

Have an annual checkup. Require that annual meetings are held with all advisers present. The following items should be reviewed to ensure that everyone is on the same page:

· Review and modification of both financial and lifestyle goals.

· Investment summary – performance, tax projection of investment earnings.

· Tax review – previous year tax summary, net impact on investment performance, tax law changes, strategies for the upcoming year.

· Estate planning – discussion about changes with family, health, desires, updated projection of estate taxes, strategies to help reduce taxes, changes in estate tax laws

Don’t be “penny wise and dollar foolish.” Obviously, these services are not free; however they can save you enormous amounts of money in taxes and improved overall wealth creation.

Learn from Dr. Phil. You may not want to take medical advice from Dr. Phil, but flush with Oprah money, I’m sure he’d be a good source of financial advice and would suggest, like Warren Buffet, the benefits of a Family Office. A Family Office is a concept that traditionally has been used by extremely wealthy individuals and their families to manage their entire financial lives. Instead of using an assortment of outside advisers, a wealthy individual would set up a Family Office to serve as his or her own in-house team of financial professionals, who all work in coordination directly for the one family. You may not be able to set up a Family Office working only for you, but you can apply the principle of coordination to your own financial life

Carrie Coghill-Kuntz is a Certified Financial PlannerAE and President of D.B. Root & Company Wealth Management, in Pittsburgh, Pa. She is a registered representative of Commonwealth Financial Network, a member of the FINRA/SIPC.

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