Greg Smith Senior Vice President & Director of Private Client Services

If a patient came to you for a checkup at the age of 40 and thought it would be the last checkup needed in his lifetime, you would undoubtedly explain that a checkup should be an annual event. Furthermore, if he had a chronic condition such as high blood pressure or diabetes, you would want to see him more frequently.

This same kind of care and attention should be shown to your financial health.  Finding the time to manage a portfolio is a challenge for all of us as we juggle career and family. It is even more daunting for physicians who may be on call nights and/or weekends.

Nevertheless, in light of the changing face of medical practices, new opportunities in the financial markets and the growing needs of families, it is critical to take care of your financial health so that you can establish a portfolio, grow it and preserve it.

With that in mind, here are the steps we suggest our clients follow to make certain that they are creating sound financial plans.

1. Just do it: The biggest deterrence to creating a sound financial plan is avoidance. No matter what the income level, we often see clients who procrastinate addressing their financial affairs.  By the time they do connect with us, they have missed a variety of financially beneficial opportunities. You probably see patients every day who have put off getting that blood test, delayed a mammogram or kept pushing back their date to join a smoking cessation class. Don’t place your financial health in jeopardy by avoiding the creation of a financial plan. Start planning today…it is never too early or late to start.
2. Student loans are not the entire picture: Your student loans represent only one aspect of your entire financial picture. All too often physicians are inclined to put off financial planning until they have paid off their loans. They may even be inclined to avoid creating a financial plan until their children are educated.  Even if your liabilities seem daunting, sit down with a planner and talk about your long-term goals and layout a roadmap for financial success.  If you are earning an income, you have an opportunity to invest at least a portion of it for long-term growth.  A focus on simultaneously improving both sides of the balance sheet can dramatically improve your net worth in a relatively short period of time and create financially healthy habits for years to come.
3. Seek professional advice: Find a financial advisor whom you can trust.  Make certain they know your goals and understand your tolerance for risk.  If you don’t know where to begin, ask your friends, your banker or your attorney. Check the individuals experience levels and reputation.  Credentials such as CFP, CPA or CFA are also important considerations when selecting an advisor.  Again, now is a great time to start.  Since you just filed your income taxes a couple of months ago, you have all of the documents at your fingertips for the planner to review.
4.  Annual check-up: Once you have taken the time to meet with a planner and develop the initial financial game plan, you should have a financial checkup at least once a year. Just as you establish a relationship with a patient through annual or bi-annual visits, so too will you be able to establish a relationship with a financial planner. Also, be certain to update him or her throughout the year on any changes in your life such as a marriage, a divorce or the birth of a child.  A good advisor will counsel you through all of your financial matters, not just your investments.
5. Diversify, diversify, diversify:  Make certain that you are investing in a broad array of asset classes and investment vehicles such as stocks, bonds, mutual funds etc. Often times you will hear a colleague or a neighbor talk about a sure-fire investment that has generated astronomical returns for them. While this may be true, discuss with your advisor any temptation to radically change your portfolio’s investment strategy. Most importantly, remember the golden rule of diversification. Studies conclude that by diversifying, investors can capture the market ups and smooth out the downs throughout the years.

Just as the practice of medicine is a long-term commitment, planning for your financial future should also be a life-long effort that you periodically review, evaluate and adjust as necessary to reach your ultimate financial goals.  As with medicine, working with a trusted advisor can have a positive impact on your overall financial health.

Greg Smith is Senior Vice President & Director of Private Client Services for Haberer Registered Investment Advisor, Inc. He can be reached at 513-381-8200.

Reprinted from the M.D. News, ©2007