Whether you’re in residency, fellowship or private practice, financial planning can start now.
Many physicians believe that financial planners are someone that will only guide them through paying off student debt or help them plan out retirement, but financial planners do more than that.
It’s important for you to see your finances from a comprehensive perspective with professional expertise by your side. Let’s dive in to see what financial planning is and what a financial planner can and can’t do for you.
To equip you with the knowledge of how to find comprehensive financial guidance, let’s start by explaining what financial planning means.
Financial planning means a lot of different things to different people. As surprising as it sounds, there are actually only six decisions that you need to make when it comes to money.
It’s important to make your financial decisions based on...
As you can see, financial planning is the process of looking at all aspects of money, and how they interact. There isn’t a single financial decision that you need to make that doesn’t fall into one of these categories.
When you think of what a financial planner does, what comes to mind? You probably think of a planner as someone who simply sets up a Roth IRA or who helps guide you through purchasing an insurance policy. Even though those scenarios are very important components to finance, they are only small pieces to the finance puzzle. Financial planning is comprehensive with many different facets.
So, while there are six categories of information that are central to developing a comprehensive financial plan, the process begins by understanding and clarifying your goals. Your goals don’t have to be big, complicated, or long term. Your financial goals can be as basic as you need them to be.
Planners hear different types of goals at varying life stages. “How can I finish my residency with no credit card debt?” “How can I pay back my student loans?” “I’m married with a child but don’t feel like I can start saving for college now – is that okay?”
The key is not the size or complexity of the goal, or the amount of resources you have. The key is to set clear goals – they need to be more than just a wish!
1. An advisor can’t forecast near-term movements in the economy.
The mid-twentieth century economist John Kenneth Galbraith famously said, “the only function of economic forecasting is to make astrology look respectable.”
As shocking as this sounds, the economy cannot be consistently forecasted. Others may say “if we knew what the economy was going to do, we’d know what the market was going to do.” But would we? The answer to this is no, we wouldn’t. The economy isn’t correlated with near-term fluctuations.
2. Advisors can’t time the market.
If you try to purely base your financial decisions on the current state of the market, the market will end up beating you. That’s the reason an advisor will tell you that the market can’t be timed and you shouldn’t try to time it.
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections than has been lost in corrections themselves.” - Peter Lynch
3. Predicting which mutual fund will outperform other similar funds is impossible.
You may have noticed, in almost every piece of finance literature you’ve ever looked at an obligatory warning, “past performance is not a guarantee of future results.”
Not only does past performance not guarantee future results, but it also may not even be an indication of future results. Whether you like to hear it or not, fact is fact. There is no statistical evidence for the persistence of performance.
1. They can help you create a strategic financial plan.
Did you know that investors who consistently follow a written plan have a better than average chance of reaching their goals? Investors who react to the whims of the market…don’t.
It’s much better to work with a financial planner, not follow a market prognosticator. A financial planner will help you set an emergency fund goal, an investing strategy, and more to lead you to financial success.
2. They can give a personal perspective.
Financial planners help give you perspective to all the news, information, opinions and noise that you hear to help you focus on historical evidence and ignore the sensational headlines. While there will always be a lot of information (and sometimes misinformation) floating around, a financial planner will be able to give you a realistic idea of what to focus on and what can impact your goals.
“Fear has a greater grasp on human action than does the impressive weight of historical evidence.” —Peter Bernstein (1919–2009)
3. A financial advisor can help you with behavior coaching in stressful times.
Feeling fear is natural but how you react to fear will determine your results
With the latest in the news about COVID-19, it can be easy to react out of fear. Working with a financial planner will give you professional insight into financial trends and provide perspective on how to interpret the information around alarming events like the novel Coronavirus.
Instead of responding to fear, the unknown, and “clickbait” headlines, financial planners encourage thoughtfulness based on historical facts.
If you are uncertain about what to do in your financial situation during these times, contact Spaugh Dameron Tenny to discuss your next course of action to be financially prepared.
For over 50 years, Spaugh Dameron Tenny has provided comprehensive financial planning for physicians and dentists in Charlotte, NC. In addition to providing personalized advice, we walk our clients through their options to help maximize finances and maintain financial security.
Securities, investment advisory and financial planning services offered through qualified Registered Representatives of MML Investors Services, LLC. Member SIPC. Supervisory office: 4350 Congress Street, Suite 300, Charlotte, NC 28209, (704) 557-9600. Spaugh Dameron Tenny is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies.→ Check the background of your financial professional on FINRA'S Broker check