The 5 Financial Mistakes Physicians Make


By Jeffrey J. Brown, MD, MBA, CFA®, CFP®


Physicians are often so focused on treating their patients, managing their practices, and keeping up with medical advances that they forget to plan for the future.


Creating a future plan for you and your family includes prioritizing your health and your family’s well-being and making sound financial decisions.


At Shearwater Capital, we are intimately familiar with successful financial planning strategies for physicians because we have worked closely with physicians and their families for over 20 years. We have also learned about what pitfalls to avoid. Below are five of the most common financial planning mistakes and some steps to take to avoid them.


1. Poor Debt Management

Most physicians finish residency with a mountain of educational debt. Fortunately, physicians’ salaries can accommodate student loan payments, but paying more than the minimum may not be a top priority. After all, young physicians have been studying hard and living on student loans for so long that it can feel well-deserved to loosen the purse strings a bit. While this is, of course, fine in moderation, it is important to establish good financial habits early on and make plans to tackle student debt from the beginning. This is particularly important if you are paying high interest rates on your student loans. Simply put, the less you pay in interest, the more money you will have to contribute to your investments and retirement plan.


2. Not Establishing a Comprehensive Wealth Management Strategy

Physicians should also take time to create a detailed wealth management strategy that takes into account life goals, family situation, and a thorough retirement plan. A solid wealth management strategy also plots out your investments and tactics that can help mitigate your tax burden.


If this feels overwhelming, remember that your wealth management strategy can evolve over time. But failure to put a comprehensive financial strategy in place can lead to frustration down the road.


3. Investing in Private Placements

Most physicians are accredited investors and are therefore eligible to invest in private placements that are not available to the general public. While some of these investments may be profitable in the long run, caution is advised. Since private placement shares are not traded on a public stock exchange, there is no mechanism for selling your shares unless the company eventually goes public or is bought by another company. It may also be difficult to achieve adequate diversification with private placements. Most investors would be better served by building their investment portfolios with broadly diversified low-cost mutual funds or exchange-traded funds.

4. Failing to Protect Your Family

If something were to happen to you, would your family be protected?


Physicians are often the primary breadwinners for their families. Failing to protect one’s income with life insurance and disability insurance can have drastic consequences in the event of unforeseen illness or injury. Insurance needs vary depending on your unique circumstances, but most physicians should take steps to mitigate their financial risk. We recommend low-cost term life insurance from a reputable company rather than more costly and complex whole life or permanent life insurance policies. With a good savings plan in place, you should be able to self-insure your life eventually and, therefore, a 20-year term policy should be sufficient. Disability insurance is typically offered by your employer, but supplementing this policy with “own occupation” coverage is advisable for some physicians.


5. Delaying Scheduling an Appointment With a Financial Advisor

A trusted financial advisor—specifically one who understands physicians’ financial challenges and potential pitfalls—can help you create a plan, put that plan into action, and protect your wealth and your family. When you delay scheduling an appointment, you are missing out on benefits that could affect your life today and your retirement tomorrow. Schedule an introductory phone call online or contact us at (314) 434-4750 or contact@shearwatercapital.com to get started.


About Jeff

Jeffrey Brown is principal and chief investment officer at Shearwater Capital, LLC, a fee-only fiduciary financial advisory firm helping physicians and their families attain financial security using a scientific, evidence-based approach. Jeff has been a practicing radiologist for over 30 years and is currently chair of the Department of Radiology at Saint Louis University School of Medicine. He earned his bachelor’s degree from the University of California, Irvine and his medical degree from the University of California, San Diego. He has been named one of St. Louis’s Top Doctors every year since 2011 in St. Louis Magazine. Jeff saw a need for physician-tailored financial services and earned an MBA from Washington University in St. Louis, going on to found Shearwater Capital, LLC with fellow MBA classmate and radiologist, Eric Malden. Jeff is a Chartered Financial Analyst (CFA®) and CERTIFIED FINANCIAL PLANNER® (CFP®) practitioner. Learn more about Jeff by connecting with him on LinkedIn.