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6 Traits of Financially Prepared Women Physicians (MD Magazine Interview with Robin Robertson, CLU)
By: Jared Kaltwasser, MD Magazine
Everyone wants to be financially secure, but many fall short of that goal. Study after study shows millions of Americans are far behind their retirement savings goals, including many people in middle and upper-middle income brackets.
AMA Insurance recently took a look at women physicians in an attempt to find out what traits those who considered themselves “financially prepared” shared. The report contrasted “financially prepared” doctors with those who self-reported being behind their goals.
The result was a report titled “6 Traits of Financially Prepared Women.”
MD Magazine discussed the findings with Robin Robertson, CLU, senior wealth and insurance planning strategist at MBGI, a Millennium Brokerage Company. Robertson helped develop the report and presented its findings at the American Medical Women’s Association in April.
Trait 1: Considers her retirement portfolio “on track” or “ahead of schedule" for her career or stage.
Though the hardest part about getting on track might be setting aside the money, Robertson said it can also be tricky to know just how much to save.
“It’s not as easy as you might think to figure out if you’re there or not there,” she said. “The best way to do it is to develop a complete financial plan early in your career and then maintain it throughout your career.”
Of course, a lot can change over the course of a career. But Robertson said most planners have software that can import information from a client’s accounts and also model the consequences of various choices, such as buying a second home.
“It’s very powerful,” she said. “…Because it’s really hard to know if you’re on track if you don’t see the numbers.”
Trait 2: Keeps a liquid emergency fund adequate for her current lifestyle.
Mastering this trait means knowing the answer to 2 questions: What’s enough for an emergency fund? And what counts as “liquid.”
The latter question isn’t as simple as it once was, Robertson said.
“It used to be the ‘liquid’ account sat in the bank,” she said.
However, while parking money in a bank guarantees easy access, it also ensures very low returns due to the very low interest rates.
Today, Robertson said, “liquid” assets don’t have to be in the bank. “You just have to be very conservative with the money.”
Investments like very-short-term bonds, mutual funds (the money from which can be accessed usually within 3 days), or even life insurance policies can be considered liquid. The latter can be cashed in quickly if need be, she said.
The other question – how much emergency savings is enough – depends somewhat on an individual’s lifestyle, job security, and other factors.
“It’s different for everyone,” she said. “Technically, it’s 6 months of what your living expenses are. That’s your formal definition.”
Robertson said it’s important that physicians are realistic about their target emergency savings number, because what’s adequate for one person might not be adequate for another.
Trait 3: Feels adequately protected in the event of a disability.
“Disability could be a lengthy topic all by itself, because it’s complex,” said Robertson. However, she laid out a few key factors doctors need to think about.
While most physicians who are employed have a disability insurance plan through their jobs, Robertson said most people don’t realize that any benefits they might get from those workplace policies are likely to be taxable.
That’s why Robertson suggests physicians get individual coverage first, and use their workplace plans as an additional layer of protection.
She also suggests physicians take advantage of the option to increase their coverage as their income goes up. Policyholders should look for plans that are indexed to factors such as the Consumer Price Index, to ensure their benefit keeps up with cost changes.
Robertson said it’s also very important to look for a plan that offers partial benefits, so a worker can receive some compensation if their disability allows them to work, just not as much as normal.
One final factor for physicians to look for is an “own occupation” provision. This provision ensures that someone who becomes disabled and can no longer perform their work can still get a benefit even if they’re able to do other work.
“Let’s say you’re a neurosurgeon and you get tremors in your hands and you can’t be a neurosurgeon anymore, or any kind of surgeon,” Robertson said.
Without an “own occupation” provision, an insurer might dispute a claim, telling the client they aren’t entitled to disability payments because, “you could be a professor or you could write articles or you could do a book, be a lecturer or speak or make money doing that.”
An “own occupation” provision protects the worker specifically against the loss of their ability to do their specific job.
Trait 4: Uses a professional financial advisor.
Robertson wasn’t surprised by the survey’s data related to this topic. She said many physicians said they didn’t have a financial advisor because they didn’t have the time to find an advisor they could trust, or because they believed they were smart enough to do it on their own.
But Robertson said even financially savvy people benefit from an advisor.
“Everyone needs a coach,” she said. “Just to have someone there to discuss things with; Someone who has the programs already in place and helps you feed all the data in; Someone who can give you a little bit of advice or keep you from making bad decisions – selling low or buying high. Those kinds of things are really important.”
Furthermore, Robertson said finding an advisor doesn’t have to be as hard as it seems.
“The first thing (doctors) want to do is talk to their colleagues and get a referral for someone that their colleagues trust,” she said. “And then meet with a few (advisors) and get a feel for how they feel about the person, their system and their style, what they can provide, and what they’re going to charge.”
Furthermore, Robertson said, don’t be afraid to get a second opinion.
“If they’re with an advisor and something doesn’t feel right, take that portfolio to another advisor and ask them to analyze it,” she said.
Trait 5: Has an updated will and medical and end-of-life directives in place.
Certainly if any cohort of people knows the importance of medical directives and end-of-life directives, it’s physicians. Thus, most physicians surely have these directives in place. Right? Not so fast.
The survey found more than half – 55% – of people who considered themselves “behind schedule” had zero elements of their estate plan in place. It seems even doctors like to avoid uncomfortable conversations.
“I think it’s a common human thing not to get up one morning and say, ‘I’m going to plan for what happens when I’m disabled or I’m on my death bed,” Robertson said. “It’s just not something people like to think about. So they put it off and they don’t get to it.”
Robertson said physicians need to be deliberate about getting their wills and directives in order. They also need to be as specific as possible about how they want their estates distributed.
“The cleanest way is to put everything in a living trust and then the trust dictates when it goes and how it goes very clearly,” she said.
A simple will also works, but it can create murky ownership issues.
Another tip: Make sure your beneficiary statements are up to date. Don’t forget to add new children or spouses, and don’t leave the beneficiary lines blank.
Trait 6: Feels more knowledgeable and confident about personal finances.
Nearly 9 in 10 (89%) women who are financially prepared say they feel “very confident” or “somewhat confident” in their ability to make financial decisions, according to the AMA Insurance survey.
Robertson said with solid financial advice and a realistic look at realistic data, anyone can be financially confident.
“If they’re more knowledgeable, they’re going to be more confident,” she said.
Copyright © 2015 MD Magazine. All rights reserved. Reprinted with permission.
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