What physicians should look for in a financial planner

Medical residents, in Paul S. Garrard’s experience, readily admit they are fiscally and time challenged.

So knowing what questions to ask can improve a early career physician’s chances of finding a financial advisor that’s a good fit, said Garrard, president and founder of the independent student loan consulting firm PGPresents LLC, which is located just outside of Washington, D.C., in Shepherdstown, W.Va.

“You need somebody who really understands that they are going to be working with not just a young physician, but a brand new physician who’s a resident,” he said.

It’s a good idea, therefore, to ask a financial planner whether he’s ever worked with residents before.

Those who have understand residents are still training and don’t typically work 8 a.m. to 5 p.m., Monday through Friday. So it’s reasonable, he said, to ask how the advisor will communicate with them after the initial consultation.

A good financial planner, Garrard said, will ask residents about their short-term and long-term financial goals and recognize that some residents may change their specialty – such as switching from internal medicine to anesthesiology – mid-way through their training.

“You need a financial planner who will be flexible enough to keep your eyes on the prize, but help you be flexible in terms of your planning,” Garrard said.

Most residents receive “a small income bump” after completing medical school, he said.

“You need a financial planner who understands you’ve got this new money and says, ‘I can help you budget that,’ ” Garrard said. “If they’re worth their salt, they will ask you about your budget and what you’re spending your money on.”

Garrard said he would be cautious about financial planners who immediately try to sell a particular product or service, quickly claim they understand everything there is to know about student loans or recommend loan consolidation, without first getting information about the client’s financial situation.

“You should be asking questions about compensation,” he said. “Are you by the hour, fee-based, commission and fee-based? … If they are very heavily commission-based, either 50-50 or more so, I get concerned because that means they will not make money on you unless they sell you something.”

Neal A. Tew, president of the Cincinnati, Ohio-based independent financial planning firm Phalanx Advisors, recommends asking trusted colleagues for referrals and then scheduling initial consultations, which are often free, with each.

“There are good advisors out there and the smart physician will say, ‘I’m going to need to do my homework,’ ” he said. “If I had a brain tumor, I wouldn’t go to the first person my neighbor recommended.”

Garrard suggests visiting the Financial Planning Association’s Web site before the consultation to learn about the different financial planning designations. The site also has search tools for finding an advisor, as well as a list of questions to ask during the consultation.

“You can get referrals, but a lot is going to be about your gut feeling,” he said.

During the meeting, Garrard said residents should get a sense of whether the advisor values them as a client and wants to establish a long-term relationship.

Residents may want to ask whether the planner adheres to any professional standards of care or code of ethics regarding conflicts of interest, full disclosure and the like, he said.

They should also be prepared to discuss their financial goals and their student loan portfolio.

Garrard advises bringing a copy of their residency contract, as well as any other documents – typically received during orientation – that outline what the hospital provides to its residents, such as insurance or a retirement plan.

They should also bring documents that indicate any other financial commitments they have, such as a mortgage or consumer debt.

“Don’t be embarrassed about what your financial situation is,” Garrard said. “A planner can’t help you unless they know all the specifics.