It’s anticipated like the summer sighting of Santa Claus. Minnesotans count the days in anticipation of the announcement of the new foods offered at the Minnesota State Fair. This year’s culinary gifts include everything from fried ranch dressing to the “Uncrustaburger”—a hamburger patty with cheese, pickles and special sauce, sandwiched between two deep-fried peanut butter and grape jelly Uncrustables.
You might wonder, “With Minnesotans’ appetite for these unhealthy foods, do they have sky-high rates of cardiovascular disease?” Here’s a statistic that defies logic: Minnesota has the second lowest incidence of heart attacks in the nation. Every year from 2000 through 2022, Minnesota had the lowest overall heart disease death rate in the United States.
Here’s another statistic that defies logic: Despite earning in the top 5% of incomes, physicians as a group struggle to build wealth. Many of your doctor clients are living this paradox right now.
The Neurosurgeon’s Dilemma
Dr. Jim, a brilliant neurosurgeon, recently shared his frustration: “I just don’t get it. I make more money in a year than my parents made in a lifetime. Today they’re enjoying retirement. My financial advisor just projected that if I continue doing what I have been doing, I can retire at age 72—maybe age 70. I want to move up retirement from 65 to 60. I don’t want to be on the hamster wheel continually trading my time for money to finance my lifestyle. How do I step off?”
Underneath Dr. Jim’s comments was a sense of shame: “What don’t I know that I should know? How can somebody as smart as I am make such stupid financial choices?”
If this sounds familiar, you’re not alone. As financial advisors working with physician clients, you’ve likely encountered this paradox repeatedly. The same qualities that make doctors exceptional clinicians can render them poor money managers and erode their wealth.
The Root of the Problem
The way doctors do money is the way they do life, and the way they do life is the way they do money. Physicians have very well-developed behaviors and perceptions that lead to their success as doctors but often undermine their efforts to build wealth.
When doctors struggle financially, they’re not broken. There’s nothing wrong with them. They’re facing a systems problem. They’ve invested so much in learning how to take care of patients that it’s natural to apply these skills to wealth building. But these are not one-to-one transferable skills.
Understanding this dynamic is crucial for financial advisors who want to better serve their physician clients. Here are three specific clinical traits that can sabotage doctors’ financial success—and what you can do to help.
Wealth-Eroding Behavior #1: Over-Reliance on Intellect
Doctors have extreme confidence in their ability to learn and solve problems. Medical technology changes rapidly, and they must keep up and adjust accordingly. This serves them well in medicine but can backfire spectacularly in wealth building.
Consider the radiologist who thought, “Pattern recognition is what I do. Why don’t I get involved with day trading? I’ll recognize patterns and know when to buy and sell.” Like many intelligent professionals, he failed to factor in market variability and factors beyond his control—and lost significant money.
This overconfidence manifests in several ways:
– Falling for “dumb doctor deals” without proper vetting
– Believing they can time markets or pick individual stocks
– Justifying lifestyle inflation with “I deserve this after working so hard”
– Underestimating risks while overestimating their ability to control outcomes
The Wealth-Building Alternative: Systems and Processes
Help your doctor clients leverage what they already know: the power of systems. From day one of medical school, doctors learn protocols for patient evaluation—ritualistic, systematic approaches that ensure consistent outcomes.
Encourage them to apply this same systematic thinking to money management:
– Establish spending thresholds that require reflection (sleep on purchases over $1,000, discuss with spouse for purchases over $10,000)
– Create investment criteria checklists
– Implement automatic savings and investment systems
– Develop decision-making protocols that remove emotion from financial choices
Wealth-Eroding Behavior #2: Relying on Intuition
Seasoned physicians often say, “The lab tests were normal, the X-rays were normal, but I had a sense something was wrong”—and they’re frequently right. This intuition serves them well in medicine but can be disastrous in investing.
When doctors apply this intuitive approach to investments, they often:
– Jump into opportunities based on compelling stories rather than data
– Trust colleagues’ investment tips without independent verification
– Make emotional decisions during market volatility
– Fall victim to confirmation bias and overconfidence
The Wealth-Building Alternative: Data-Driven Decision Making
Just as doctors don’t treat family members because emotion clouds judgment, they shouldn’t make investment decisions based on gut feelings alone. Help them understand that:
– Investing elicits strong emotions that can impair judgment
– They need objective advisors to identify blind spots
– Warren Buffett’s rules apply: Don’t lose money, and don’t forget rule number one
– Systematic, evidence-based approaches outperform intuitive investing
Wealth-Eroding Behavior #3: Following the Standard of Care
In medicine, following the standard of care protects doctors from malpractice liability. They constantly compare their practices to community standards and peer behaviors. This mindset extends beyond the hospital—doctors notice what colleagues drive, where they live, where their children attend school, and how they vacation.
This “keeping up with the Dr. Joneses” mentality can be financially devastating because:
– No one knows what’s really happening behind closed doors
– High-spending colleagues may be drowning in debt
– Lifestyle comparisons drive poor financial decisions
– The pressure to maintain appearances can override sound financial planning
One orthopedic surgeon appeared incredibly wealthy—driving a Bentley, wearing expensive clothes, taking luxury vacations. When he died, his family discovered he had left nothing but debt. He was “all hat and no cattle,” as they say in Texas.
The Wealth-Building Alternative: Values-Based Decision Making
Help your doctor clients “stick to their own knitting” by:
– Identifying their core values and life goals
– Aligning spending decisions with personal values rather than peer comparisons
– Creating financial plans based on their unique circumstances
– Developing confidence in their own choices rather than following the crowd
Practical Strategies for Financial Advisors
Understanding these behavioral patterns allows you to better serve your physician clients:
1. Address the Shame
When doctors express frustration about their financial situation, start with compassion. Remind them they’re not alone, not broken, and facing a common challenge among high-achieving professionals.
2. Leverage Their Existing Skills
Frame financial planning in medical terms they understand:
– Compare investment diversification to not putting all patients on the same treatment protocol
– Relate systematic investing to following clinical protocols
– Use their understanding of risk management in patient care
3. Implement Systems Over Willpower
Don’t rely on doctors to change behavior through discipline alone. Create automatic systems that remove decision-making from emotional moments:
– Automatic investment contributions
– Systematic rebalancing schedules
– Predetermined criteria for major purchases
4. Provide Objective Perspective
Position yourself as the objective voice they need—like a consulting physician who can see what they cannot. Help them understand that seeking financial advice isn’t a sign of weakness but of wisdom.
5. Focus on Values Alignment
Help doctors connect their financial decisions to their deeper purpose. Many entered medicine to help others; show how sound financial planning enables them to continue serving while building security for their families.
The Path Forward
The financial challenges physicians face aren’t a reflection of their intelligence or worth. They’re simply the result of applying clinical skills to a different domain. Once doctors understand these patterns, they can redirect their exceptional qualities toward building wealth.
Your role as a financial advisor is crucial in this transformation. By understanding the unique psychological and behavioral challenges doctors face, you can provide more effective guidance and build stronger relationships with your physician clients.
Remember: the same qualities that make doctors exceptional healers—their intelligence, intuition, and commitment to best practices—can be powerful wealth-building tools when properly channeled. Your job is to help them make that transition from clinical excellence to financial success.
The doctors in your practice don’t need to choose between being good physicians and building wealth. With the right understanding, systems, and guidance, they can excel at both.
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Dr. Vicki Rackner is a retired surgeon and author of three books about physicians and money, including “How Doctors Build TrueWealth.” She helps doctors develop healthier relationships with money through education and coaching, not financial advice.