by Nate Wenner

There’s no doubt about it: Health care professionals are busy.

They juggle many responsibilities: caring for patients; staying on top of new research developments; managing their practices in an ever-changing economic environment. All of these tasks are essential to the well-being of the professional and the patient.

Unfortunately, in the face of such tasks, health care professionals often overlook their personal financial goals. For example, have you thought about your retirement goals with the same effort you planned your most recent vacation? Do you know how much money it will take to fund your retirement? If you have been able to save and invest for retirement, is the money properly diversified in investments that meet your growth goals and risk tolerance?

If you answered yes to these questions, you’re in the minority. Most health care professionals don’t even begin to make financial plans until later in life. But waiting that long could be costly: Peak earning years may last a fairly short time in the health care field, and not developing a personal financial plan early enough could prevent you from achieving the future you dream of.

So why aren’t health care professionals planning for their financial future? In all probability, it comes down to time. Most health care professionals are smart people, but their days are busy. Two things can happen as a result. Some health care professionals — those who are committed to making decisions on their own — procrastinate because they don’t have sufficient information. Other health care professionals outsource the job to a financial advisor, who is often less than qualified for the job.

Choosing a financial advisor: Buyer beware

The latter point is worth exploring in more detail. Busy health care professionals often need someone else to assess their financial condition and provide recommendations. At times, however, they choose a financial advisor who isn’t working in their best interests.

The problem: All financial advisors are not created equal. Anyone can call himself a “financial advisor” in most states; there is no licensing requirement and very little regulation. In such an environment, many people will call themselves financial advisors simply to sell products that generate hefty commissions. Would you want your physician to write you a prescription not because you need it, but because he or she is compensated by a pharmaceutical company for doing so?

How do you choose a financial advisor, then? First, understand the types of financial advisors. Some financial advisors don’t charge for their time; instead, they’re paid a commission on the products (such as mutual funds) they sell you. Others — called “fee-only” financial advisors — charge you an hourly rate but don’t accept commissions.

Next, ask for referrals. Friends and colleagues are good sources, as is the Financial Planning Association at www.fpanet.org.

Finally, look at credentials (those alphabet-soup designations listed after a financial advisor’s name). Shysters can’t use these designations, so the credentials are often an indicator of quality.

Of course, referrals and credentials don’t tell the whole story. How you interact with a financial advisor is also important. Because of that, a consultation is a good idea. The financial advisor should dig for information about your financial situation, your financial goals, and your tolerance for risk. And you should ask questions. Is the financial advisor an expert? Is he or she without compensation conflicts?

Planning beyond your investments

And remember, financial planning is not synonymous with investment planning. Yes, a financial planner can and should tell you how much to save for retirement and help you pick the best mutual funds or stocks. But there are broader issues he or she should also address. Managing cash flow and debt may be the most important task for a health care professional early in his or her career; doing so prepares for any number of unknown risks, which are growing more and more prevalent in today’s litigious world. Disability and life insurance can protect you and your loved ones if something happens to you. Related is the issue of estate planning: How will your assets be safeguarded, and when will they be distributed, after you’re gone?

You already know that with hard work, you can prudently manage the well-being of your patients. But don’t forget to take care of your personal financial goals as well. When you review and revise the goals you have for your practice, do the same for the goals you have for yourself and your family. And if necessary, seek help — but only from a trusted financial advisor.

For more information, the Financial Planning Association offers a brochure called “Consumer Tips on Working with a Financial Adviser.” Just visit www.fpanet.org, click on “Public,” then click on “Brochures.”

Ready for the next step? Wipfli Hewins Investment Advisors provides fee-only investment management consulting services to health care professionals and other individuals in Minnesota and Wisconsin. Give them a call today.