Starting out in practice - the vultures
Let me say at once that I know referring to agencies and their representatives as vultures is not very kind. However, when I write further about this you will get the idea.
As I said to a recent student, I am not sure if the situation now is as bad as when I started practice in the late 1970’s. However, it seemed that everybody who wanted to make money off of a new doctor in practice was writing, calling and in some cases even stopping by. Of course, the last probably only happened because I lived at the time of my first practice in a very small town where people tended to get to know everyone else.
Yes, my wife and I were having dinner one evening after work when a knock came on the door. There was a sales man with a demonstrator car from the nearest dealer a couple of blocks away. I am not sure what he thought of me but it wasn’t even a new car! Probably he knew about me because his wife was up Community Health Nurse who was part of the team I had joined in this rural community clinic.
Anyway, the vultures that I am referring to are:
- anyone with any kind of investment plan that they want to sell you.
- insurance agents, especially for whole life as the used to refer to it, as distinct from term.
- car salesmen
- and even some salespersons of larger items such as encyclopedias, which nowadays of course are not even sold as books anymore.
I think all of these individuals also knew, probably from their experience and those of their agencies or colleagues, that most new young doctors, at least then, were woefully unprepared to deal with any of what they had to offer.
I don't know if the situation is much better today in terms of what medical students and residents learn about dealing with the circling vultures and what they want to sell you. I have a sense that there have been some improvements made in this area. I hope I am right.
As I believe I have said in another posting, perhaps the best way to go about this is to talk to your provincial Medical Association team as well as the financial advisors that the medical associations provide free of charge to their members. This alone is worth the price of membership in the long run.
When it comes to insurance, you want to know about the ins and outs of home insurance, disability insurance, all those add on’s including for travel, let alone the basic distinctions between whole or universal life and term life; there are probably some other kinds of insurance that I am still overlooking.
It varies from province to province but most medical associations offer good group plans on things like extended care for eyewear, dentistry, physical and occupational therapy, medication, ambulance, private hospital bed, travel etc., not to mention disability. When it comes to travel, one has to pay attention to the frequency, destinations and duration of trips one expects to make In any given year. With disability insurance you want to make sure it kicks in soon enough so that you are not left in a situation without income. The medical associations and their financial advisors do not sell life insurance but they can certainly give you good advice on it.
One particular form of insurance that one might be advised to get and not wait until you are within a few years of retirement as happened in my case because of oversight on my advisor’s part is a special insurance you can get to cover the possibility of ending up in long-term care, which is something that can happen towards the end of your life.
When all was said and done, I probably spent some money on insurance over the years that was not necessary or could have been better spent elsewhere. Perhaps I am still doing that. One investment vehicle that was popular in the decade after I began practice was to do with real estate and housing. Some of my older colleagues will remember Multi-Unit Residential Buildings, or MURBs. I invested in one of these in Saskatoon, in which I think I broke even, along with the tax benefits that accrued during the time. With the one in Calgary, I had to put in quite a hefty sum of money to end my involvement in that one, so that was really a loss.
When it comes to investments though, for the most part, I have left those in the hands of the medical advisors attached to our medical associations. These individuals are well-educated and paid through our dues and are there to serve you. They can give you financial planning advice about mutual funds, RRSPs and retirement, Including wills and estate planning. They can even take all those messy family dynamics out of these areas by taking on the role of your will’s executor at your demise.
They can also help you decide what level of risk you are comfortable with as an investor. As a general rule, for most of us, we can live with a higher level of risk for the first decades of our practice, as this sometimes tends to give us the greatest return. However, as we grow near our retirement age, we don't want to lose the nest egg we have been building up and so the practice then is to move your investments into portfolios that are largely more secure, which generally does mean somewhat slower rates of return. However, by that time you should have a good beginning to your retirement fund.
Of course, one of the best pieces of advice always, I think, is to pay down your debts, including your student loans and mortgage, as soon as possible. I am not sure if this still holds, with all the available plans out there nowadays, but at one time credit unions, being mutual non-profit organizations, were preferable for mortgages in the sense that you could pay it down as fast as you wanted, versus banks that tied you to plans so they could get their interest.
I think there are also some lifestyle issues reflecting changes in mores that have happened between my generation and younger ones. I have a sense that many young people are not as prepared to start off “without" as my generation was. Not everyone may be as handy as I was but I built some of my own inexpense furniture to get by with for the first few years before gradually investing in nice dining room and living room furniture etc. I didn’t jump at buying a luxury car right off the bat either, just because I was a doctor. In fact, I never have done so, but that is another story relating to my ethics. Nor have I ever bought let alone built a new house or cottage. Those again were ethical decisions, which is another story.
So, perhaps there has been a nugget or two in here that was helpful in preventing you becoming too much of a case of carrion for the vultures (sorry for the mixed metaphors). Good luck with your finances.
