A little Financial knowledge is a dangerous thing

Dr. Eagertoh Lern is a family doctor in Iroquois Falls.

She’s been dedicated to her community for four years, having graduated from the Northern Ontario School of Medicine and moved there right after residency.

Dr. Lern joined an existing family practice, where she practices full-spectrum family medicine, obstetrics and elder care in a local nursing home. Like many family doctors, her busy professional life means she struggles to balance her personal life. It’s tough to keep up with the medical literature, even though she sets aside at least an hour every evening to catch up on journals.

Dr. Lern’s also a new mom. She and her husband are proud parents of five-month-old Emma. But Dr. Lern is already back at work, almost like she never missed a beat.

With Emma’s future to think about, Dr. Lern’s mind has turned to financial planning. The family’s thinking of having two more children and that possible future raises questions: How much money should they save yearly? Should they get life insurance? What type?

They’ve heard of term and permanent life insurances, but are having trouble grasping the nuances. How do they make a decision? Dr. Lern’s brother-in-law just obtained his insurance license and was hired by one of the major insurance carriers. He offers to help set up two policies.

Dr. Lern is also thinking about setting up a Registered Education Savings Plan (RESP) for Emma. She’s heard of group RESP plan, and is considering signing up soon. She wants to know more but no one in her immediate circle has any experience with it. She figures she might as well just take the plunge, knowing she must start saving for Emma.

At a family medicine conference in Toronto, Dr. Lern was pleasantly surprised to see more topics around physician wellness. The conference discussed topics like personal growth and wellbeing; building a road map to an ideal practice; and recapturing the joy in family medicine.

But she couldn’t find any sessions on personal finance. She asks the organizer why there aren’t any and is told credits can’t be provided for financial topics— so there are no sessions on insurance, risk planning, managing debt or teaching physicians how to manage their income during their first five years of practice. 

She gets to thinking how never in her residency—and certainly not in her high school and undergraduate studies—was she ever exposed to the important life skill of managing her personal finances. While she’s gained mountains of medical knowledge, a key life skill was left off the table. But, she wonders, if not during professional training, then when is she supposed to make time for it? Maybe as part of physician wellness education?  It seems not.

However, in the exhibit hall at the conference, she finds a kiosk represented by a major Canadian bank advertising their preferred mortgage rates for physicians. Another kiosk represents another major bank advertising their financial consulting services (mainly selling proprietary high-fee mutual funds). A third kiosk represents a major insurance carrier, promoting its level entry critical illness insurance of $50,000 for family doctors. Dr. Lern knows that these companies are just there to sell their products and services, but she has no other way to get information about financial management other then these vendors. No conferences are willing to allow financial topics in their programming. And if the conference program does provide financial topics, they are sponsored presentations provided by the vendors themselves. Dr. Lern has always questioned about the conflict of interest and the biases that they may deliver in their messages. Dr. Lern is conflicted. It seems she has no choice.  In addition, the representative makes very convincing arguments and Dr. Lern ponders inviting them to her home include her husband in the discussion. The representative agrees. 

Later, Dr. Lern gets a flyer inviting physicians to a dinner talk sponsored by a local investment firm at a popular seafood spot. She’s attracted by the topic: Investment strategies to put your retirement plan on steroids. She’s also attracted by the seafood.

Dr. Lern is very impressed by the presentation and thinks this firm could be the answer to most, if not all, of her financial questions. She schedules a meeting with her husband and the representatives for the coming week. She’s keen to discuss her financial plan—or lack thereof. The physician sitting to her left whispers, “This may turn out to be a $50,000 steak and lobster. Just be careful.” Dr. Lern is a little confused by the comment.

Since the dinner, Dr. Lern’s put more thought into the question of an RESP and life insurance. She’s searched these topics online and is confident she’s read as much as she needs to—in reality, she’s only skimmed the surface—after reading the numerous medical journals she needed to catch up on. She and her husband have decided to set up the group RESP for Emma. She is still unsure if a group RESP is the right decision, questioning whether private individual RESP plans would work better for them. However, her husband is eager to get it settled.

What they don’t know are all the restrictions of a group RESP in contrast individual private (or family) RESP programs. Not knowing the numerous limitations of such group programs can cost the family money, peace of mind and time. Knowing just a little bit unfortunately isn’t enough, both Dr. Lern and her husband won’t realize until after Emma is ready for post-secondary studies. But sadly they can’t turn back time. Dr. Lern wonders what other tools she could have missed to save for her children’s education. But no one has helped her. Physician-focused conferences won’t deal with this subject. No conference organizer is willing to take this on, simply from lack of accreditation.

The couple also went ahead with the two life polices recommended by her brother-in-law. Dr. Lern really did not look at policies by other insurance carriers. Her brother-in-law doesn’t carry other policies and she feels uncomfortable asking for comparisons. After all, he’s well-intentioned, right? That should be enough? She and her husband also don’t have time to investigate options and feel they must make a decision. With the knowledge they have, they figure they can’t go wrong with the advice of the brother-in-law. At the end of the day, they feel he has their best interest in mind. Why not just go with that?

If they thought about it more deeply, they’d realize they’d never buy a car or a house this way.

Somehow, we’re unwilling to dig deeper when it comes to one of the most important financial decisions of our lives. We renounce our control to others with the hope that they have our best interest in mind. Some do, and some don’t, perhaps unintentionally. Like Dr. Lern, most physicians have never been taught how to properly assess life insurance policies. We’ve never been educated on the spectrum of coverage and cost. Physicians don’t understand the many roles life insurance policies can play in their professional and personal lives. In the end, physicians like Dr. Lern fall prey to pressure sales tactics and often purchase the wrong policies at the wrong time, only to ultimately lapse their policies.

Have you met a Dr. Lern? What might you have in common with her? Maybe she reminds you of a colleague. There are many financial questions we, as physicians, must face in our personal lives. But nowhere have we been exposed to financial literacy during our entire training up to end of residency.

Some of us are lucky enough to have been exposed to these topics. But as physicians advance in practice and accumulate wealth, things get more complicated. Do you feel prepared when faced with these complicated financial pathways? Where do we get our knowledge? If you answered Google Finance, you aren’t alone.

Financial questions and stress for physicians are real. They’re as palpable as a tumor found in a patient. We would never minimize the finding of a mass but we are more than ready to neglect the huge white elephant in the room when it comes to our own well-being.

Dr. Vu Kiet Tran is an experienced physician hoping to banish the taboo of openly discussing financial security and wellness. He’s the founder and host of the “How is my financial health, doc?” podcast. 

Disclaimer: The Financial Fables series is entirely fictional