DOCTOR: What’s Your Net Worth?

Posted on August 31, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

How Would You Respond … if Asked?

By Rick Kahler MS CFP® http://www.KahlerFinancial.com

Rick Kahler CFPFinancial professionals like me think nothing of asking clients this question.

But, if the tables were turned, though, and clients or prospective clients asked the same question of us, how would we respond?

The “Talk”

Every now and then this issue comes up in conversations among financial planners. Some advisors think their net worth is none of their clients’ business, any more than doctors’ cholesterol levels are any business of their patients.

Others are concerned that a single number like net worth is incomplete information and can even be misleading. Knowing a financial professional has a net worth of, say, five million dollars doesn’t necessarily mean the person is trustworthy or a capable financial planner. Net worth tells prospective clients nothing about where the money came from. The planner may have inherited it, won the lottery, earned it through a business other than financial planning, earned it from commissions on poor investments, or even obtained it illegally.

Wither the “Number”

Nor does net worth reveal anything useful about the understanding of money or knowledge of financial planning. I’ve worked with plenty of multi-millionaires who were skilled at making money but were horrible money managers and inept at investing. Even more, there are many brilliant young planners who haven’t had the time to accumulate a large net worth.

I suspect that most clients who want to know about their planners’ net worth actually have several deeper questions in mind. Some may be asking if the professional actually follows his or her own advice. Imagine how troubling it might be to find out your financial planner doesn’t have a retirement plan, is a habitual over-spender, or hasn’t gotten around to making a will.

Other Reasons Why

Another reason for the question may be a concern whether the planner is financially stable and will be around in the future. During the Great Recession, many financial professionals saw their revenues fall by 30% to 40%. Some who did not have a business emergency reserve had to resort to laying off staff, cutting services, or in some cases closing their doors.

Still another concern may be whether the planner is familiar with a potential client’s particular financial issues. This is especially true of high net worth clients. They need to know a planner can relate to the complexities, responsibilities, and emotional challenges of managing wealth.

***

Net Worth MDs

***

The Questions

All of these are legitimate concerns. Knowing a financial planner’s net worth, however, doesn’t address those concerns. To discover whether a planner is a good fit for you, it would be more useful to ask questions like the following:

  • Do you follow the same advice you give clients? Give me some examples.
  • Do you have six months’ living expenses in an emergency account?
  • Do you invest your money in the same manner you will invest mine?
  • If I were to run a credit report on you, what would it tell me?
  • What are some of the things you have learned from your financial mistakes?
  • Tell me what your company has in place for emergency planning and succession planning.
  • Tell me why you can relate to someone with my net worth and the issues I am facing.

Assessment

If a planner is offended by these questions or dances around answering them, that may be a red flag. If a planner offers answers freely and transparently, you may have found someone who provides exceptional service. Planners who share some of their own financial information are clearly committed to building the trust that is so essential between planner and client.

As a prospective client, you may hesitate to ask these questions even though you want to know the answers. Don’t be shy; ask.

More:

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Financial Planning MDs 2015TEXT BOOK

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants

Filed under: "Ask-an-Advisor", Experts Invited, Financial Planning, Investing | Tagged: , , , , | 1 Comment »

Careers and Net Worth

Posted on October 1, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

Join Our Mailing List 

Your Career as an Asset Class

By Rick Kahler MS CFP® http://www.KahlerFinancial.com

Rick Kahler CFPIs your [medical] career part of your net worth? Should you include it as an asset class in a diversified investment portfolio? While we consider careers as essential aspects of financial and professional success, few of us think of or manage them as financial assets.

Emerging New Philosophy

Michael Haubrich, CFP®, of Financial Service Group, Inc., in Racine, Wisconsin, encourages clients to think of careers this way. Some of the following ideas come from his new book, Career Asset Management: Getting Ahead, Staying Ahead and Using Your Head to Maximize Your Career Value.

Career as Assset

If you consider your career an asset, then managing it means paying attention to the return you get from that asset. Here are a few things to consider in order in order to receive the most value from a career.

  1. Keep in mind that the most important return on investment from a career is not necessarily financial

The value of a career is much more than just the money you earn; it includes a host of less tangible but vital rewards like the satisfaction you get from your work and the fulfillment that comes from following your dreams and using the talents that make up your unique genius.

  1. Consciously set out to build a career rather than get a job

As with investing, this provides the most benefit when you start early. Settling long-term for “just a job” usually won’t provide as much value, in terms of both income and job satisfaction, as you will get from a meaningful career.

  1. If your career asset isn’t providing a good return, make changes

Just as you might sell an underperforming mutual fund, consider making changes to your career if you aren’t getting the earnings, fulfillment, or other value you want from it. You might look for a similar job with a different company, add skills and knowledge to help you move up, consider changing careers, or explore starting your own business.

One way to fund such changes is to budget for a reserve over and above the six months of living expenses that many financial advisors recommend. Mike calls this reserve an Asset Working Capital Fund. He suggests the amount to have in this fund depends on the “velocity” and “volatility” of your career asset—including how fast you’re likely to advance, the stability of your job and career field, and life changes like starting a family that will affect your income.

  1. Think of your career as a rental property

Mike recommends viewing your career as an asset that you own and rent to others for given periods of time. To get the highest “rent”—income and satisfaction—you need to keep that asset in top shape by keeping your skills and knowledge up to date, maintaining your passion for your work, and building a strong reputation and network of relationships within your profession.

  1. Make the most of your near-retirement years

Wanting to retire early because you’re dissatisfied with your work can be a sign that your career asset isn’t working for you. Yet staying employed for even a few more years can make a big difference in your retirement income. Mike suggests considering options like part-time or contract work, flexible scheduling, consulting, or freelancing to add value to your late-career years. This can help you move into retirement gradually, as well as provide more financial security.

Bear + A Falling Stock Chart

Assessment

Chances are you won’t choose to list your career as an asset class in your investment portfolio. To make the most of both your aspirations and your earning power, however, keep in mind that a satisfying career is one of the most important assets you can own.

More:

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Financial Planning MDs 2015BOOK:

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

Filed under: Financial Planning, Portfolio Management | Tagged: , , | 8 Comments »