There is pretty much zero financial training in vet school, and typically, the available presentations are given by people that have inherent conflicts of interest. Remember the promised “free” financial advice? Turns out nothing is really free, and that free advice can actually amount to a very significant portion of your retirement savings - No longer in your pocket, but in someone else’s. This post is the first of many, where we'll share important topics on financial literacy.
Please remember, as mentioned on the disclaimers, I am not a financial professional, nor I have any financial training per se. This content should be taken as general information and to encourage you to read more about these subjects. Please note the links below are affiliate links.
First of all, not every financial advisor or insurance agent is a bad one. There are amazing and knowledgeable professionals out there. But it is extremely important to learn how to identify the good ones.
Friend of Foe?
Some "financial advisors" are not really financial advisors per se. They are simply salesmen that often times “specialize” in veterinarians, doctors and other medical professions. Many only have a sales background, and all the financial advice they provide (ie. products offered to you) comes from training obtained from the company they work at. And their companies know very well that medical professionals, including us, have pretty much zero financial training. Therefore, we’re easy catch and thus there's easy money to be made.
You can already see one of the many conflicts of interest – they might only be able to offer you products from their company. I’m not saying those products/investments are necessarily bad. But they certainly are not going to share information on other products that might be better for your situation!
Are they Fiduciary?
This is one of the first things to know. Fiduciary advisors are legally required to put clients’ interests ahead of their own.
But wait, wasn’t this supposed to be the case to begin with? Yep, I thought the exact same thing. This is a very foreign concept to us. As veterinarians, we always put our patients’ and pet parents’ interests first.
Plus, being a fiduciary is not required at all! And even if they are, there is the large question of what “put your interests first” really means.
Playing the odds, a non-fiduciary “financial advisor” with no financial training per se (more on that below), will offer you products that have high/highest commissions.
After all, they need to earn an income to support their family.
But i know this person and...
Your financial advisor might be a friend, colleague, family member or other. Regardless, no one will care more about you and your finances than yourself. Bottom line, the worse the investment or insurance product, the higher the commission. This is how people that offer “free” financial advice get paid. It’s awesome to get free advice when you’re a student, intern or resident (especially if that includes free lunch!). But some of the products you get offered can significantly affect your retirement savings. They might even prevent you from ever obtaining life or disability insurance in the future depending on your medical history.
So bottom line, take the free information, learn more about the topics and make sure you're dealing with some of the good people out there.
financial designations to look for
Here are two things to look for: fiduciary and certain financial designations/degrees. Keep in mind that sales courses/weekend courses provide many letters after people’s names. Realistically, they mean absolutely nothing when you’re trying to evaluate a person to work with.
No one will have all of the above, but they might have a combination. These professionals will focus on different things. For example, you don’t want a JD if you’re looking for financial planning or tax preparation. You’d want to look for a CFP or CFA and CPA, respectively.
Not everyone needs a financial advisor. Do your homework. Learn the basics of financial literacy so you are at least more informed about what to look for. We’ll trying to help, but it’s on you to do additional reading and research! See below for books to learn more!
This is a great introduction to the idea of advisors, and great resources to link to! I just gave a talk about personal finances to the interns/residents last week and they seemed to appreciate it. It’s amazing and frustrating that we don’t spend more time educating people about personal finances. This should be taught in high school, much less in undergrad or vet school!
I agree! Just think about how many “bad” financial companies would go out of business if this was taught by the good guys! Not that I’d like all those people to go out of business per se, but the financial/insurance sector really needs a shakeup!