Why doctors run out of money

3 August, 2017

I was meeting with a physician client a few weeks ago, and he was puzzled why so many of his confreres have money problems.

Filed Under: Financial Planning

I was meeting with a physician client a few weeks ago, and he was puzzled why so many of his confreres have money problems. I thought the answer to his puzzlement would be of interest to other professionals as well, since the malady many doctors suffer from is not unique to their profession.

Here we go…

I explained to him that although physicians generally earn high salaries, that income doesn’t in and of itself make them wealthy. The fact is – and various research, surveys and writings corroborate this – many doctors find it difficult to accrue wealth due to poor spending, lack of know-how on money management, medical school loans, and more. Personally, I find that the best way to help physicians – and others – to overcome these shortcomings is through education, open financial discussions, and encouraging them to develop good wealth-building habits. Oh yeah, and work with an experienced financial advisor.

In a recent survey, half of physicians reported they are behind where they would like to be in retirement planning. In fact, professional medical associations are exploring how to assess competency in older physicians who continue to practice medicine because they cannot afford to retire.

The reasons usually cited as to why physicians fail to build wealth include medical school debt, late start on earning and savings, failure to protect assets, overlooked risks, poor tax planning, getting investment advice from the wrong people, fraud and theft.

This is like saying people are overweight because they eat too many donuts. It may be true, but it fails to tell the whole story. Further, it fails to lead to sustained solutions that deliver different outcomes. Budgets work about as well as diets.

I believe that the real cause of physicians’ unrealized wealth is a symptom of a deeper financial ill – being their dysfunctional relationship with money.

Physicians as a group are intelligent people who unfortunately tend to overestimate their ability to manage money – and underestimate the level of difficulty in the challenge. Simply put, they lack insight about what they do and do not recognize this shortcoming. Oftentimes – and this is not confined solely to physicians – they turn to money to solve non-financial problems, such as alleviating their guilt about spending so little time with their families.

The barrier to change comes down to a conspiracy of silence around money. For physicians, money is the ultimate taboo topic, but you cannot fix problems that you cannot talk about.

I would advance that there are three reasons physicians avoid conversations about money:

First of all, many physicians deal with life and death situations every day. It can be a very stressful and draining profession – who needs to add more stress to their lives by talking about money after a day in the operating room?

Doctors have no formal education in money matters… there are no courses in business or financial management included in medical school or in residency. Further, mastering exhaustive volumes of medical information takes priority over learning about how to build wealth.

Lastly, is their vulnerability… physicians think of themselves as financial prey. They turn to people they trust and attempt to avoid disclosing their financial vulnerability.

Of course, physicians have the ability to build wealth. As Einstein says: “problems are not solved on the level at which they are created”. The solution begins with physicians’ willingness to tolerate their discomfort when discussing their money. Here are three steps to physicians should follow to achieve financial freedom:

  1. Medical students, prior to becoming physicians, should have conversations with experienced loan officers when they take out medical school loans or accepting massive $150,000 credit lines from credit card companies, or when they’re setting-up their practices –  and should speak with financial advisors when they plan to buy a house or make any major purchase.
  2. Avoid the forces that drive spending. Here are some things that financially struggling physicians say to themselves:
    • “I deserve nice things.” Physicians and their families make tremendous sacrifices to answer the call to medical service. When physicians finally start earning their six-figure incomes, they feel like it’s time to splurge.
    • “I can save lives and I’m smart; that means I can manage my own money.” This is the physician who fails to know how much he or she does not know about money. Arrogance can be very expensive…
    • “There will always be more than enough money.” This physician fails to plan, trusting that there will be a bright financial future. Without a plan, money tends to wander off.
    • “You invested in a marijuana farm with a 200% return? Count me in!” Physicians can follow people they trust into marginal investments.
    • “Look at me!” This physician wants to maintain the appearance of success at the cost of building true wealth.
    • “Sure, I trust you.” Physicians’ trusting nature makes them easy targets for embezzlement, fraud, and ploys.
    • “I’m embarrassed.” Many physicians wonder how smart people like themselves could make such ill-informed choices. Disclosing mistakes can be painful.
    • “Mother Theresa took a vow to poverty; I should, too.” This physician does not feel worthy of wealth.
  3. Seek guidance from experienced financial advisors early and often. As doctors are specialists in their field of study, professional financial advisors are specialists in theirs.

With the right professional guidance, physicians can achieve financial freedom. Particularly with the economic stresses posed by ever-increasing taxes, now is the time for physicians to take a serious new look at wealth-building.

As always, please do not hesitate to communicate with the writer if you would like additional information on this topic.


Joel Attis


Joel Attis is a Senior Financial Advisor with AttisCorp Wealth Management and IPC Investment Corporation. Comments or questions may be submitted to Joel at joel@attiscorp.com, or he may be reached at 855-1155.

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