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Podcast: Why physician finances are different

In this inaugural episode, hosted by Pamela Allen with special guest Samantha Findlay, we talk about why physician finances are so unique, how it impacts the whole family, and how MD Financial Management can help with physician-focused advice.

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You’re listening to The Financial Literacy Podcast, brought to you by MD Financial Management.

Canada’s only national financial services firm dedicated to helping physicians and their families with their unique financial needs.

PA: Hey everybody! Welcome to the first episode of MD Financial’s brand new podcast, The Financial Literacy Podcast. Every episode will be packed with information from industry experts as we highlight different aspects of financial planning, specifically to help physicians and their families reach their financial goals

My name is Pamela Allen and I’m a Executive vice president, client Value & Performance and I’m so excited to be hosting this kick-off episode. Today we are going to talk about why physician finances are so unique, how this impacts the whole family, and how  MD Financial understands these challenges and helps you and your household plan together.

And joining us today, we have a very special guest; Samantha Findlay Thank you so much for taking the time to be with us today.

SF: Thank you. I’m thrilled to be here. I can’t wait to tell our listeners all about MD and how we help physicians and their families!

PA: Awesome. So, what is it that you love about working at MD?

SF: I love working at MD because it’s not just about financial planning – it's about truly making a difference in the lives of Canada’s physicians and their families. At MD, we believe firmly that helping our clients achieve financial peace-of-mind contributes greatly to their overall well-being. And we accomplish this in a way that's pretty specialized and considers their unique career path. And that’s because this paths means that their financial experiences and needs are ... very different from those of non-physicians. It’s this niche that provides the focus for our mission, which is to help Canada’s physicians and their families achieve their financial goals at every stage of their lives and careers.

PA: Oh, that's great. So, let's talk about financial planning now. Can you tell our listeners why financial planning is so important, especially for physicians and their families?

SF: Yes, I’d love to. Now, it’s no secret that becoming a physician is a long, emotional and expensive road for everyone involved. Medical school, residency and then possibly fellowship can mean moving away from family and support, and it’s also expensive and often leads to a lot of debt. And if there’s a partner or spouse involved on this journey, they go through all of this too. Then, there are the unique costs of transitioning to practice, which can mean  becoming a small business owner with all the financial worries that that can entail, as well as the uncertainty of not having a company pension to rely on for retirement. All of this means that when physicians enter the workforce, they do so later in life (which means less time to work toward their goals and their expenses and debts are often much higher than other professionals. And that’s why we’re here to support and help. We have experience and can anticipate their needs, and we can help provide solutions to get them to where they want to be, in the most efficient way, while considering their unique individual circumstances.

Sometimes physicians avoid the topic of money because there's this idea that they become doctors to help people, not for the money. And there‘s also this idea that t since doctors earn so much, they shouldn't have financial problems. But the truth is that physicians have money worries just like the rest of us [PJ1] and they need to take care of their finances, pay down their debt, buy a home and fund their own  retirement and more. It's part of the self-care necessary not only to be a better physician, but just for your overall wellness. Just like healthy habits involving sleep, diet and exercise, healthy financial habits can help physicians relieve financial stress and avoid burnout.

Financial planning enables physicians and their families to shape their lifestyle and reach other goals outside of their careers, like buying a home, starting a family, funding their children’s educations and retiring

And that’s the goal with this podcast, to start those conversations that physician households  might not be having, highlight the benefits of financial planning and financial literacy in general, and guide them toward the resources and services that MD has to offer.

PA: Now that we know why it’s important, what actually is financial planning?

SF: Well it’s several things, put together:  It includes  financial management, which is managing your debt and cashflow, asset management, which is about where to invest money, s tax planning, which includes finding savings strategies and opportunities, and this often ties into your retirement planning, which is what retirement looks like and how to get there. And then there is risk management and estate planning to make sure that you and your loved ones are taken care of.

Now, while all of these things are important for everyone, the order of their importance, in other words, the priorities might be different when you’re a physician or a member of a physician household.

For example, physicians incur significantly more debt than professionals in other fields, so a physician’s plan for managing that debt will extend longer into their career than others and be higher on that priority list. Similarly, physicians have a different timeline when it comes to saving for their retirement because they tend to start their career [CN3] later than the average professional, so they have less time to work towards their goals. They also usually have to fund their retirement on their own, without the benefit of a company pension. However, a spouse may have a pension plan, so that’s why it’s important for planning to be done at the household level.

Also - investment management is typically a higher priority for physician households, since in the absence of a pension plan, they are responsible for investing their own retirement savings.

Our advisors have significant expertise in these planning areas - specific to physicians and their families.  An example of this expertise is in planning with clients who have Medical Professional Corporations or those looking to incorporate. Incorporation can result in tax savings and can be an important tool for retirement planning for physicians, and potentially other members of their families.

So, MD advisors are dedicated to making that winding road a little less bumpy.

PA: So, you’ve mentioned preparing for retirement a couple of times now, and how physicians have a different timeline in terms of their income and when they need to meet certain financial goals. So, what does that look like? How would an MD advisor help a physician navigate through the different stages of their career and financial plan?

SF: Well, of course, everyone’s individual plan is going to be different based on their unique circumstances and their goals and what’s important to them. But there is a roadmap in terms of what areas of a financial plan will take focus during a particular stage in a physician’s career.

For example, in med school and through residency, the focus is on cash flow and managing debt. We’re going to look at what borrowing options work best for your circumstances, what kind of cashflow you have, or how a spouse’s cashflow can be leveraged to manage payments and other expenses or obligations you may have. We help students with payment deferrals and repayment plans so that they’re prepared and can make payments on time when they kick in. This is also when we want to start establishing good saving, budgeting and spending habits, because once med students become resident physicians and start to earn their resident salary, we want to empower them with the knowledge to use those extra funds wisely.

Once physicians start earning a steady income during residency, this is when we might begin to shift the focus of their plan. From residency through the first five years of practice, the focus is going to be on re-evaluating debt. This is because residency and transition to fellowship or practice are often when new debt and expenses are added to what they’ve already accumulated. So, this is where we would look at the household-level debt and figure out what their best plan of action for repayment is based on their income and other factors like a partner or spouse’s income. The answer might be consolidation or loan forgiveness programs, as examples, but there are various options. We also want to consider debt repayment alongside any other goals they may have, like buying a home, or starting a family.

Then, after they’ve established themselves a little bit, they’re still in their early to mid-career, this is when they’re going to see that shift in cashflow, since debt repayment is well underway and  even if they’re not paid off entirely, they’re ready to start contributing more to their savings and investments for goals like --you guessed it -- retirement.

This leads to more decisions that need to be made around which investment strategies to employ. Should they use an RRSP, a TFSA or a non-registered investment portfolio? This might also be a good time to think about incorporating their practice, which comes with some additional expenses and complexities, but adds even more investment options and tax saving strategies that most professionals don’t have access to. Incorporation can also be beneficial for spouses, who can become employee shareholders of a physician’s corporation. All of these have tax and cashflow ramifications that need to be considered. It’s our job at MD to develop the right strategies to help physicians and their families achieve their goals

So, yes, the retirement timeline for physicians is unique, and it also needs to be much more strategic. Especially because we want physicians and their family members to be able to live fulfilling lives beyond their careers. Their sense of financial security shouldn’t come at the cost of other goals; like buying a home, starting a family, going on vacations and enjoying retirement on their terms.

PA: Absolutely, and it’s clear that that’s why MD advisors don’t just work with the physicians , but with their families as well.

SF: Yes. Exactly. Your financial situation as a physician is undoubtably going to impact your immediate and extended family dynamic in a variety of ways, so planning as a family and making sure everyone is empowered, informed and on the same page is critical.

PA: So, what are some of the different ways that MD can help families plan together?

SF: Oh, there are so many!

We help parents prepare for the cost of med school for their children, which can be tricky because while every parent does their best to save for their children’s education, there are always things that can set them back. And not every parent expects their child to want to be a doctor, so they may need help adapting their savings plan. Plus, maybe they have more than one child, so their savings need to

We also help physicians plan with their partner or spouse.  We often see that during med school and residency, a non-physician spouse is the primary earner, so not only are they responsible for the majority of the household expenses, but also any savings that they can manage during this time. AAs a physician  transitions to practice and their income increases, ,if goals or priorities need to be rearranged, MD advisors have the experience to be the partner who can help with all the complexities associated with cashflow changes.

For example, in the case where one spouse is the other’s employee at their practice, this creates tax saving opportunities through strategies like income splitting.

Or maybe both partners are physicians. In this case, finances may be even tighter during study and training when they both have high debt and are earning limited income. However, they will eventually have two physician incomes to put toward their goals.

Whatever the dynamic between a physician and their spouse, we can help them with shared goals, like saving for their children’s education, qualifying for a mortgage and preparing an estate plan to ensure loved ones are taken care of and to be in control of the legacy they leave behind.

What it comes down to is this: as a physician you are dedicating your life to helping others. Helping physicians and their family members achieve financial well-being is the only focus we have at MD. I firmly believe it’s a worthy focus. There’s nothing more important than taking meaningful care of the individuals who spend their life’s work looking after the health and well-being of Canadians.

PA: That’s amazing. And I’m sure knowing that you have an advisor that is looking out for everyone in your household brings peace of mind to physicians, and helps boost their confidence in being able to live their life the way they envision.

SF: Exactly and, like I said earlier, that’s our whole goal with this podcast series. Information is power. The more you know about your finances, the more likely you are to successfully achieve your goals. We want physicians and their families to be confident in their financial decisions and feel in control of their finances. We understand that the medical journey impacts the physicians and their families emotionally, logistically and practically. With an MD advisor, they can feel confident that the financial implications are well taken care of so they can focus on those other aspects of their lives.

PA: Right. Because talking about finances can be confusing and overwhelming for anyone.

Now, we’ve already touched on some of the topics that will be covered in some of our future episodes. But do you want to give our listeners a little more of a glimpse into what they can expect from the podcast.

SF: Yes, of course -- I’d love to. So, we mentioned planning as a family, we talked a bit about why planning is important and what goes into a financial plan.

But we’re going to also go more in depth into strategies for funding education and managing and repaying debt. We’re going to talk about how to prepare for buying a home, funding retirement, and how to create an estate plan. And as I mentioned very briefly earlier, tax and incorporating play a very big role in a physician’s finances so we’re going to talk about the benefits and advantages involved in both those areas.

And probably most exciting, we’ve got some awesome guests lined up to host these episodes and experts in each field to provide top-level insight.

PA: Well, it sounds like there is a lot to look forward to here on The Financial Literacy Podcast. But, before we wrap up for today, do you have any final advice or encouragement for our listeners?

SF: Sure. I just want to reassure you that we’re not expecting you to be experts in your own finances at the end of this, so if you have questions or want to learn more about anything after listening to an episode, that’s totally normal. In fact – we hope you do have more questions and want to dive deeper into learning about your finances.  Most importantly, we want you to know where to turn to for the advice and information you are missing. When it comes to your financial success as a physician or a family member of a physician, we hope you’ll find a partner in your MD advisor.

PA: Fantastic. Well, Samantha, thank you again so much for joining us today. It’s been great getting to hear about your passion for Canada’s physicians and their families.

SF: You’re welcome. This has been so much fun. And best of luck to our listeners on their physician journey, whether it’s as the physician or as a family member, we’ll be here to help you along the way.

PA: Yes, and a very big thank you to our listeners for tuning in. We hope that this episode has gotten you excited for everything to come. Once again, my name is Pamela Allen and it has been my pleasure being your host. We hope you’ll tune in to next week’s episode where we’ll dive into “Funding education”. Bye everyone.

This has been The Financial Literacy Podcast brought to you by MD Financial Management.

For more information or to speak to an advisor today, visit our website at md.ca

The information contained in this podcast is not intended to offer foreign or domestic taxation, legal, accounting, or similar professional advice, nor is it intended to replace the advice of independent tax, accounting or legal professionals. Incorporation guidance is limited to asset allocation and integrating corporate entities into financial plans and wealth strategies. Any tax-related information is applicable to Canadian residents only and is in accordance with current Canadian tax law including judicial and administrative interpretation. The information and strategies presented here may not be suitable for U.S. persons (citizens, residents, or green card holders) or non-residents of Canada, or for situations involving such individuals. Employees of the MD Group of Companies are not authorized to make any determination of a client’s U.S. status or tax filing obligations, whether foreign or domestic. The MDxO® service provides financial products and guidance to clients, delivered through the MD Group of Companies (MD Financial Management Inc., MD Management Limited, MD Private Trust Company, MD Life Insurance Company, and MD Insurance Agency Limited). For a detailed list of these companies, visit md.ca. MD Financial Management (MD Financial/MD) provides financial products and services, the MD Family of Funds and investment counselling services through the MD Group of Companies.

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