Most practicing medical doctors in Canada don't feel well-educated about personal finance, and many of them report feeling "stressed" about making financial decisions regarding their priorities like meeting their present and future financial goals.
This new information came to light in a brand-new study done by MD Financial Management about medical doctors' financial literacy.
Who answered our survey
In partnership with Environics Research, we polled 411 physicians across Canada in September and November of 2019. Of those, 162 were specialists, with the balance serving as general practitioners.
The mean age of the youngest group was 37.3, and those doctors had about 3 years of experience in practice. Along gender lines, 56% were female, 42% were male and 2% preferred not to say. 1 in 5 reported being single.
For doctors in the middle cohort (6–15 years of tenure), the mean age sat at 43.9 years and doctors had about 10.8 years in practice. Slightly more women (54%) answered than men (44%). Only 2% said they were single.
And finally, our most senior respondents had a mean age of 58.9 years, with 29.4 years in practice. This time we had more male respondents (68%) than female (30%), and 6% reported being single.
We asked all respondents 13 questions to assess their financial literacy and affixed a score based on the number of correct answers. In our report, we've broken down their answers according to tenure (0–5 years, 6–15 years, 16+ years).
In this article, we'll discuss three key areas of the survey and how physicians can better position themselves to gain greater financial control.
1. Financial stresses are unique at each stage of a physician's career
Roughly 90% of respondents said future-present balance, retirement and investment performance were their top financial priorities. However, priorities shift slightly according to tenure. We found:
Doctors with 0–5 years of tenure were also focused on increasing their savings and financially protecting themselves and their families against death or illness.
Their top concerns were mortgage payments (6 in 10) and tax planning (1 in 2), followed by saving for their children's educations. imbalances in government billing and the inability to invest in their corporation to fund their retirement.
Doctors with 6–15 years of tenure had nearly identical priorities as those in the less experienced range. They differed, however, in the order of top concerns. For these physicians, tax planning was top of mind (1 in 2), while mortgage payments concerned just 3 in 10 respondents. The intervening concerns were the same as less tenured doctors.
Meanwhile, 45% of doctors with 16+ years of tenure said tax planning was a worry, while a full 23% said they had no concerns at all.
MD insight: Priorities remain more or less consistent across different tenure brackets, while concerns shift with age. Stress about financial decisions also decreases over time. Meeting with your MD Advisor early on to identify your priorities, clearly define your goals and develop an actionable plan will help reduce concerns in these and other financial planning areas.
2. Most physicians haven't received a financial education
One of the more interesting results of our study is that across the board, financial literacy is poor, with an average score of 55%. What changed was their perception of whether they'd received financial education prior to starting their careers.
Of the younger physicians, 56% said they did not receive financial education before embarking on their careers. Among the older cohorts, respondents were likelier to say they received a financial education; 60% of those with 6–15 years' tenure said they received some kind of education, while 72% of those with 16+ years of tenure said the same.
MD insight: This result is intriguing. The majority of older physicians feel as though they received a financial education, while the majority of the youngest feel they didn't. Where this is a change of perception over time, or truly a reflection of how physicians are taught about finances, the fact remains: Today's physicians feel as though they should know more about financial planning than they already do.
3. Physicians increasingly rely on advisors as they gain more experience with the market
We noticed an interesting correlation between the importance of financial advisors and how stressed respondents felt about their financial situation—namely, that it was an inverse correlation.
The least-tenured doctors felt more stressed than their more tenured counterparts; they also trusted their peers more and financial advisors less when it came to financial advice. In the most senior cohort (16+ years of tenure), 68% of respondents said they relied on advisors to make most decisions regarding their investments and financial planning. Meanwhile, only 35% of these senior physicians said they felt stressed about making financial decisions.
"They seek out advice from advisors and have developed trust in them due to the many financial planning needs and market cycles they have been through together. They see the value of working with an advisor," says Mary Ruddock, Wealth Planning and Strategy Lead at MD.
The answers from physicians in between (6–15 years of tenure) were a mix of those given by the youngest and the eldest. For instance, 6 in 10 reported feeling both confident and stressed about their financial decisions, while 53% relied on financial advisors.
MD insight: Financial planning is deeply personal. Peer recommendations can help young physicians make sense of the financial world, but ultimately they don't always help when it comes down to making decisions.
The inverse correlation between stress and tenure length hints at a trend of confidence growing with age and experience. As well, more tenured doctors have the added bonus of having witnessed many market upswings and downturns, meaning they may be less stressed by market volatility—and may even work with an advisor to use downturns to their financial advantage.
How an advisor can help
Working with an MD Advisor* can help attenuate the concerns of physicians across all levels of experience. They can lend guidance and confidence to younger doctors who may not yet have their financial footing, while helping more tenured doctors understand how to deftly manage always-changing market conditions and work them to their advantage.
An MD Advisor can look holistically at your expenses, savings and dreams and help you to make the most of your finances. All that's left for you to do is enjoy the ride.
For the full report on medical resident and practising physician financial literacy, check out the MD Physician Financial Literacy Study.
Source: Environics Research (2019) MD Physician Financial Literacy Study
* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.