Physicians as Investors


 It takes years, and in some cases a decade or more, to become a licensed and degreed physician in the United States. The cost of the education involved can be measured both in actual money as well as in time.

That dedication to the education necessary to perform the functions of a physician pay off monetarily over time. Doctors make good money doing what they trained to do.

Doctors are a unique subset of affluent investors because of their educational background and their eventual net worth. Advisors advertise in journals and magazines doctors read or on websites doctors peruse in order to attract them as investor clients.

Spectrem’s qualitative and quantitative Professional Series looks at doctors as investors and compares them to affluent investors in other professions to determine just what advisors are working with when they contract with physicians.

“Our Professional Series goes to the heart of the matter regarding investors from particular occupations,’’ said Spectrem president George H. Walper Jr. “We often compare all Professionals – doctors, dentists, lawyers and accountants – to investors in other occupations, but this series is the first look at the specific occupations encompassed in the Professionals category. Doctors are likely to be among the wealthiest investors, and at the same time are likely to be the most careful in their investment strategies.”

“Careful’’ is one way to look at it. Physicians obviously need to take care in both diagnosis and administration of care, and treat their investments in much the same way.

According to the Doctors study, 79 percent use a professional advisor, and that is far above the percentage of all investors. For instance, Spectrem research shows that only 64 percent of Millionaires with a net worth between 41 million and $5 million use advisors, and only 69 percent of Ultra High Net Worth investors with a net worth between $5 million and $25 million do so.

They use advisors, but they may not always hold them in the highest regard.

“I am very knowledgeable about orthopedic surgery,’’ one doctor said in the report. “They are experts at what they do and that’s why I let them run the accounts and make suggestions and track things. That is my expectation of my advisor.”

On the other hand, “They were not as knowledgeable in their area of expertise as I am in mine,’’ another doctor said. “I have much greater training.”

Where doctors differ from investors in other occupations from an investment strategy standpoint is that they are likely not going to be as involved in investing as much as others. Asked why they hired a financial advisor, one doctor said time made it necessary.

“I have a lack of time or knowledge to manage my own accounts,’’ one doctor said. “I need to diversify, which I don’t really know how to do, and need help to reach my goals.”

Doctors are on average less satisfied with their advisor than are investors in other professions. In terms of performance as an investment manager, only 61 percent of Doctors are satisfied, compared to 68 percent of investors from other occupations. In terms of an advisor’s knowledge and expertise, only 69 percent of Doctors approve compared to 78 percent of investors from other occupations.

Doctors favor Independent Financial Planners as their advisor more so than do investors in other occupations (27 percent to 15 percent). They are far less likely to use an Investment Manager (3 percent to 11 percent).

Top Takeaways for Advisors

Physicians could be both lucrative and challenging as clients. They are likely to be extremely affluent or wealthy, and due to their time constraints they are likely to benefit from having someone else handle their finances. Although they are well-educated, they may not be so knowledgeable about the ins-and-outs of investing, and could use some professional assistance, which they would likely appreciate if delivered in a professional manner.


©2017 Spectrem Group