MD Financial Management advisor explains the stresses physicians face, explains how he helps them navigate
Almost half of all physicians in Canada experience burnout, according to a study of physicians’ health by the Canadian Medical Association. 21 per cent experience anxiety. 46 per cent say their mental health is worse than it was before the pandemic. While the causes of that burnout are myriad, one financial management firm is calling attention to a less-discussed contributor to physicians’ stress and mental strife: financial worry.
MD Financial Management is emphasizing the challenges many physicians face in Canada as they’re thrust into the dual role of caregiver and business owner. Issues like debt, lifestyle creep, and delayed gratification can all contribute to the stress doctors are feeling. For advisors looking to serve this client segment, a view to managing the financial factors in burnout could prove beneficial.
“Physicians are inn a very stressful environment at work, whether it be their clinic or the hospital or any kind of environment. And then from a financial perspective a lot of physicians are running their own business,” says Joe Doria, Senior Financial Consultant at MD Financial Management. “Maybe they’ve got staff and they’ve got offices and they’ve got expenses and they’ve got that side of it. And then they’ve got the money that they’re trying to invest to save for the future and their goals and their retirement. And that can be stressful for anybody.
“I always so that my clients went to medical school to care for their patients, and all of a sudden they’re running a business.”
Doria notes that there are still deep education gaps that doctors face, especially as they make the transition from residency into practice. Single payer healthcare functionally turns physicians into private contractors, responsible for cost management, revenue, and growth. They have to deal with big picture questions early in their careers, like whether they want to incorporate and how to time that decision. They often come out of residency with significant debt and few concrete plans to pay that down. They also see a significant earnings jump from residency to staff physician roles, which can result in lifestyle creep as expenses rapidly rise to match new earnings.
For Doria and MD, the approach begins with education. He explains that his firm regularly tries to reach medical students and residents to educate them about personal finance, debt management, and the impact of decisions like incorporation. He notes that most physicians finish residency at around the age where they will be buying a first home, getting married, or starting a family. Life can come at them fast, so giving them a grounding before they get to the end of their medical education can be helpful.
As part of that conversation, Doria will talk to clients about insurance. Critical illness insurance, he explains, can help protect a new physician’s most valuable asset: their earning potential. Telling a resident earning $65,000 per year before tax that they should buy a policy that costs $300 per month may be startling for them, but showing that in the context of what they’ll be billing as a staff physician can help demonstrate the value of these policies relative to the new financial reality these doctors will be walking into.
That sudden jump in earnings has been noted as a major risk for physicians. After grinding away on moderate wages for years, they could be tempted into a real lifestyle creep by what they’re bringing in. Doria’s experience has been that, despite these temptations, physicians are open to guidance around budgeting and spending, so long as it aligns with their priorities. Living within their means is easy enough of a strategy to recommend, so long as it’s pointed at a goal like paying down debt, saving for a house, or financing retirement.
To determine what his clients goals are, Doria likes to go deeper, finding out about their emotional relationship with money. Some clients, he notes, may be so stressed out by debt that even a small, affordable mortgage is something that keeps them awake at night. He will work with those clients to more aggressively pay down that debt before they move on to other goals. By addressing the emotional side of finance, Doria believes that advisors can help keep physician burnout at bay.
“It all goes back to the financial plan as a living, working document that says, here’s where we are today, here’s where you want to go, and here’s what the next 30 years can look like in terms of how much you need to save, where you need to save, what your goals are,” Doria says. “That could be wanting to help your kids buy a home when they’re 27 and wanting to give them $100,000, so you have to put that in the plan. And I think when you can quantify a goal for them and actually visually show them that if you do these things that we’ve agreed are reasonable, here’s the benefit of it they can gain so much clarity.”
