Financial Advisors for Doctors (Physicians)

Doctors, as just about anyone in the medical field will tell you, aren’t always great with money. They can be brilliant with the human body and empathetic in their bedside manner. They can be relentlessly clever when it comes to stitching us up and making us well. But as with many high-earning professions, the broke doctor is also an unfortunately common cliché. Fortunately, whether you’re in medical school or have already entered practice, a financial advisor can help you manage your finances so that you feel as successful as you are.

Financial Whiplash

This is the most common source of financial problems for doctors. Once they enter practice, many young doctors begin spending money as fast as they can make it.

In some senses, starting practice can feel like winning the lottery. Almost overnight you transform from a broke student to an attending physician earning hundreds of thousands of dollars. This sense of financial whiplash is an experience common to many high-earning professions such as medicine, law and banking, and the reaction is common too. Young professionals go out and they spend that money.

This is how someone with student loans, credit card debt and an entry-level bank account buys a Tesla, a new house or a motorcycle. In doing so, though, you can start adding fresh debt as fast as you pay off the old. These new bills pile up, and all of a sudden you’re living paycheck to paycheck while earning $250,000.

This is so common that some payday loan operations exist only to cater to six-figure incomes. Yet a good financial advisor will know how to talk to you about this. In particular, they will know how to help you strike a good balance between enjoying your success without cannibalizing your future.

Medical School Debt

The average medical school debt for a new doctor in the last year was $202,453. Most graduates pile on five figures of additional debt getting through their residency and internship, which is to say nothing of the median $27,000 of undergraduate debt those new doctors carry.

Since the federal government only gives favorable, subsidized interest rates to undergraduates, this is all relatively high-interest debt. Generally, medical school graduates have interest rates between 5% and 7%. That would be bad enough for any loan, but when you apply a 7% compound interest on more than $200,000 in debt it can define your entire financial life.

So it is absolutely critical to get a handle on medical debt fast. Doctors, and especially young doctors, need a financial advisor who can help them make a plan to get out of debt as quickly as possible. It will save you hundreds of thousands of dollars in the long run.

Business Expenses and Taxes

Financial Advisors for Doctors (Physicians)

As a doctor, your business expenses will depend on your status, the type of practice you create and where you live. Cutting expenses where you can will help your business get off the ground. Most doctors fall into one of three categories:

Employee

Some doctors, particularly if they work for a large hospital or practice group, will work as W-2 employees of the organization. Their relationship with their employer and their business expenses is much the same as any other professional, which means that you can expect your employer to pay for costs such as medical malpractice insurance, licensing fees and any related taxes.

For doctors, this is a relatively uncommon arrangement. While it limits your freedom to practice with different organizations, it does make your financial life easier.

Independent Contractor

Many, if not most, doctors who work with hospitals and large practice groups are technically employed as independent contractors. This makes life somewhat more complicated when it comes to both your income and your expenses. On the income side, depending on the organization your pay may depend on your patient intake. This is entirely institution-by-institution, meaning that any given hospital and practice group will have different pay structures for their doctors. However, any pay structure built around intake or billing means that your income can fluctuate month-to-month.

On the expense side, working as an independent contractor means that you’re responsible for your own expenses. This generally won’t apply to supplies, support staff and equipment. However, you will have to pay for costs like medical malpractice insurance, licensing fees and necessary travel. These costs can be considerable, with one insurance company placing medical malpractice premiums alone between $6,000 and $35,000 per year.

A good financial advisor will help you manage all of this. They will build a financial plan around the erratic income that intake-based pay can generate and will help you set aside money for your costs of practice. Ideally, they will help you plan out your medical malpractice needs as well, finding plans that balance protection against potentially high premiums. They should even help you find any possible tax breaks that come with paying for your own costs, which can mean considerable savings depending on your circumstances.

Practice Owner

Fewer and fewer doctors enter private practice these days. This is generally considered a byproduct of the specialty movement. Most young physicians become specialists, which have the highest earning potential, rather than general or family practitioners and specialists tend to work with hospitals and practice groups. Whether you’re a general practitioner or a specialist, many doctors still become partners in their own practice. If you do this it is critical to find a good financial advisor.

Opening your own practice or buying into an existing one means that you now own, or more likely co-own, a small business. The purpose of the business is to give you a space in which to practice medicine, but in many respects, this is no different from opening a store or a restaurant. Your income will be defined by how the practice’s business does, which can mean significant fluctuations from month to month.

Your income will also be defined by the practice’s costs. The business will pay its expenses before it pays you and your partners, so you don’t see a dime until rent, staff salaries, malpractice insurance and every other bill has been paid. From a financial planning standpoint, the good news is that you have fewer costs to personally manage than as an independent contractor.

How Can Doctors Find a Good Advisor?

Doctors typically find financial advisors through a combination of referrals, professional networks, and targeted research. Given their busy schedules and specialized financial needs, many doctors prefer recommendations from colleagues, trusted friends, or professional associations that cater specifically to medical professionals. Professional organizations, such as the American Medical Association (AMA) or specialty groups, sometimes maintain a list of vetted advisors who understand the unique financial landscape for healthcare providers, including high student debt, fluctuating income during training years and tax complexities.

Doctors may also attend medical conferences or financial planning seminars where advisors experienced in healthcare finance often present. Additionally, some turn to independent research, reading online reviews and consulting resources like the National Association of Personal Financial Advisors (NAPFA) or the Certified Financial Planner™ (CFP®) Board to identify credentialed, fee-only advisors. In some cases, larger hospitals or healthcare networks offer in-house financial counseling or maintain partnerships with advisory firms, which can provide a convenient option tailored to their specific employment circumstances.

Bottom Line

Doctors face unique challenges when it comes to managing their money, from spending challenges in their early years to buying their practice. The right financial advisor can help you navigate those issues, but they can also help protect your business finances while making sure you plan for the future.

Tips on Financial Advising

A financial advisor can help you handle finances with your business in the most efficient way. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Doctors who own their own firms should consider tax planning strategies for their small businesses.