Many accomplished professions utilize lawyers to negotiate the terms of their contract in order to create a solid foundation for the partnership between the employer and employee. While lawyers specialize in the legal language of contracts and are undeniably an invaluable tool, it is vitally important to also consider including a financial advisor on your team during contract discussions.
Many doctors have to balance paying off incredible sums of student loan debt, which makes additional expenses stressful—even with a high income. Despite the burden of these loans which often cause physicians to hesitate on spending more money, there are some expenses that are worth it. One of the first mistakes new doctors make when entering into a contract is not paying to consult industry professionals like attorneys and financial advisors.
Physicians need to maximize the return on their hard work and the best way to do that is to invest in a financial advisor. Anyone with a medical degree has already invested in themselves and their education—they only need to extend this perspective to further invest in a financial advisor. The average cost of a financial advisor ranges from 0.50% to 1% of the portfolio they manage.
Hiring a financial advisor to consult on a physician’s contract is an initial investment that will pay off in the long run, with their ability to find ways to get more income or benefits that would have otherwise been left on the table.
Financial advisors can also guide doctors who are not self-employed to ask for benefits they would not have known to ask for that might even be write-offs for their employer. Knowledgeable advisors will ensure that a comprehensive contract ideally covers health insurance for the physician as well as their dependents which is not always the case. They can also assist negotiations with employers to help cover licensing fees, student loans, professional liability insurance, gym memberships, or continuing education involved in maintaining a medical license that can all add up quickly.
There are many new nuances to navigate as a result of COVID-19, driving a change in demand for certain healthcare services. There have been waivers extended by the government that determine fair market value compensation during the pandemic and will affect how much doctors are allowed to make in their contracts.
This kind of specialized knowledge and being up-to-date in the industry—even during a pandemic—is part of the job for financial advisors which is something that doctors simply cannot replicate with their demanding responsibilities. Residents are expected to work 80 hour weeks only to reduce to 60 hours on average once their training is complete which still does not leave time to do their own research the way a financial advisor would be able to do.
Additional terms to consider include allowing physicians to negotiate a higher rate of compensation for performing work outside of their typical job description and even hazard pay for working with COVID-19 patients. There are too many doctors now wishing their contracts that depended on productivity had some form of protective clause to cover drastic changes in volume causing unexpected pay cuts. Now it is even more important to consider contractual exit clauses that offer job protection or some form of a severance package that can cover expenses until the next prospect is lined up.
The Spectrem Group is a market research firm that determined that doctors are the most likely group to use a professional advisor, even compared to millionaires with a higher net-worth. The survey revealed that 79% of physicians utilize financial advisors compared to only 64% of millionaires. This merely proves how much more complicated the nature of physician contracts can be since finance negotiations are dealing with intangibles like malpractice insurance for peace of mind or vacation time off which affects quality of life.
Ultimately, it just makes sense to defer handling finances of this magnitude to a specialist. Hiring a financial advisor for contract negotiations will free up doctors to do their jobs to the best of their ability because they simply cannot afford not to—neither can their patients who depend on them. Likewise, physicians need a financial advisor they can depend on to make the same kinds of commitment to their guarding their assets.
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