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Doctor: How Many Lives Have You Saved (Lately)?

| March 20, 2013
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Physicians are held to a duty of care that holds them accountable for risks that the physician is aware of that may affect their patient.  As a physician financial planner I am aware of a multitude of financial risks that could affect my physician clients.  Patients and clients however are often aware of these many risks and likewise perceive a medical or financial recommendation differently than the professional.

Protecting Against Unknown Risks:  Physicians and Financial Advisors

In my financial advisory practice I am sometimes second guessed by a client.  This can be expected, especially in light of the fact of the barrage of constant conflicting advice from media, friends, family, and self-proclaimed "experts."  In many cases of being second guessed, I find the client's alternative to be loaded with much more risk than the path we have together initially decided on.  A case in point:

Last Year I received a phone call from a client that was concerned about the return of the portfolio I was managing for him.  The returns were in the single digits, commensurate with a diversified 60/40 stock/bond portfolio.  We had determined the risk the client was willing to assume in one of our initial meeting.  We both agreed that a 100% stock portfolio was too risky for him, in part from a presentation of back-test data going back 70 years showing that a 30% - 40% annual drop in prices occurs enough times in the past to warrant concern and was beyond the client's comfort level.  This previous meeting was forgotten unfortunately on the phone call, as the client pointed out to me that he has been tracking my managed portfolio with one he has created, comprised of "four or five" stocks, with one of the stocks being Apple, Inc (AAPL).  His portfolio was producing high double digit returns.  I pointed out that it would be malpractice for me to manage his several hundred thousand dollar portfolio using only a handful of stocks, as the risk of such a portfolio includes not just systematic risk (market risk in general) but high unsystematic risk (company or industry specific risk, easily mitigated with diversification).  After a discussion of risk the client agreed to sit tight.  Since then, Apple stock has dropped from its September 2012 high of over $700 by almost 40%.  Having that occur to a substantial part of one's portfolio, especially in a rising overall market, can sting.

How a Doctor Saved My Life Last Week (in spit of my negligence)

Doctor, how do you feel when you hear those words uttered by the patient after you pronounce your diagnosis:  "I would like a second opinion"?

How often is your dutiful care and recommendations disregarded by a patient that knows better?  Too often I'm sure.  Perhaps you may at times be perceived by a patient being too cautious, or performing "unnecessary" care.  I have a confession to make regarding this last one.  Last week I underwent my first colonoscopy at age 52.  I was delinquent by 2 years but gave in to my wife and the many billboards on I-15 between Salt Lake City and Provo telling me I needed to get one.  The colonoscopy consortium is alive and well in metro Salt Lake!  I assured a coworker before the procedure that the day would be a "write off" because nothing would be found and that I was perfectly healthy, but I needed to succumb to the external pressures and just this thing.  In the recovery room Dr. Brett Doxey, MD, the gastroenterologist that performed the procedure informed me he removed 6 polyps, with two of them being quite large.

Imagine that?  I was shocked.  I am in perfect health.  Even the nurse taking my pre-op blood pressure was impressed with the low readings.  But my reluctant adherence of some pretty common medical advice won the day.  In fact, Dr. Doxey told me that if I had waited a few years this ugly polyp had a decent chance of becoming cancerous.  Thank you doctor for possibly saving my life!

Preventative Medicine Save

As a physician you will never really know how many lives you save.  Like sounds medical advice, proper financial planning and portfolio management minimizes risk.  Patients and clients do not always understand these risks and do not always appreciate us until that "waste of time" procedure or "overly cautious" asset allocation saves our bacon.  While I will never save a life, I know I have prevented a number of financial suicides over the past couple decades by practicing sound financial planning and portfolio management and recommending clients to stay the course and to ignore the static.

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