MtoM #139: Academic Pulmonologist Hits Half Million Dollar Net Worth and Finance 101: Financial Advisors

This is the White Coat Investor Podcast, Milestones to Millionaire. Celebrating stories of success along the journey to financial freedom. This Milestone to millionaire podcast number 139, academic pulmonologist, his half a million dollar net worth. If you're finding our podcast informative and helpful, we would encourage you to sign up for our monthly newsletter. It is totally free and includes useful, actionable information not available in the regular blog posts. It's almost like being in a secret club. The kind of club that can boost your knowledge and enhance your wealth at the same time, with no strings attached. Sign up today@whitecoatinvestor.com Newsletter. You can do this and the White Coat Investor can help. Welcome back to the Milestones to Millionaire podcast. We're glad you're here. This podcast is driven by you and what you want to talk about and your experiences and your challenges. We use your stories to inspire others to do the same. Then we throw in a little bit of extra information. We added that this last year or so, trying to boost basic financial literacy, but this material doesn't show up in the show notes we publish each week from the regular White Coat Investor podcast. The only way to get it is to listen to the Milestones podcast. So I hope you're enjoying that. The feedback we're getting on it is good. People like the extra information, so we're gonna continue to do that. We got a great interview today. Afterward, I'm going to talk a little bit about financial advisors and say some hard truths that if you're a financial advisor, it might not be all that fun to hear, but that if you are not and don't know how the financial services industry works, this is information you need to know. So stick around afterward. My guest today on the Milestones to Millionaire podcast is Ian. Welcome to the podcast.

Thanks. Thanks for having me.

All right, tell the audience what you do for a living, how far you are out of training, what part of the country you live in.

So I am an intensivist and I live in the Midwest and I'm about seven years post fellowship.

Seven years post fellowship. Okay, and you've hit a net worth milestone recently. Tell us what milestone you hit this year.

Yes, this year we hit in a sustainable way, a half million dollar net worth. It was up and down a little bit in 2021 or 2022, rather.

Yeah, yeah, I think most of us experienced that as well. Okay, so tell us about your net worth. What's it divided up into? Tell us about your assets to start with.

So it's about $480,000 in retirement savings, which is mostly in pre tax accounts with some smaller Roth and taxable space, and then maybe about $150,000 of.

Okay, and tell us about the liability side.

We have one car loan and I have student loans which are due to be forgiven via PSLF later this year.

That's exciting. Later this year. There's another story right there. Okay. You know, this is fascinating. In 2017, I had people coming to me going, nobody's gotten PSLF. The newspapers are reporting only 1% of people who apply for it are getting it. And I had to really push people to say, hey, no, this is like a real thing. It's really going to happen. The reason no one's getting is no one's done 10 years of payments yet. Now we're seeing all kinds of people getting it all the time. So. Awesome. Good plan. I like your student loan plan.

Thanks.

What? You know, you're in the Midwest, so it's not Bay Area prices, but what kind of house do you live in? Approximately what's it worth?

Yeah. So we bought the house for $360,000 when I was at the end of training and it's appreciated some. It's probably worth maybe half a million dollars. But it's a comfortable sized house. We have four kids, two of them share a room. But I feel like I joke with my relatives. If we had a bigger house, we'd lose one of them. So it works well for us and it doesn't stress our finances, which is really helpful.

Very cool. Allows you to build some wealth. Okay. Spouse working.

She is on hiatus. She worked up until our fourth was born and has been home full time with them and is interested in getting back into something within the next year or two.

Okay. All right, well, tell us a little bit about income over the last seven years and what you guys have been doing.

Yeah. So when I finished fellowship training, I was making maybe about 150 or 160,000 as a base because I'm in an academic center and was doing some research and my wife made maybe 90. So our income was a little over $200,000 coming out of training. And then actually during COVID because we worked a lot more in the ICU and I took on some extra work. Our income was up over $400,000 for a year or two. And now it's kind of settling in around 300.

Okay. So 200,000 to $400,000 range over that time period. Pretty typical. I mean, if I had to ask, what's a doctor income 200 to 400 is what I tell people it is.

Yeah.

Okay, so tell us how you did this. I mean, you've been steadily building wealth. It's not like some crazy story that you're worth $2 million a year out of residency or something, but you've been steadily building net worth. You're moving in the right direction, and now you've hit a significant milestone. How have you done this?

Yeah, I think slow and steady is sort of the right descriptor. We actually, we worked with a financial advisor who was an insurance salesman for a couple of years before I sort of found your material and learned that I could take more control on my own. And after doing that, we accelerated our savings rate from more like the mid to high teens to closer to 20%. And that's made a big difference in the last couple years. We've grown our net worth a lot more via just more aggressive savings.

How did you feel when you found out your financial advisor was really a salesman?

I was frustrated, but also motivated to learn how to do it by myself.

That is a great description of how I felt in 2004 when the same thing happened to me, and I was mad. I was like, ugh, I'm taking advantage of. I'm never going to let this happen again. Okay, so, savings rate, that was the first time you calculated your savings rate? It was when you fired your financial advisor?

Yeah, 2021 was the first time. I'd sort of built an Excel sheet. Now I have a nice Excel sheet where I can track everything. I'm kind of a data nerd.

Very cool. Well, you know, I mean, you work in an icu, right? But you can certainly handle a spreadsheet about your savings rate and your net worth. No doubt about it. If you can handle, you know, intensive care medicine. What. What'd you find out? You said your savings rate the first time you calculated it was, what, mid.

Mid teens, Mid teens, Mid teens.

And how'd that feel? Were you happy? You're like, oh, we're actually doing pretty good, or were you like, oh, that's all, or how'd you feel about it?

I was happy that it was more than the single digits and that, you know, things had been sort of slowly growing. But then I recognized that we had some need and opportunity to do more. We hadn't been doing backdoor Roth IRAs, and I have a 457 account at my work, which we weren't using, and now we're doing both of those things. And so almost all of the savings happens in some sort of tax protected space.

Tell me about some of the conversations you've had with your spouse about finances as you were kind of going through this financial awakening, for lack of a better term.

Yeah, I think the most useful thing is just focusing on our goals, which is, hey, it would be really nice if, when I'm in my late 50s or early 60s, I can be choosing how much and how to work. And if it's right for us as a family for me to stop working, that we're in a position for me to do that and if it's right for to keep working, that's great. And we'll just have more resources. So I think she's totally on board with a journey towards financial independence. She's not as in the weeds as I am, which is fine, but she's definitely. We're on the same page about our big picture goals for our family.

Now you picked up a little bit of a side gig. Tell us what you're doing on the side.

Yeah, so I do also ICU telemedicine from home. It's within our sort of an offshoot of my main job. And that's helped us grow our income also in the last couple years. And it's just new and different, which is fun at this point in my career.

Where are the ICUs that you're working in via telemedicine?

All over our state. So some quite far hours away.

Little tiny towns mostly or what?

Yeah, exactly. Small places.

So who's taking care of these patients during this is a night gig for you? You mentioned who's taking care of these patients during the day?

There's an ICU doc during the day and then at night we work with a non intensivist clinician at the bedside.

Okay.

So we sort of work as expert consultants.

They port you in with a video camera in the room and you can see the monitors.

We can, yeah.

And you got access to the EMR and all that. Very cool.

Exactly.

Very cool. And which job do you like better? I mean, obviously one of them's at night, so that's a big downside. But if they were both during the day, which one would you like better?

For me, I love my bedside work mostly because I have built relationships with the nurses and the respiratory therapists and all the sort of team members that we work with in the icu. And it's the people that are as motivating as the medicine for me to go into work. And the nights are hard as I've gotten a little bit older and Have a bunch of kids, it's hard to work at night.

I can definitely relate to that. Especially as they get into activities that are in the evenings or missing those or whatever. Okay, so tell us a little bit about your spending. What kind of spending do you guys do? How much do you think you spend in a typical year?

Yeah, I was trying to figure that out in advance of this podcast and I think we probably spend between 170 or $180,000 a year, including everything. I think that the biggest chunk is maybe food feeding all of our kids. And we have some unique desires for their food.

I talked to somebody yesterday. They make like six dinners every night.

Yeah, exactly. So I think we're certainly not living bare bones at all, but we also have reasonably frugal taste in our vehicles and on our vacations and things like that. And that has helped us not spend too excessively, I think.

What are you driving into the hospital?

I drive a Corolla hybrid and we have a minivan.

Is that the one with the loan on it?

Yeah. Those things are expensive.

Yeah, they add up for sure. Especially if you want a four wheel drive one, which is what people look for around here.

Yeah.

Okay, well, what advice do you have for somebody else? Let's say they're, you know, they're a couple years out of residency and they're like, I don't really know what's going on with money. I'm not sure about this advisor I've got. What advice do you have for that person?

Yeah, I think my advice is just to not be intimidated. And like you say often, you know, if you can figure out how to take care of sick people, you can figure out how to take control of your finances. And that's been really liberating for me and for our family to feel like sort of we're in control. We're not beholden to somebody else in defining our goals and how we get there. So I think you can do it is really the key.

What lessons do you plan to pass on to your kids about money?

I think just recognizing that there's always trade offs involved and if choosing to do one thing now may mean you can't do something else later. Because that's been sort of, I think, the most important piece of this, of saving now so that later we have choices in life.

What's your next big financial goal?

Well, getting the student loans forgiven, so that'll be nice. And then saving up to just pay off the car loan so that our only debt is our mortgage.

Very cool. Wouldn't surprise me if you knock both of those out before the end of the year. Yeah, very cool. Well, congratulations to you on your success. You're doing great. You should be proud of yourself. Your kids don't know it yet, but eventually they'll be proud of what you. You're doing in these years of your life. So thank you for coming on the podcast and using your experience to inspire others to do the same.

Thanks. And thanks so much for all that you do for our community. We really appreciate it.

All right. I hope you enjoyed that podcast. You know, we get so many people on here that are just absolutely crushing it. You know, people that are millionaires, two years out of residency or pay off their student loans in four months or whatever. It's nice to have a regular doc on here every now and then. That's just doing it right. That made a few mistakes, sure. But is saving money? Is investing it in some reasonable way? Is building wealth slowly but surely is serving, working hard in academics, in this case an ICU doc, and just doing it? This is what white coat investing is all about. Going to work, taking care of patients, doing the best you can, making sure your finances aren't being totally screwed up, and being able to focus on your spouse and your kids and your patients and your own wellness well, without having to worry about money. So I appreciate having what I'd call a regular milestone. I remember when we hit that milestone, it was a big deal to hit a half million dollars, one we recorded earlier. I think it actually runs later than this one was somebody who hit $250,000. I remember that milestone. It was an important milestone to us, and I'm sure it is to you as you tick them off as well. Okay, I promised you we were going to talk about financial advisors. I do not hate financial advisors, despite some of the things I've written about them and said about them. However, I use the term financial advisor differently than most of the financial services industry. Basically, you don't have to do anything to call yourself a financial advisor. The term, legally speaking, means nothing. And so a large percentage of those who call themselves financial advisors are not what you think of in your mind when you hear the term financial advisor. What they are is representatives or agents or salespeople. And what are they selling? Well, they are generally selling mutual funds, commissioned or loaded mutual funds. They are selling annuities, they are selling insurance, and they call themselves financial advisors. And maybe they even throw you a pearl or two of what could be called financial advice. But the problem is they have this huge conflict of interest, right. How are they paid? They are paid on commissions. They're paid on commissions. So when they sell you something, they get some percentage of what you use to buy it. That's fine. I have no problem with commissions. I've had staff members that I pay on commission. When they can sell an ad, they get a percentage of it. When I buy a car, I buy it from a commissioned salesperson. I don't have a problem with them earning a commission selling me the car. It's fine. But when I walk into that dealership, I don't expect that Toyota salesperson to give me unbiased advice about all cars. They can help me choose between the models of Toyotas. They can help answer questions about what's available for that model year. But I don't go to them asking should I buy a car at all, much less which car should I buy? And that's the way you should interact with salespeople. You know, you should use them for what they are good for, but not mistake them for an unbiased advice giver, which is what you're looking for when you hire a financial advisor. So the easiest way to make sure you are hiring an advice giver is only pay for advice. That means fee only, not fee based. Fee based means you're paying commissions and the fee, but fee only. And fee only means that you're paying them in one of three ways. The most common way is an asset under management fee. I'm not a huge fan of this. It's fine when you don't have that much in assets. You know, if you're paying 1% of your hundred thousand dollars invested, that's only $1,000 a year. That's a fair price for good financial advice. In fact, even if you're paying 1% on a million dollars a year, that's only $10,000 a year. That's probably a fair price too. But if you're paying 1% on $5 million, you're getting ripped off. So as your assets go up, you've gotta be negotiating lower fees with someone who charges asset under management fees or you gotta move on to a different advisor. Or even if you're getting good advice, you're just paying too much for it. A couple other ways you can pay advisors, you can pay them an annual fee, whether it's a fee for them to do financial planning and be there for you when you need them, questions or whatever throughout the year, some sort of retainer, or you're paying them flat fees for the you know to help you draft up a financial plan, or you're paying them on an hourly rate, often, which is higher than the hourly rate you charge. But that's okay, because you're paying for advice. When you don't need the advice, you're not paying more. And that's the way you hire your accountant. That's the way you hire your lawyer. That's the way you hire your doctors. Right? So why shouldn't it be the way you hire your financial advisor? It's a little harder to find people that charge flat fees, a little harder to find people that charge by an hourly rate. But the bottom line is you just need to calculate what you're paying. Is that a fair price? Am I getting good advice? Okay. But a lot of us, including me, as I mentioned on the podcast, get into a situation where we realize we have made this mistake. We have hired. We have hired a salesman. We have mistaken them for a financial advisor, and we now need to extricate ourselves from that situation. And I have got an online course called fire your financial advisor. And you can imagine that title was a big hit with our financial advisor advertisers. And we keep a list of recommended financial advisors. Real financial advisors, not salesmen. Real financial advisors. On our recommended tab, you can go to whitecoatinvestor.com recommended. You'll see all the professional services that we recommend. But you get into a situation and you're like, okay, how am I going to get out of this? This. And step one is not to make any huge change right away. Step one is to figure out what are you moving to. And that might be hiring a new advisor, a real advisor this time. And if that's what you're going to do, go do that first. Go hire them and have them extricate you from the situation. That's what you're paying them for. You might as well get some value for your fees. If the answer is, I'm going to try to do this myself, I'd recommend our fire your financial advisor course. Not because it's, like, specific to firing your advisor. In fact, the first module teaches you how to work with advisors, but because it will allow you to have a plan in place. And that's what you need, is an overall plan. Whether you put that in place with the advisor's help, whether you use our course to do it, whether you go on forums and read books and figure it out yourself, you got to have a plan. So get that plan in place before you make the changes. Otherwise you're likely to have to make changes multiple times. So that's my recommendation. If you got to move on from an advisor that maybe you shouldn't have hired in the first place, and if the advisor works for a company whose primary job is selling you insurance, for example, a company that rhymes with schmorzwestern putul, you need to do this as soon as possible. All right, that's the end of our podcast for today. I hope you're liking these podcasts. We sure enjoy making them for you. It is some work. It's mostly work for Megan, though, and we appreciate Megan, our producer. And we appreciate Wendell, who does all of our AV work. Gets it up on YouTube, gets it up on the podcast services. They sure work hard on this podcast, a lot harder than I work. They do three or four or five or six hours of work for every hour I'm doing in this. And I'm grateful for them, just like I'm grateful for you and your work. Keep your head up, shoulders back. You've got this. We'll be here to help. See you next time. The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.