WCI #37: Introducing the WCI Online Course: Fire Your Financial Advisor

This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dahli.

Welcome to podcast number 37. Introducing the online course Getting Quality Disability.

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The day today comes from Daniel Crosby, who said you can realistically afford half the home the mortgage broker approves you for. I think that's probably about right. On average, if you want to build any kind of wealth, you can't spend all your money on housing. In today's podcast, I wanted to talk a little bit about the online course that we just released three days ago and which for the next week is being offered at a 20% discount or $100 off its $499 price. Don't procrastinate it or you'll be paying a little bit more. Of course, it's still a bargain, even at its regular price. Now you don't have to complete the course in the next week. All you got to do is buy it in the next week to get the discount. But we're calling this course Fire your Financial Advisor Now. I interact with thousands of White Coat investors every year and I try to offer something for everyone, no matter what their level of financial knowledge or discipline, motivation or resources might be. For example, some people are true hobbyists. These folks read every blog post I write. They email me corrections when I screw something up. They read a dozen other financial blogs. They actually enjoy reading financial books. They leave comments on most of the posts they read, and they probably spend more time helping others on the WCI forum than they do learning themselves. There are other people who can just read a book or two, skim around the website for interesting topics and and everything seems to click. They figure out a simple plan relatively easily and put it into place. They might not love this stuff, but they know it's important and they become competent. Do it yourself investors. Toward the other end of the spectrum, we have people who want a financial advisor, either locally or maybe somebody they can work with via Skype or email or phone. They occasionally come by the site to double check the information they're being given and make sure they're paying a fair price. They really don't want to read any books or follow blogs for that matter. They, they just don't want to get ripped off. However, between those last two groups of people is a huge swath of physicians and other high income professionals. I meet them all the time when I'm out speaking, they send me emails. Sometimes they get around to posting a question on the forum or the blog. When they find out how much financial advice costs, they want to become do it yourselfers, but they don't have the knowledge or the confidence to do so. However, they get overwhelmed when they're given a list of a dozen books to read or when they realize there's 1100 blog posts on the white coat investor. I spent the last year trying to figure out the best way to help these doctors. My first attempt at it was the WCI Financial Boot Camp. This was a 12 step or 12 email course that eventually will be compiled into a short book. I really tried to cut out any fluff and make it as short and high yield as possible. It's really for the person who wants to be told exactly what to do as quickly as possible. The price on it is right, it's totally free via email, and the book's not going to cost much. But I realized this just wasn't going to cut it. For most of the people in the group I'm trying to reach, they need that course that they weren't given in medical school. And they need it to be a real course with real lectures and real exams to test their knowledge and with real assignments. They need someone to show them what to do step by step. So we came up with fire your financial advisor. We bought a professional quality camera, professional quality lights, a mixer, microphones, professional software, and we learned how to use it all. Katie and I then spent literally two months of our lives putting this course together for you. So a little bit of introductory information about it. I mean, I understand that name's a little bit provocative, right? Fire your financial advisor. That's partially deliberate just to get you in here so you actually learn this stuff because no matter how you choose to use a financial advisor in the future, this course is going to help you to do it. If you want to be your own financial planner or investment manager, you're going to have the knowledge, skills and confidence to do that by the time you finish the course. If you still want to check in with an advisor from time to time, I'm going to teach you how to do that effectively, both cost effectively and time efficiently. But even if you still want to use a full service financial advisor, then this course is still going to be very useful to you. It will help you to negotiate a fair price for that advice, and more importantly, it will help you know how to discern and even improve the quality of advice you're receiving. And as most advisors will tell you, the more engaged you are in the process, the more that advisor can and will do for you. Honestly, you're probably not all that different than I was a few years ago. I wasn't really interested in business, finance or investing. I was just interested in science and medicine in particular. But I had a few dreams in my life that required money and I really hated feeling like I was wasting it or that I was being taken advantage of. So I spent years and years compiling all this information from dozens of financial books, websites, blogs and Internet forums until I knew enough that I could write, implement, and follow my own financial plan. My goal with the course is to cut years off your learning curve so you don't have to do what I did. I'm going to give you the high yield information you need, nothing more in order to be financially successful. As a high income professional, I'm going to show you trustworthy resources that can help you. But you're not going to have to necessarily become an investing hobbyist like I have, because I know you have important things to do and this isn't super fun for you. And that's okay. Once you have a plan in place, you're only going to have to spend a few hours a year maintaining it. Now, the course is the most expensive thing we've ever sold here at the White Coat Investor. I mean, we generally don't sell much at all. We've given stuff away. The blog's free, the newsletter's totally free. This podcast, as you may have noticed, is totally free. Even the book's free if you go get it at the library. 10 bucks on Kindle, 20 bucks for the print book, but basically for a doctor, that's free too. But we're actually charging for this course. I know it's expensive and we're charging 500 bucks. You know, if you get it in the discount period, it's only 400, but otherwise it's 499 or 500 bucks. And I'm not going to apologize that for a couple of reasons. One, because I spent two months of my life on it. My wife spent two months of her life on it. But number two, because I think paying for it is going to do a couple of things for you. One, you are going to pay more attention to it. You will invest the time in it because you invested the money in it. And so I think it's important to actually have you make a commitment, both with your time and your dollars to learning this stuff so that you can become successful. And number two, this is an incredible value. I mean, imagine sitting down for eight hours with a financial advisor at 250 bucks an hour. That's two grand. If you go to a financial advisor and you ask them to draw up a financial plan for you, that's going to cost you two or $3,000. And that's assuming you're getting a good price on it. And in the end, you're still not going to know how to do it yourself. You'll just have that financial plan. At the end of this course, not only will you have the financial plan, but you'll know how to do it yourself. You'll know how to change it as needed. You'll know how to help other people with it as needed. And in reality, this information is found elsewhere. It's found somewhere in the 1200 posts on the White Coat Investor blog. It's found out there in dozens of financial books. You can get it from Internet forums. You're not paying for the information. What you're paying for is the convenience of having all of it distilled down to its most essential elements, put together in one place and spoon fed to you as efficiently as possible. You're paying for a financial plan that would cost you thousands of the ability to implement it yourself, which likely will save you hundreds of thousands or even millions over the rest of your life. I knew that if I didn't charge enough for this, you just wouldn't take as seriously as you would if you had to make a commitment. As a high income professional. When it comes to financial success, you've already done 90% of the work. By spending over a decade in school and training to learn your craft and ensure you have a high income. This course is going to teach you how to do the last 10% using a football analogy, it's first in goal from the three yard line and all you've got to do is run the ball across the goal line. This course is your all star running back. It's jam packed full of information that wasn't given to you in medical school, dental school, law school, penn school, or pharmacy school. It's far easier to learn than those fields are. But if you don't learn it, there's pretty serious financial consequences. Your success isn't going to be automatic. So what's in the course? Well, first you take a pre test and you know, honestly, I expect you to fail it miserably. I think most people taking this course are going to fail it miserably and that's fine. By the time you get to the end of the course, those questions I asked you in the pretest are going to seem really, really easy. So don't give up after the pretest. But then after the pretest, there's 12 sections, each of which covers a subject that's really critical to your financial success. Most of these are around 30 minutes. There's one that's quite a bit longer, but it contains some darn important information, so I thought we had to include it. And each of those includes videos, screencasts and written material. And then there's a quiz at the end of each of these and explanations for the quiz questions. And if you miss any of them, or even if you just want more information about that topic, I encourage you to read the explanations. And then at the end of most of the sections, teach you how to write a portion of your financial plan. And then by the end, you're going to have a written financial plan that you can follow to invest in success for the rest of your life. So here's the deal, right? I can't force you to do every single little part of the course. If you just want to watch a few videos, you can do that. If you just want to take the tests, you can do that. If you just want to look at the examples of financial plans that are included in it, you can do that. But if you do it all, by the time you get to the end, not only are you going to be financially literate, but you're going to have the confidence you need to follow that plan. So let's talk a little bit about each of the different sections in the plan. There are 12 different sections or modules. The first one contains a lot of introductory material. It talks about what the course is going to teach you, describes the course, tells you a little bit about me and specifically talks about a plan and why it is so important to have a written plan order to be successful as an investor. In fact, the answer to about 50% of the questions I get by email or on comments on the blog is what does your plan say? And the truth is most people don't have a plan and that's why most people aren't financially successful. I also go through a comprehensive way of looking at the White Coat Investor website and I go through and show you where the resources are and the things that you need to know in order to find information on that website and find the material you need to help yourself. In the second module I talk all about financial advisors, both the good and the bad. I'll teach you about what a financial advisor can do for you. Talk about how much advice costs, the different ways of paying for advice, how to find an advisor, how to use an advisor, and a discussion about whether you need one or whether you can do it yourself. I even teach you how to move money away from your financial advisor, which is a step that honestly keeps a lot of people from doing it themselves. They just don't know how to change to something else. So I take them through very clearly how that is done. The third section is all about insurance and we talk about insurance and what your theory should be behind insurance and why it's so important to insure against financial catastrophes but not against stupid stuff like so many of us do. We talk about disability insurance and life insurance, both term and permanent life insurance. I show you in a screencast literally how to buy term life insurance. We talk about liability insurance, both personal and professional and property insurance and health insurance and the importance of not mixing insurance and investments. And of course we teach you how to write the insurance portion of your written financial plan. The fourth section is all about housing. I teach you why a house is an investment and why it's a consumption item. Talk about resisting the urge to buy that doctor house right away and talk about how much you can spend, how to interact with realtors and lenders, and whether or not you should use a doctor loan. We talk about how to pay your mortgage off early and help you write the housing portion of your written financial plan. In the fifth section or module we talk about your student loans which talk about how you can minimize that burden if you're still in training, as well as how to deal with income driven repayment plans, which ones are best for you, and how to select one and sign up for one. We talk about Public Service Loan Forgiveness, which is the best forgiveness program out there and what you have to do to qualify for it. We talk about how to manage your loans during residency and after residency, and how to refinance during residency and who can you do it with? Well, as after residency. We also talk about why you should pay off your debt quickly and how to decide how much to pay toward your loans versus toward your investments. And then, of course, at the end of the section, we help you write the student loan management portion of your written financial plan. Section 6 is all about spending or budgeting. We talk about the four most important words on this website and this podcast, Living Like a Residential. Talk about that most important year of your financial life, your first year as an attending and why it's so important to hit the ground running. Talk about budgeting and cash flow planning, about minimizing your fixed expenses, how to use sinking funds to manage your budget, and some common sense on emergency funds that a lot of people just don't know how to apply. And then, of course, we help you to write the spending portion of your written plan. Modules 7, 8 and 9 really have a lot of the meat of the course in them. They're all about investing. And the largest portion of your written financial plan is going to be about investing. In Section 7, we talk about goals, about how they're going to change but you should set them anyway, and about how to set smart goals. We talk about the three enemies of the investor and how much you need to retire. We talk about your savings rate and what to expect from Social Security. We talk about college savings. And I teach you how to do financial calculations using a spreadsheet, things like future value and payment and period things that are very important for you to know if you're going to be your own financial planner. And then of course, we help you to write the goals portion of the investment portion of your written financial plan. In section 8, we talk about accounts. We start with the boring old taxable non qualified account and and teach you about the advantages of investing there and the downsides. And then we talk about your plan documents for your plans at work and the two main types of retirement accounts, tax deferred accounts and tax free accounts. We talk about 401s and 403bs and 457s and SEP IRAs and SIMPLE IRAs and SOLO 401s. We even talk about defined benefit and cash balance plans, backdoor Roth IRAs. We talk about the rules behind using multiple 401 s, health savings accounts and 529s. And then we help you write the account portion of the investing section of your written financial plan. Module 9 is our longest section. It's all about investing, about asset allocation and about implementing your investing plan. We teach you about stocks and bonds and mutual funds and options and other derivatives. We teach you about mutual funds and their fees, about the advantages of index funds. We teach about all the different asset classes. We compare a total market approach to investing to factor investing. We talk about various options for real estate investing and asset allocation. We talk about using a simple approach including funds of funds and treating all of your accounts as a separate portfolio. Then we teach you how to do it the right way to combine all of your accounts as one big account for each goal. And we talk about tax efficiency and asset location and allocating your money across the various accounts. We give various ways to rebalance and even talk a little bit about investing in retirement and how it's different in the decumulation phase versus the accumulation stage. And of course, we help you to write the asset allocation and the implementation plan of the investing section of your written financial plan. Once you're past section nine of the course, you're on the downhill slide for sure. In section 10, we talk about estate planning. We talk about its purposes. We talk about the importance of a will. We talk about avoiding probate by designating beneficiaries and using a revocable or living trust. We talk about avoiding death taxes. And this is all updated for 2018. We talk about giving money away and using irrevocable trusts and about when you should meet with your estate planning attorney. And at the end we help you to write the estate planning portion of your written financial plan. In section 11, we talk about asset protection. We talk about evaluating your risks, about how insurance is your first line of defense. We learn about your state laws. We learn about why incorporating doesn't protect you from malpractice, how you can separate toxic and non toxic assets. Then we talk about hiding assets, fraudulent transfers, family limited partnerships, LLCs and overseas trusts. And then we teach you how to write the asset protection portion of your written financial plan. The final section I call Staying the Course. We talk about market history and why it's so important to understand financial history. And we talk about the importance of staying the course and about initial and your continuing financial education. We teach you how and when to modify your plan and then give you a worksheet that you can use to write your own financial plan. We teach you how to do that after you're done with that section quiz. We even have a 50 question final exam that covers the material from the entire course and gives you the confidence to know that you actually learn this stuff as you went along and that you've become financially literate. And so this course is pretty awesome. We put a lot of work into it. We have very specific audience in mind for it. It's not the true hobbyists that we're trying to get this course for. It's not the people who don't want to learn a thing, who just want to be completely dependent on a financial advisor either. It's for the people in between. But that's an awful lot of doctors. So if this describes you get out there today, you can come through the website and you can buy fire your financial advisor. The White Coat Investor Online course Alright, enough about the online course. Let's talk a little bit about some of the questions that have been sent in by readers lately. Our first question comes in asking if it's recommended to save 20% of your salary a year toward retirement. He has a couple of questions about that. The first is what if your salary is $240,000? So that 20% would be 48,000 a year and you can put 18,000 into a 403 and 11,000 into spousal and individual backdoor Roth IRAs. Where's that additional 19,000 supposed to go? And this is actually a really common question. I get, I get this all the time and, and in fact wrote a blog post about it in December 2017. Basically the answer when you filled out all your available retirement accounts and you need to invest more is that you do it inside a taxable account and it's okay to save for retirement in a taxable or non qualified account. It's not like you don't get any tax advantages for doing that. When you sell stuff that you've owned for at least a year, you get the lower capital gains rates on any gains that you've had there. And when you get out qualified dividends from those investments, those are also taxed at a lower dividends rate. And so there are some advantages to investing in a taxable account. It's not as good as investing in retirement accounts, but once you've maxed those out, what choice do you have? You don't. And so you have to invest in a taxable account. And the second part of his question was if you're saving 20% of your salary toward retirement, does that mean that part of that 20 goes towards student loans and savings for a house down payment? Or is that an additional Savings above and beyond that. Well, the truth is it's above and beyond that. You need 20% just for retirement. Anything for college or to pay off your own student loans, or to save up for a housing down payment or a boat or a car or whatever else you're saving for is above and beyond 20%. Now that's not a hard and fast 20%, but that's the neighborhood you need to be in. You know, 15% might be fine if you start saving early or you got some other advantage like a pension or if you, you're willing to work a long time or you don't need that much money in retirement. But 5% is not adequate. It's simply too low. You've got to get up there around 20%. And that's where high income professionals need to be to have the type of retirement they want to have. Alright, our next question comes from someone asking about podcast number 12. I really enjoy your podcast and was listening to podcast number 12 and at the end I noticed you mentioned starting a business doing something like online surveys so you could Open an individual 401. So this reader noticed that although the question I was answering was about backdoor Roth IRAs, it made him wonder if it would be beneficial for him to start a business. As I do a lot of surveys online and as a consultant and make about $6,500 a year doing that all as 1099 income. This doc's an employed doc is already maxing out 403s, 457s, HSAs, 529s, investing in taxable, both in index funds and in real estate. This stock also happens to make about $18,000 a year as an independent contractor for another company and owns a little bit of a hearing center it sounds like, although that doesn't sound like it's earned income. And so the stock was basically wondering, well, is there another retirement account available to me? And yes there is. It's called an individual 401k. Even though you may have a 403 or a 457 or a 401k at your employed job, you also can open an individual 401k. Now the amount that you can put in there is dependent on how much you earn at the job. And basically if you're using your entire employee contribution at your main gig, you're only going to be able to put in about 20% of your 1099 income into the individual 401k. So if you're only making five grand, you're only going to be able to put $1,000 in there. If you're making 20 grand, you might be able to put $4,000 in there. And so the more you make at the side gig, the more you can put in there. But for some people, that's not the point of the individual 401k. The point isn't to try to get a whole bunch of money into there. The point is to give them some place to roll a big traditional IRA or SEP IRA that they may have that is preventing them from doing the backdoor Roth ira. So that gives them something they can roll that into. So say, for example, you had a $500,000 traditional IRA and you wanted to start doing the backdoor Roth IRA. Well, you wouldn't want to do that unless you got rid of that traditional IRA first, because the pro rata rule on the backdoor Roth IRA would screw you up. And so what you do is you figure out a way to open individual 401k. And you don't need much income to do that. A few hundred bucks from surveys is probably plenty. And then that allows you to be self employed and thus get, get an employer identification number from the IRS and open up that individual 401k. You put, you know, 50 bucks in there from what you earned from your surveys, but you roll that $500,000 IRA in there and now you can start doing backdoor Roth IRAs on the side. So that's what I was referring to in the previous podcast. But you know, if you make a lot of the side gig, you can shelter even more money in the individual 401k as well. All right, our third question comes from another listener who says one thing that I still haven't quite figured out is whether or not is reasonable to consider some semi necessary expenses as part of our emergency fund. And this doc and spouse have monthly payments of around $5,500 on student loans and basically want to know, does our emergency fund need to include that $5,500 a month that we, that we're paying towards student loans? Because that would be obviously a very large emergency fund, especially if you push that out to six months worth of your actual expenses. And so I think in these sorts of situations, it's important to inject a little bit of common sense into your emergency fund. Just because you're making payments of $5,500 a month doesn't mean your emergency fund needs to cover those payments. It should probably be enough to cover your required payments. And if your required payments, you know, $1,000 a month. Well, that amount probably ought to be baked into how large your emergency fund is. But if you're making all these optional payments, those don't have to be in your emergency fund. Now if you've decided to get really aggressive about paying off your student loans and you've got a five year loan, for instance, and you really are making these multi thousand dollar a month payments, maybe that's reasonable to have some of that in your emergency fund. But in a lot of ways when you look at an emergency fund, the point of it is to help you avoid going into debt. When you're already in debt, you've kind of already had the emergency. And so I think it's okay to have a little bit smaller emergency fund and be dedicating those dollars toward paying off that debt as fast as you can. It just doesn't make any sense to me for somebody to have a hundred and fifty thousand dollars, you know, student loan and be carrying $60,000 at an emergency fund, you know, knock that down, 10, $20,000 maybe and put the rest toward the student loans and help yourself get out of debt that much faster. If you listen Dave Ramsey, his recommendation is nothing more than a thousand dollar emergency fund until all your debt is paid off except your mortgage. Now I think that would probably make a lot of physician families a little bit uncomfortable to have an emergency fund that small. But that's basically the idea is you want to have a smaller emergency fund while you're trying to get rid of that debt, especially really high interest debt. And I think there's also some room for, you know, room for play there. Obviously in that sort of a situation when you have these other really great uses for your money, maybe a six month emergency fund isn't where you want to be, maybe a three month or even a two month emergency fund is where you want to be. So I think it's, you don't need to get too rigid about what an emergency fund is. And isn't the whole idea behind it is you need to have some money set aside that can take care of some things that come up without having you take on any additional debt. And you know, it's not money that you're trying to earn a great return on. And so you want to limit how much money is in that emergency fund. Now at this point in my life we keep about a six month emergency fund in a high yield savings account. It only pays us 1% or maybe a little bit more right now. And so that's a reasonable thing for us to do because we don't have any debt, but if I owed somebody a bunch of money at 8% I'd have a much smaller emergency fund than a six month of spending emergency fund.

Getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state or health status, and one in seven doctors get disabled at some point during their career. Because these policies can only be purchased through brokers, we've put together a list of vetted agents who are experienced with working with the specific needs of medical professionals and who have your best interest at heart. If you have questions about insurance and what kind of policies would be the best fit for you, check out our insurance recommended list@whitecoatinvestor.com insurance and feel the peace of mind that comes with knowing you have the optimal policy in place. You can do this and the white code investor can help.

Remember that the special discount offer on the online course only lasts one more week, so sign up today. You don't have to complete it in a week, you just need to buy it in the next week. Head up, shoulders back. You can do this. We can help.