5 Misconceptions About Teaching Personal Finance

Over the last six months, we have been discussing the implementation of a new business of medicine curriculum for our residents, which would include teaching personal finance topics.  There has been a lot of support for the idea.  There has also been some concern over conflicts of interest and the possibility of leading learners astray.

Though those with concerns have every intention of trying to do the right thing for the residents, it became clear to me that there were several misconceptions about teaching personal finance.

Today, we will discuss some of the common misconceptions about teaching personal finance, and why they just don’t hold any water when the rubber meets the road.

Misconception 1: Leading People Astray

“The residents might get bad advice! What if they come back years later disappointed in what we taught them?”

This is probably the most common concern from academic physicians who are worried about teaching personal finance.  And I get it.

While leading people astray sounds like a problem, I am here to tell you that – even if it is a problem – it is the lesser of two evils.

The evil of leading people astray happens when we attempt to teach personal finance topics the right way, and yet we make a few mistakes along the way.

For example, maybe we tell someone that the max amount of money they can put into an IRA is $5,500, because we didn’t realize the recent change for 2019 allows us to put $6,000 away each year.

Or maybe we are asked about paying down debt versus investing, and we discuss both options and the resident decides to pay down the debt. Later, they may regret paying the debt down if they (retrospectively) look back and realize that they would have had better returns in the market.  [For the record, I don’t view this as a mistake – no one can predict the future].

While mistakes can be made while teaching personal finance, the problems caused by this kind of “evil” pails in comparison to the alternative evil – letting our residents get fleeced by the financial industry.

Let’s be real for a moment.

We may not like to admit it, but we all know that there are both good and bad professionals in any industry – including medicine.  Similarly, there are also good financial advisors and bad financial advisors.

The same goes for insurance sales people.  We know some that are doing insurance the right way, and some who are not.

Failing to arm our trainees with the requisite knowledge on how to interact with the financial industry is a much more devastating fail than trying to teach personal finance and making an unintentional mistake along the way.

Misconception 2: Teaching Personal Finance is Different than Teaching Medicine!

Everyone thinks that they are the expert at their own finances.  Teaching residents about money is too personal.  We should just stick to teaching them medicine.”

Some people think that personal finance is a leprous topic that, as academic attending physicians, we shouldn’t touch with a ten foot poll.  People who hold to this logic argue that we all think so differently about money.  This is why people say that personal finance is “personal,” right?

Well, my friends, I’ve said it before and I’ll say it again.  It’s time for academic attending physicians to stop making excuses.  It is our job to equip our trainees for life after residency and fellowship.  This includes preparing them as people, because a financially secure doctor is a better physician.

Here is what I have to say to this argument:

Yes, everyone views and interacts with money differently.  That is true.  It shouldn’t surprise anyone, though, that each physician practices  medicine differently, too.

I know that I picked up various tips and tricks in anesthesiology from different attendings. That’s one of the reasons we don’t keep the same attending with the same resident for the duration of their training.

Obviously, when it comes to learning medicine we view this as a strength (learning different ways to “skin the cat” from different attending physicians).  Yet, when it comes to money this is now viewed as a deficit.

Why should teaching personal finance be any different?  It can be taught just like any other topic.

Yes, there will be different perspectives – and that should be viewed as a strength for our residents and students! It is not to their detriment.

Misconception 3: We Shouldn’t Give Personal Financial Advice!

Everyone’s situation is different.  You can lecture on this stuff, but they are going to ask questions.  What if they ask questions!?!?!?”

I think there is an inherent problem with this line of thinking.  Too many people view resident physicians and medical students like children looking for a silver spoon.

These are highly intelligent people who – when armed with the appropriate information – will usually make the right decision.  Just like you and me.

The problem is that people are too afraid to introduce them to the topic.

I cannot think of a time where I gave one of my residents personal financial advice.  And, trust me, it’s not because they don’t ask for financial help.

How do I avoid giving individual advice? I let them get to the answer on their own.  The reason is that everyone’s situation is different.

So, when I give two different residents the options to get a “guaranteed return” on any student loan debt that they pay down versus “hoping to do better in the market” with any money they invest – each resident may choose something different.

And, they should!  Because each person is different.

After arming them with the information from both sides of the debate, they can better handle making the autonomous decision themselves.  I don’t need to make personal financial decisions for them.  They can do it themselves.

Misconception Number 4: Personal Finance Should be Left to the Professionals!

“We aren’t trained to teach about money and personal finance.  We should leave this to the financial professionals who do this for a living!”

Right.  That makes sense…

Except for one tiny little fact: The vast majority of our residents do not have the requisite knowledge to choose the right financial professional.

Which advisor should they ask?  What is the difference between fee-based and fee-only financial advising?  How are Assets Under Management and  flat-fee models different?  Should they buy insurance from their financial advisor?  Do they need to work with a fiduciary?  What IS a fiduciary? What is an independent insurance agent?

Wait, we didn’t teach them the answers to this stuff?  

The point is this.

If we do not teach our trainees about the financial industry, you can rest assured that many of them will keep their low financial literacy while they fill up the pockets of the closest financial advisor or insurance sales person after attending a steak dinner.

“Leaving personal finance to the professionals” is the sort of thinking that prevents me from being able to get personal disability insurance to this day.  It’s also what led me to make a bunch of financial mistakes in medical school and residency.

Our residents deserve better than this.

Choosing “to do nothing” when it comes to teaching personal finance is infinitely more dangerous than trying to do the right thing and miss-stepping occasionally.

We wouldn’t take that sort of “let them figure it out on their own” stance towards teaching physiology and pharmacology.  And, we shouldn’t do it with money either.

If our residents decide that they do not want to be Do-It-Yourself investors, then at the bare minimum we have to teach them about where and how to get financial advice.

Misconception 5: Physicians Aren’t Qualified to Teach Personal Finance!

“As physicians, we have not been trained in personal finance topics.  So, we should not be teaching something we weren’t trained to teach.”

This one is my favorite.  It’s a self-perpetuating argument.  We were never taught this stuff, and so we shouldn’t teach it either!

That’s exactly why we need to fix the problem.

I equate this line of reasoning to my thoughts on parenting.

One parent might say, “I walked up-hill both ways in the snow and so my kid should have to do the same!  If it happened to me, then it should happen to them.”

Another parent with a different perspective might say, “I want my child to prosper and to be better off than I was.  If there are mistakes that I’ve made, I want them to learn from it.  There is no sense in my kids repeating my mistakes.”

When it comes to my philosophy on both parenting and teaching my medical trainees – I want to be the second person.  Learners should not have to repeat our mistakes, and we should be happy for them when they are better off for it.

In a curriculum, I’ve got no problem with letting financial professionals (with the least possible conflict of interest) do the teaching, but it needs to occur with physicians present who also know something about personal finance.

Otherwise, we – as a profession – will continue to have the wool pulled over our eyes when it comes to managing money.  I’ve taken the wool from my eyes, and we should prevent it from happening to our residents in the future.

Take Home

Starting any new curriculum, including teaching personal finance, can prove challenging. There will be mishaps, failures, and stumbling blocks.

Still, it is a noble goal to help our residents have a better educational experience than we had by equipping them to be whole people – and not just doctors left to fend for themselves outside the work place.

Soon, people will come to recognize that this topic impacts doctors’ ability to practice medicine. When that occurs – and we are more comfortable with personal finance as a profession – we will realize that teaching about the business of medicine is just like teaching about phys and pharm.

What do you think?  Are you concerned about teaching personal finance to trainees? What misconceptions have you heard? Leave a comment below.

TPP

19 thoughts on “5 Misconceptions About Teaching Personal Finance”

  1. Excellent points TPP.

    We have to break the cycle and actually teach the next generation of physicians otherwise we will always be easy financial prey to the predators out there (and believe me there are a lot).

    I too got bad financial advice from a “professional” when I was a resident. I was referred to him by my CPA and I know there had to be some financial incentive between the two. I was put in a high front load fund that I’m sure was done purely for the commission. Luckily the amounts were insignificant in the grand scheme of things but it was a lot of money to me then.

    Financial literacy should be a required course in medical school and in residency. It makes no sense to have over 25 years of education and not even a single hour regarding finance, which has been the case for most docs.

    Your residents are lucky to have you. Hopefully every residency can have someone who takes over the mantle of financial educator as you have in your program.

    • Our stories are all too common, unfortunately. I was actually having lunch with a friend of mine who happens to be a financial advisor (with a model I can’t recommend) and he made the comment that the industry had “created this monster” which is physician finance bloggers.

      I think almost all of us have a horror story to share about our interactions with the financial industry. Several of us have more than one.

      The ship has sailed on letting the residents and students figure it all out on their own. We have seen how that goes, and we are tired of it.

  2. I admire your courage, TPP.

    History suggests the academic physician who dares touch the leprous topic of resident financial literacy will end up crucified by his peers.

    I was talking with Dr. Nii Darko recently, who suggested an interesting model. He uses an advisor but made it clear from day one he intends to transition to become a DIY investor. She is aware, and supportive.

    Perhaps residents would benefit from a training wheels approach to investing with advisors who have a gift for teaching as they go.

    WCI interviewed a colorectal surgeon (from Arkansas I believe) who runs a successful resident finance curriculum that gained traction over time. Perhaps reaching out or inviting him to demystify your plan would help your cause.

    In your corner,

    CD

    • Funny you should mention that.

      So, I brought Jason Mizell in to be a visiting professor a couple months back. He did a great job, and it was finally the straw that broke the camel’s back. After two years of talking about it, his lecture was what opened the door to this being possible where I work.

      Now, I am coordinating with a few other docs to get it done. It’ll be a group effort, but I am hoping it’ll prove useful for the residents without getting us ostracized.

  3. Good for you TPP. I wish I had some financial education while I was going through residency. I’m reminded of NFL players who are suddenly presented with million dollar pay packages and are broke in several years. There is now a financial coaching program that helps them make sound financial decisions. I think the basics should be taught (debt, savings, insurance, investing). That alone would prevent over 90% of the common mistakes that are made the first few years out of residency.

  4. Wow, what a coincidence. I’m part of a Wellness committee that seeks to help physicians with financial matters. We had a one day conference to promote financial literacy. It was comprehensive too, encompassing everything from: debt, saving, investing, retirement plans, asset allocation, wealth management, asset protection, and estate planning.

    Since I don’t work in an academic setting, I’m no longer in the front line for residents like you are. But I’m trying my best to reach out and educate young physicians.

    Keep it up! I’m sure the curriculum will be a huge success!

  5. Keep up the good fight!

    I love teaching med students, residents, and my peers.
    It is THE reason I got into this niche.

    We change lives for sure.

    I have many success stories of people coming back later and thanking me.
    Not one complaint. Ever.

    p.s. These lectures are my best-attended ones. And they are riveted and ask questions. The level of engagement demonstrates the desperate need.

  6. millionaire-doc, wealthy-doc…hmmm

    how about him-who-lives-within-one’s-means doc, philanthropist-doc, generous-doc?

    Something that troubles me about the get-wealthy/retire-early theme is that in focusing on it, we tend to glorify it. In the words of Bob Dylan, “you gotta serve somebody”…. When we think about wealth and the management of money, we hold at arms-length and sometimes even forget that our primary obligation in life is to be of service to others. Recognizing “no margin, no mission” is a fact and that prudent management of one’s assets is a virtue, it’s easy to slip into the mode of leveraging the practice of medicine to the higher goal of getting rich and quitting early. Teaching residents to think about managing their assets and liabilities wisely is fundamentally no different than thinking about clinical problems, the risks and benefits of various courses of action in remediating the clinical problem. The simple fact that the subject matter is personal finance is producing a ready awareness of how this topic pervades modern life. Using credit is all about risk management. making choices to invest here, pay off debt there is about risk management. Backing up the investment in your education with a life insurance policy for your family is most definitely a risk management decision. Physicians should be risk-adverse on behalf of their patients. Ignorance in personal finance is highly risky behavior that can bring the house down at some point in the future. Like most things in life, awareness and attendance to the subject are far better strategies than ignorance. One doesn’t have to be right every time in order to be wildly successful. getting to the goal of a secure retirement is the definition of wildly successful, seen against the status of the majority of Americans in terms of their retirement savings. That’s a form of risk management; assuring that you don’t run out of money before your clock runs out of ticks.

    • I agree that the focus should be on teaching personal finance and how to obtain financial independence. Actually, I have a guest post coming up on POF discussion exactly why I almost never (or at least rarely) discuss early retirement.

      I am empowered by the idea that a financially indpendent doc (or one who has at least created a glidepath to get there) is a better doctor who takes better care of patients.

  7. First, I want to commend you on recognizing the potential danger of having your true intentions twisted. By not having a conflict of interest, you are better protected when trying to help residents.

    I think this is an extremely important area to bring understanding. Physicians are one of the most poorly educated groups of people when it comes to financial issues. Why? Because in college what did you study science classes aka pre-med…Med-school…medicine….residency…your trade…no where in the 11+ years to people get any sort of financial training.

    To Kemalyan’s point, sure one can easily become obsessed in the love of financial freedom, money, etc. However one is not debating world views on the definition of happiness, meaning of life or the purpose of mankind. I agree, money will not buy happiness but a lack of money sure does cause this.

    If TPP can bring spark questions into residents minds regarding financial issues, I believe he has done them a great service. Residents need to hit the financial ground running when completing residency, not starting in a black hole of debt.

    I’m excited to learn from others on what it means to be financially wise. As this will allow me to work because I want to work not because I have to when I’m 50 or 60.

    • Thanks, nightnightdoc. I think it’s important how we bring this message and who brings it. Regardless, though, it is a message that must be taught in training.

      Otherwise, we set our residents on a course for failure and discontentment. This will certainly impact their patient care and non-clinical work alike.

      And that’s the mission in a nutshell: teaching others about how to obtain financial independence so that they can choose to practice medicine because they want to and not because they have to. In the end, a financially independent doctor is a better doctor.

  8. I am in full agreement that teaching financial literacy from the high-earner perspective is a critical part of professional education that is sorely lacking across the landscape of medical and residency training. Indeed, being free of money-stress makes for a better physician on multiple fronts. In fact, it allows you to pursue your values and your passions, rather than choosing work according to how well it compensates you and how fast you can retire a mountain of debt. We are placed at such huge disadvantage these days, accruing alarming levels of debt starting with undergraduate education and on into graduate education. Even as we pay federal, sometimes state and local taxes high enough to support our own personal policeman, the “Tax” of having to purchase education, (even “state sponsored” education at a price that will require years to retire and amounts to enough to purchase a home or a child’s complete education is a dismal failure of public policy. Where else in this world is the security of such a critical safety net profession left to such a “lottery” mentality to assure the ranks are filled?

  9. If you have already been there, it is easy to show someone else the way. Residents have not been there yet. We need to find a way to teach them how to get to the end of their career in good financial shape. Thanks for your thoughts.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

  10. I have an opportunity to speak with residents during their academic protected time about personal finance in the coming academic year. What disclaimers do you suggest when talking with residents about personal finance? I notice most personal finance podcasts advise it is for “entertainment only” or “education and entertainment” but this does not seem appropriate to something that would be included with academic content.

    • Well, I have one very important disclaimer in these talks… this website and the fact that I am not a lawyer, broker, realtor, investment advisor, financial planner, etc. I have to inform them that I make money from this endeavor, and is really the only disclosure I include in a regular talk at the hospital. If you don’t have financial disclosures for an academic talk, you probably don’t need to make a disclosure at all.

      The “education and entertainment” disclosure isn’t really necessary in an academic institution and, in fact, you are somewhat protected from this kind of advice because it is for educational purposes. The reason that blogs say this is because we do not want our words misconstrued as personal financial advice (particularly when it comes to investments) because we are not registered investment advisors, and giving paid financial advice in this situation would be illegal. Of course, I’m not a lawyer. So, this is my layman’s perspective.

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