No “Self-Treatment” – Get a Financial Advisor

The American Medical Association (AMA) clearly states in their Code of Medical Ethics that:

Physicians generally should not treat themselves or members of their immediate families. Professional objectivity may be compromised when an immediate family member or the physician is the patient; the physician’s personal feelings may unduly influence his or her professional medical judgment, thereby interfering with the care being delivered.”

In other words, you don’t want personal feelings clouding the judgment of the guy standing over you with a scalpel in the operating room.

Wall StreetWhen it comes to personal finance, however, everyone seems to be ok with self-treatment and especially treatment of immediate family members (ie: Mom or Dad as personal financial advisor). Just go to a retail bookstore and see the countless “Financial Advice” books providing all the secrets to wealth. The sheer number of this type of book indicates the demand for financial help. It also suggests that many Americans do their own financial advising.

I have a business degree and a clinical doctorate degree. I have managed budgets for large businesses. I have read dozens of financial books. I’ve even considered putting in the effort to get a certification from the Financial Planning Association (FPA). Do I have a financial advisor other than myself to help manage my personal finances? YES.

The hardest part of financial planning: being objective.

Financial planning is not rocket science. The math is pretty easy. The strategy is basic: “Spend less than you earn.” This seems straightforward enough, however many highly compensated professionals fail to achieve financial success throughout their career. Financial planning is pretty easy but we are still bad at it. One of the main reasons we fail is that we cannot truly be OBJECTIVE when looking in the mirror and assessing our own financial situation.

Sorry Dad.

Since financial planning education is limited (or nonexistent) in our school system, most of us learn about money from our parents. With the debt problems in the United States it is fair to say that, for most of us, our parents may not be the best source of financial education. Beyond learning the basics, financial advice (often unsolicited) from Mom or Dad may also lack objectivity. Parents often want their kids to avoid the financial mistakes they made early in their careers, which is totally understandable, but sometimes mistakes actually come with valuable lessons. One of my favorite books, The Millionaire Next Door, discusses the differences from generation to generation and how the children of wealthy families may lack the financial skills that made their parents successful.

In addition to a parent’s personal feelings interfering with judgment, strategies to financial success may change over time. In other words, what worked for your Mom or Dad in the 1970’s may not work for you in 2014. A great example of this can be seen with interest rates of student loans. Interest rates peaked in the 1980’s, eventually eclipsing 20%! The Millennial Generation has only known interest rates <10%. In the 1980’s when a Millennial’s parents were in college, a student loan may have been dirt cheap when compare to the 20% rates to buy a house or a car. In the 21st century, the rates have reversed to where mortgage rates are now often lower than Federal Student loan rates. I have heard a few Baby Boomers say things like, “Student loans are good debt” or “Student loans are cheap.” This may have been true in their college days, but this is misleading for today’s college students.

Finding the right advisor for you

Finding a good advisor can be tough because the term “Financial Advisor” can be used pretty loosely. The quality range of advising spans from expert to “Well, I stayed at a Holiday Inn Express last night.” Try meeting with different people to learn their qualifications and hear what services they offer. For me, it was important to find an advisor that I liked and meshed well with. Since I felt comfortable with the numbers, I really wanted to have an advisor that could be an honest sounding board for my ideas and provide sincere opinions regarding my financial strategy. I didn’t want someone pushy or someone constantly plugging financial products that they get a cut of.

There are a few ways to find an advisor, but I would suggest starting with the Financial Planning Association website at: http://www.plannersearch.org/Pages/home.aspx and go from there. For new practitioner members of the American Pharmacists Association (APhA), be sure to check out the Financial Planning Webinar on July 29th. (Register online at: http://pharmacist.com/register-july-29-financial-planning-webinar)

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Joey
Joey Mattingly, PharmD, MBA is an assistant professor at the University of Maryland School of Pharmacy located in Baltimore, Maryland. Joey has managed retail and long-term care pharmacy operations in Kentucky, Illinois and Indiana. Leading Over The Counter is a blog of Joey's views and opinions on the topics of pharmacy leadership and management and do not represent the University of Maryland, Baltimore. Joey can be followed on Twitter @joeymattingly.

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