Investing Basics for Physicians: Financial Planning vs. Investment Management
By Jared Andreoli, CFP®, CSLP®
Physicians are typically advocates for letting the pros do the diagnosing and treating. But apparently only a little more than half—53 percent—of doctors enlist the help of a financial advisor. If you’re among that group, when it comes to investing for physicians, do you know the difference between financial planning and investment management?
Unfortunately, few people know that “financial advisor” is actually a generic term that could refer to a number of professionals: a financial planner, an investment manager, a wealth manager, an asset manager, or a financial coach. So, do you know what your financial advisor can do for you?
Many people use the terms “financial planning” and “investment management” interchangeably. But there is a difference between the two terms, and it’s important to understand the two concepts when investing as a physician.
Financial planning is a broad discipline that accounts for everything associated with your financial life, whereas investment management is about handling your financial assets to pursue specific financial goals.
Here’s a look at whether a financial advisor who is investing for physicians is providing you with financial planning, investment management, or both.
What Is Financial Planning?
Financial planning is a comprehensive, holistic process for helping you meet your financial goals. When financial planning, a financial advisor evaluates your overall financial situation, walks you through identifying your goals, develops strategies to strive toward those goals, and then bundles it all into a plan to take you step by step from where you are to where you want to be financially.
Your written plan may cover these key financial areas:
Budgeting
Saving
Wealth management
Investing
Retirement planning
Tax planning
As you can see, financial planning encompasses investment management, which is just one of the strategies to help you pursue your financial goals.
What Is Investment Management?
When it comes to investing for physicians, this is where investment management kicks in. Investment management is the handling of the financial assets in your portfolio, such as stocks, bonds, commodities, real estate, artwork, precious metals, and more. Investment management implements investment strategies in pursuit of your financial goals.
A financial advisor investing for physicians may provide the following services:
Asset allocation
Financial analysis
Securities selection
Risk management
Monitoring of investments
Investment management also calls for making adjustments as needed based on a financial advisor monitoring your investments and changes in your financial circumstances.
Financial Planning and Investment Management Work Together
When investing as a physician, working with a financial advisor who provides both financial planning and investment management offers significant advantages. You can benefit from having a single advisor who understands your personal motivations, goals, and aspirations while also overseeing your investment accounts.
An integrated approach to financial planning and investment management, like what Simplicity Financial LLC offers, helps facilitate clear communication and accountability. With a comprehensive understanding of your financial life—your situation, goals, and risk tolerance—your advisor can effectively tailor your investment strategy, implementing proper asset selection, allocation, and management.
Get a Financial Advisor Focused on Investing for Physicians
Arguments are often made that doctors are smart enough to do their own financial planning and manage their own investments. At Simplicity Financial LLC, we believe it’s not about intelligence, but that hiring a financial advisor gives you someone dedicated to the processes of financial planning and investment management, leaving you to focus on your patients and building your practice.
Now that you know the difference between financial planning and investment management, you might be ready to consider hiring a financial advisor or working with one who meets your financial needs. Get started by scheduling a free consultation, or reach out to us by emailing jared.andreoli@simplicityfinancialllc.com or calling 414-207-6473.
About Jared
Jared Andreoli, CFP®, CSLP®, is president and financial planner at Simplicity Financial, a fee-only RIA dedicated to helping early-career physicians conceptualize their financial picture and achieve their financial goals. Jared specializes in devising individualized financial road maps for clients, and he loves nothing more than a full day meeting with clients who value his partnership to solve problems—big and small.
After college, Jared spent six years working as a mutual fund administrator for a large company. While he learned an immense amount about the financial world, he was missing the personal connection of working with individual clients. Combining his passion for finance and personal connection, he established Simplicity Financial in 2017.
Jared has a degree in finance with a concentration in financial planning from Western Kentucky University, along with the CERTIFIED FINANCIAL PLANNER®, CFP® and a Certified Student Loan Planner (CSLP®) certifications. Outside of work Jared enjoys cooking and traveling. He played baseball in college and still coaches occasionally. He and his wife recently welcomed a daughter, who occupies most of their time. To learn more about Jared, connect with him on LinkedIn.