This is a synopsis of the white paper published by Yuval Bar-Or, PhD, professor at Johns Hopkins Carey Business School. The full scholarly article is linked below.
The Need for Financial Literacy
Most physicians complete medical school and residency without sufficient training in personal finance. This deficiency leaves physicians vulnerable to poor decisions that can have a long-term negative impact on their finances. It can also leave physicians vulnerable to advisors who do not have their best interest in mind. Lack of financial know-how can cause anxiety about money, poor purchasing decisions, and cause relationship difficulties.
Physicians face more financial challenges than ever, including increasing student loan debt, delay to investing due to school and residency, all-consuming careers, and wealth management becoming more complex and intimidating.
No Systematic Solution
There have been no systematic solutions to the challenge of equipping young physicians with financial literacy education. Physicians have been left on their own to read books, listen to mentors, participate in blogs, attend seminars. The problem with these half-solutions is that there is not sufficient opportunity for follow up or for physicians to ask questions. Hospitals and private practices often allow financial advisors or insurance agents to deliver so-called education seminars on the premises. In reality, these typically turn out to be thinly-veiled marketing sessions. In many ways this is an example of letting the fox into the henhouse. There is considerable downside for attendees- they may be taken advantage of under the guise of implied endorsement by the hospital. It’s not enough for administrators to mentally check off the box that financial literacy education has taken place.
Elements of a comprehensive personal financial literacy framework for physicians:
- Deliver three courses on personal finance: At the end of medical school, late in residency, and near the end of fellowship. A personal finance course should extend 8-10 hours and cover investing, insurance, asset protection, home purchase, college savings and more.
- Use an objective and expert instructor who does not have conflicting agenda of selling financial products or asset management services. An MBA degree does not automatically qualify someone- most MBA programs focus on corporate skills, not personal finance.
- Deliver the course in a classroom setting, with all the seriousness of a medical subject.
- Offer subsequent training, providing ongoing access to experts.
- Make attendance mandatory, to ensure that students take the course seriously.
Teaching is most effective when students have an opportunity to implement what they have learned. This real-world, hands on dimension drives the message home and converts class discussion into life-long wisdom.
Physicians should be properly equipped to make constructive financial decisions for themselves. The best time to gain critical knowledge for decision making is before such decisions become urgent. Financial literacy gives physicians control over their finances, and helps them to make proactive decisions about their financial futures. Proper financial literacy helps set up physicians for success.
Summary by Jennifer Frahm. Full article can be found HERE