Estate planning and personal finance tips for physicians [PODCAST]

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“With COVID-19 raging through the nation, and limited supply of PPE at hospitals, doctors and other critical care personnel are at high risk due to their increased and daily exposure to the virus. For health care workers, the need to plan for a possible worst-case outcome for themselves and their families has become an immediate concern. Doctors are spending limited weekend time urgently completing the paperwork so that their family is protected in case of the worst outcome. If a person were to pass away intestate (with no will or living trust), the legal system makes the decision on their behalf, which can be a long and expensive process.

To alleviate the stress, as a physician financial blogger, here is my suggestion on what exactly should be completed.”

Dewan Farhana is founder and CEO, Betternest, and blogs at Doctor Finances.

She shares her story and discusses her KevinMD article, “How doctors can rush to complete their wills.”

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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, and welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today on the show we have Dewan Farhana. She is a physician, and she’s the founder of Doctor Finances, and she wrote the KevinMD article “How doctors can rush to complete their wills.” Dewan, welcome to the show.

Dewan Farhana: Thank you so much for having me.

Kevin Pho: So we’ll get into your article in a little bit, but first off, can you tell me your story and your journey to where you are today?

Dewan Farhana: Sure. So I started my undergraduate degree at Rutgers University in New Jersey. I majored in cell biology and neuroscience. I completed my medical degree at Touro College of Medicine in New York. I matched into PM&R, and rehab medicine was my area of interest, but I’ve always been a founder at heart. In high school and college, I started organizations. In medical school, I started the first medical Spanish class at my school.

During clinical rotations, I started an organized patient queue at one of the hospitals after I noticed that the attending doctors were printing over 30 pages of patient information on their service each morning, and it was leading to a lot of confusion. So I designed and created a HIPAA-compliant system to keep all the information organized and correlated with each doctor, team, and unit in a systematic way. This reduced the printing to a minimum and increased the productivity.

So I was generally always interested in technology. I was raised in the generation that used some of the first Apple and PC computers, so we learned about hard drives and motherboards, took apart computers, and learned about C++. But I didn’t quite understand the magnitude of technology until I was in med school and we started using these amazing products such as Dropbox and Evernote, and I was seeing how these amazing products were basically changing the world at scale. So while businesses were always built, the software part really intrigued me, and I wanted to build something bigger, touch millions of people, and scale it using software.

So right after I graduated medical school, I had an opportunity to work at a startup with an amazing co-founder, and we decided to go for it. So we founded our startup, Betternest, which is a software that connects users to professional and certified home organizers. Our platform connects the elderly, busy professionals, people with mental illness, veterans, and small businesses to certified organizers that make the spaces very functional to improve the utility and quality of life. Home organization is a $26 billion industry, and we’ve raised funding from Rutgers Business School as well as angel investors.

And so while working on the startup, I learned about robo-advisors, and I got very intrigued and started learning about them, and that’s how I discovered the world of personal finance. I discovered the principles of compound interest and how investing in low-cost index funds can really help your net worth grow exponentially, and that’s where I got started. So I refinanced my loans and signed up for the life and disability insurance, 529s, Roth IRAs, and all of that. But I think what shocked me was that I was never taught this in school. And then I thought maybe it was just my school, but then I learned that no one was taught this in school, even if you went to an elite school.

So I started posting tidbits about it on Instagram. I started getting a lot of followers, and then slowly that transformed into a blog, because there was significant detail and research that went behind it. And I also started the blog because I think that women approach finances in a different way compared to men, and I wanted to articulate that well. Most women definitely think things through more and tend to be risk-averse, so taking that into consideration in the education and investment strategy can help women tap into all the investing tools and strategies that are available today. And so because of the personal finance background, that’s why I wrote the article on estate planning.

Kevin Pho: Sure. So let’s talk about estate planning. You wrote this article on KevinMD, “How doctors can rush to complete their wills.” And on this podcast, I’ve talked to several physician couples, and because they’re both on the front lines, they’re completing their wills and updating their wills, because they want their children to be cared for in case both of them, God forbid, perish on the front lines. Now, what are some of the major issues that physicians need to think about when talking about estate planning and wills?

Dewan Farhana: Sure. So I think that most people approach estate planning the wrong way, in the sense that they focus too much on the death and the dying part. But what estate planning and completing a will actually is, is taking care of your loved ones after you’ve passed away. So in a sense, it’s an expression of love.

So I think the major thing that I wanted to convey in the article is the difference between the trust and the will. Almost everyone was rushing to complete a will, but if you are married, if you have assets, if you have children, the main thing that you want to complete, for most people, is the estate plan, which includes a living trust. Because the will only designates the guardian of your children, so it doesn’t designate a trustee for your assets or a timeline of how things should be distributed. If you think about it, you don’t necessarily want to give your teenager access to your entire assets on the first day, for example.

So that’s essentially what the living trust does. It prevents your family from going through the very expensive and long probate process, and the trust also keeps your information private. With the will, basically, you can pay a fee and have access to it, so the general public can have access to your will. And also, having the trust can help you avoid estate taxes.

Kevin Pho: So when thinking about trusts, I know that there are several different options. Can you go through some of the thinking behind what is the best choice for most physicians?

Dewan Farhana: Yeah. So basically, first you want to think about who is the person that you want to designate as your trust, who is willing and able to handle it. You also want to think about when you want to distribute your assets, at what age. And then you want to think about the other additional things, such as who should control your finances, as well as make the health care decisions for you.

Kevin Pho: Now, estate planning: Is this something that physicians can do themselves, or do they need attorneys to do so? Because sometimes on my Facebook feed I always have do-it-yourself estate planning, do-it-yourself wills. Now, what do you advise?

Dewan Farhana: So I personally went with an estate planning lawyer. I don’t know if it’s a woman thing, but I prefer having an expert go through the entire process, just making sure that the person who’s an expert in the field can walk me through the process. So if you have something complicated, then you definitely want to have a lawyer go through it. But many, many people, many doctors, have said they’ve completed it online through Trust & Will or LegalZoom, and it’s been perfectly fine. So either process is fine. In my personal opinion, I would say it’s better to just go do it through an attorney so you don’t miss anything, but many people have completed it through an online process, and it’s been perfectly fine.

Kevin Pho: Are there any issues specific to physicians when it comes to estate planning?

Dewan Farhana: Not that I have come across as far as specifics, because the estate depends on how many assets you have, and if you have a difference in, say, divorces or stepchildren, or you share a partnership. I think that’s where the complication comes in, rather than physicians in particular.

Kevin Pho: Sure. So let’s take a step back. You blog at a site called Doctor Finances. Now, especially during the pandemic, what are some common personal finance issues that physicians need to be aware of?

Dewan Farhana: Yeah. So one of the big things is definitely the emergency fund. Usually, in the personal finance world, it’s always recommended to have at least three to six months of emergency fund. But a lot of people felt like it wasn’t absolutely necessary, because you have insurance covering, for example, anything that happens to your car. You have the car insurance; anything that happens to your home, there’s the home insurance; and your health, and so on. So the emergency fund was necessary, it’s recommended, but I don’t think any of us thought of it coming to fruition until this pandemic happened. So that’s definitely one thing for the pandemic: making sure that you have the emergency fund and using it.

The second thing is, honestly, if you understand how the stock market works, historically it has always gone up. And so there’s actually really nothing to do in regard to your finances, as far as investing is concerned. If you’re investing, you’re not supposed to touch it, because if you do and you pull out your funds right now, you’re not going to know when to put it back in, and the market will go back up. So it’s just a long game. You basically leave your low-cost index funds and let them grow. The market will go up and down, up and down, but eventually it always goes up, and when you’re at your retirement, you’ll be able to retire comfortably.

Kevin Pho: Sure. Now, one of the things that you mentioned is that physicians don’t get a lot of training when it comes to personal finance. Now, do you advise that physicians hire a financial advisor, or is this something that they can do themselves?

Dewan Farhana: I absolutely think you can do it yourself. Hiring a financial advisor, as you probably know if you read a lot of the finance blogs, is, you know, not all of them are what they call fee-only certified, so they have other interests in mind. Many times they will sell you insurance to basically make money. And so you can do it yourself. If you would like to hire a financial advisor, just make sure you vet them very properly. Make sure that they’re NAPFA-certified and that they’re fee-only advisors. But you can absolutely do it yourself, and that’s kind of where I got started, too, because of the robo-advisors. There are just some really fantastic tools out right now, such as Wealthfront and Betterment, that really help you do your own finances and handle them really well.

Kevin Pho: And for those who aren’t familiar with robo-advisors, can you tell my audience a little bit more about what they are?

Dewan Farhana: Yeah, sure. Basically, robo-advisors are investing that is done for you, using automated services and software. So you no longer need to hire a financial advisor to do the investing for you; the software automatically does it for you. And so it’s very easy and simple to use.

Kevin Pho: All right. We’re talking to Dewan Farhana. She is a physician, and she wrote the KevinMD article “How doctors can rush to complete their wills.” Now, you said a lot of physicians can manage their personal finances by themselves. Can you share any resources, perhaps online, where they could learn more about that?

Dewan Farhana: Yes. So the OG of the physician finance world is, of course, the White Coat Investor. He writes some great, excellent, detailed articles on everything about finances. There’s also Physician on FIRE. He writes really well-written, very easy-to-understand articles. So that’s a great place to start. My favorite finance book is “Simple Path to Wealth,” where he just breaks down how the entire market works, and it’s just so simple, and exactly what to do is in a step-by-step process. And then there are, of course, the Bogleheads forums, as well as the book, which is also really excellent to get started.

Kevin Pho: Now, I want to ask a question away from personal finance. You’re a physician and you’re a CEO, and that’s sometimes a combination that’s not often found. Now, do you think being a doctor made it easier or harder for you to go into that CEO role?

Dewan Farhana: For me personally, I think it made it easier. I am honored to be a physician. Everyone in my family, and of course all of my best friends from medical school, are physicians. We are able to take a lot of information, process it, and apply it in a short amount of time. At the end of the day, there are no shortcuts, and that’s kind of what medicine teaches you: You have to do the hard work. And for me, it made it much easier. I was able to understand how VC funding works and how to manage employees, especially having worked with patients from diverse backgrounds and so on. So for me, it was easier. It helped me, and I’m so proud and honored to be a physician, as well as to now be able to be a CEO.

Kevin Pho: And my final question: Do you have a take-home message that you want to share with the KevinMD audience?

Dewan Farhana: Sure. So I think that if you’re on the fence about your finances and you’re not sure, I would say just get started. You’ll be surprised at how empowered you feel after you take a handle on your finances. I know a lot of people feel it might be crippling, and, you know, you may not know, like, you can’t buy things or make decisions. But once you have a good handle on your finances, you’ll feel so empowered. You will be able to make spending decisions quickly and consciously, and also donate very generously.

Kevin Pho: And how can people find out more about you?

Dewan Farhana: Sure. So you can find me at Doctor Finances, with the S, doctorfinances.com, and my Instagram handle is dr.finances.

Kevin Pho: Dewan, thank you so much for your time and insight, and thanks again for being on the show.

Dewan Farhana: Thank you so much. Thank you for having me.

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