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Attorney and wealth manager David B. Mandell discusses his article “Why physicians are unlike the ‘average’ investor,” highlighting why doctors face unique financial challenges compared to most U.S. investors. David explains the significant income and tax liability differences physicians must navigate, the complexity of their net worth, and the critical opportunity cost of their limited time. He also outlines why many doctors choose to outsource investment management, and what they should demand from financial advisors in terms of transparency, communication, and alignment. Listeners will gain practical insights on how physicians can protect their wealth, make tax-efficient decisions, and focus on their highest and best use of time while still staying engaged in their financial future.

Mentioned on the show: Wealth Strategies for Today’s Physician: A Multi-Media Playbook. Get your free print copy or eBook download, available exclusively to members of the KevinMD community: https://www.ojmgroup.com/promo/KevinMD/

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Transcript

Kevin Pho: Hi, and welcome to the show. Subscribe at KevinMD.com/podcast. Today we welcome David B. Mandell. He is an attorney and wealth manager. Today’s KevinMD article is “Why physicians are unlike the average investor,” and it is an excerpt from his book, Wealth Strategies for Today’s Physician: A Multimedia Playbook. David, welcome to the show.

David B. Mandell: Kevin, I am really pleased to be here.

Kevin Pho: All right, so let us start by briefly sharing your story and, of course, we will talk about your book and why you decided to write it.

David B. Mandell: Sure. So my story is quite physician-focused. As you mentioned in the bio, I started my career thirty years ago as an attorney, mostly in estate planning and business planning, and then got really interested in a field called asset protection. What asset protection is about is helping clients shield their wealth from potential future lawsuits. The reason I got into that is my father was a radiologist. While I was in law school and in business school, he became concerned and said, “Listen, I am reading so many films (when there used to be films) and I know I am going to miss something. I am human, and I do not want to bank everything that I am doing on that, all my savings and all that.”

So I started my career in that direction and wrote a book called The Doctor’s Asset Protection Guide in 1996, so almost thirty years ago. I then continued that sort of focus on serving physicians when we formed a wealth management firm about eighteen years ago. So I still maintain my law practice, but really for old clients; I do not really take on new clients there and do most of my work at the wealth planning firm. Our clients are all over the country and really physician-focused.

Kevin Pho: All right, so sometimes the intersection between personal finance and what physicians do is something that we always explore on this podcast because, as you know, physicians do not get a lot of personal finance training during medical school and residency. You have an excerpt here, “Why physicians are unlike the average investor,” and we will talk about your book later on, of course. But this particular excerpt, for those who did not get a chance to read it, what is it about?

David B. Mandell: The concept here, and I have to credit my partners (we have got seven partners, all equity holders in our wealth management firm), is that we have folks who manage portfolios and do the financial planning, the CFPs and all that. I am just a lawyer who knows my field. But the point of this article is to let physicians know, especially as they age and build up more wealth. I know there is a difference between a fellow and someone coming out and dealing with student loans and their first home purchase and someone who is ten, twenty, or thirty years in practice. We know it.

As that happens, there is a lot of financial media. When I started my career in the nineties, there was not that much financial media; you would watch Wall Street Week at the end of the week. That is it. Right now, we have just so much hitting us, and for a lot of what is out there, as physicians move through that wealth plan in their career, it is not relevant for them. So this article was to just remind doctors that their income is higher than the average, and their tax issues are often more important than for the average viewer, even on what you would think are higher-end websites.

On the other side of that, Kevin, they do not have much time. You know this. So it is hard to dedicate the time and do everything on your own. We have a lot of clients where we do a piece of it and they are do-it-yourselfers on the other piece. I understand that. But when you combine having more income overall, having more wealth, having less time, and then the other concept in the article that we flesh out in the book is highest and best use and opportunity costs. So is it better for a physician to see other patients or do something entrepreneurially and then farm out doing their will or their tax return or their investments, etc., rather than try to do everything themselves? I think that leads to a lot of stress. So that is sort of the concept of the article at a high level.

Kevin Pho: So what would you say are some of the biggest mistakes or red flags or traps that physicians fall into financially?

David B. Mandell: There are so many, but I think one that I see often is finding an advisor early in their career. My partner, Jason O’Dell, used to do this in the nineties at hospitals with the residents and fellows, sitting in the fellow room and bringing pizza and helping them with their first disability policy, their first investment, etc. A lot of doctors find an advisor that way early in their career, and they stick with them for good reasons. It is maybe out of loyalty, or they think, “If it is not broke, do not fix it.” But their challenges become more complex. Like, “I am going to be doing rental property. Should I own that in a real LLC or not?” That advisor really is not equipped to help them with that. Or their tax issues become a little more complex. Maybe they are doing some side hustles. “Should I create an entity for that, or should it just be a 1099 on my tax return?” They are not really equipped to answer that.

The point is, in medicine, the doctor that you start with as a pediatrician as a young person is not the doctor for the rest of your career; you have specialists. We know that in medicine, and people are comfortable with it. Apply that also to wealth planning and understand that your needs may change and it is OK to change advisors or to find other expertise you may need.

Kevin Pho: So that decision point that physicians and their families make, whether to do it yourself or go with a company or advisor. Tell me the types of questions physicians need to ask themselves to determine which path they should take.

David B. Mandell: That is an awesome question. We actually have a chapter in the book just on that. We go through like six or seven questions. I think the most important concept behind it is transparency. We have a graph that shows that as transparency goes up, trust goes up. Most physicians, and there are some do-it-yourselfers who are like, “I do not want to work with anybody. Fee drag is real,” which it is. You pay someone to do something, you are going to have less if you got the exact same return than if you did it yourself. But there is data out there that shows people who work with advisors typically do better.

Putting that aside for a second, back to the questions: understanding the business model. As a lawyer, people make lawyer jokes all the time. I start my lectures with a lawyer joke my dad loved. But what they liked about working with me, when I did work with them in estate planning and asset protection, was that it was a flat fee. So they could decide after a meeting, “This is what Mandell is going to charge, this is what I am going to get out of it,” and I can decide to work with them or not. But it is not an hourly rate where there is some kind of unknown and maybe even a conflict of interest where I am going to work slower, which is good for me because I am going to get paid more, but not so good for the client.

The financial piece is the same thing. Understand how this advisor makes money. You should be very frank about that. How does the firm make money on top of that? Do they have proprietary products, etc.? Then you can understand, “OK, this is what is in it for them,” and you can begin to build that trust. Because if you do not know that—and I cannot tell you how many really smart physicians, you know, great scoring, great training, terrific doctors, they come to us and they go, “Here are my statements. I do not really know how much I am paying.”

Kevin Pho: Now, you talked earlier, of course, that physicians are not like the average investor. They are at a higher income bracket. Now, for those physicians who are doing it themselves, tell us the type of unique obstacles or situations that they are confronted with.

David B. Mandell: I will give you an example from this year. Just on the investment side, I am not even going to talk about asset protection or tax or all that kind of thing, but let us just say investments, because I think that is probably the area most physicians are focused on doing themselves. Certainly, I run across doctors who will file their own tax return. They will try to maybe use LegalZoom or one of these tools to create legal documents, but that is, I think, a small percentage. Then physicians say, “Listen, I am really interested in the markets. I want to manage my money.”

So here is what happened this year already. In April, we saw a two-day drop in the market of ten percent. The first thing we want to make sure of if you are doing it yourself is that you do not panic, and you do not go to cash. We train our clients, but a lot of them we have had since 2008 and 2018 and 2022, etc. So they know that. When you are on your own, you cannot run ideas by somebody, or you cannot confide in someone. You might be tempted to do that. Now a lot of doctors have been through this enough that they are not going to do that, but that is just avoiding a negative.

What about actually a positive? This would mean having the physician, before there is a downturn (because we know they will happen), before there is a pullback, research in their portfolio. What are other options? What are other funds that could fit in that asset class? Because maybe when there is a big pullback, there is an opportunity to do some tax-loss harvesting and sell some funds that have some losses in there, and then buy back in to a similar fund, perhaps in the same, let us say, international or large-cap, small-cap, whatever it is.

When that pullback happens, and we did that for clients in April, we did that in March of 2020 during COVID-19. But that requires a fair amount of research before it happens, with the dry powder ready to go. You cannot just wait until those days because it is too quick, there is too much going on, etc. You have to sort of have that bullpen of funds you are ready with. That is the kind of thing that most doctors who are doing it on their own do not do. Not all. Some are really diligent, and we would love to hire them at our firm, but most do not do that. They sort of react; they do not do it proactively, and that is what it takes.

Kevin Pho: So you go to a lot of these physician finance sites, and they recommend, of course, an index fund strategy, perhaps two or three index funds. Now for the majority of physicians, is a simple plan like that enough?

David B. Mandell: We are big fans of index funds. I mean, in our portfolios at OJM Group, for large-cap U.S., we just do not think there is anyone who can beat the S&P 500 month by month, so why pay for it? Let us make it as cheap as possible. In certain asset classes, maybe international, maybe developed international, maybe emerging markets, we think there is some value proven from different fund managers, and it is worth paying for that.

Again, this gets back to the business model, Kevin. We charge an assets-under-management fee. It is pretty standard in a lot of firms, but not all. So what that means is beyond our fee, we want our clients to do as well as possible because it means we do as well as possible. We are not going to choose anything that is more expensive than it needs to be. So, back to your question, we are big fans of index funds, but again, especially as physicians build their wealth, they should be looking at some private investments to hedge against the correlations, because everything seems to be correlated to the S&P 500 these days, especially the Magnificent Seven. So having some private investments, whether that is real estate or private debt or private credit or private equity, etc., to hedge not a huge piece of it, but enough to hedge the portfolio.

That is the kind of thing that you would not just get by putting together some index funds because even a successful physician is only one client. We manage about a billion dollars, so we are getting to see some opportunities where you might have some minimums, and we can put ten, twenty, or fifty clients together, including me (they manage my money), and get into something that really helps the portfolio that I would not be able to do on my own. So it is a long-winded way to say we are big believers in index funds, but we think that should be combined with some other stuff.

Kevin Pho: So let us talk a little bit about asset protection. I think the biggest fear that physicians have is the proverbial story where they may get sued in some type of malpractice lawsuit for an amount larger than their insurance would cover, and it affects their personal assets. So how realistic is that common fear that physicians have?

David B. Mandell: I mean, this is why I got into the field, because my dad was concerned about it. My brother, who is a cardiologist, started to practice in Florida with no malpractice insurance. He joined somebody, so he was like, on the first day coming out of fellowship, “Dave, what can I do to protect myself?” It is not very likely that that is going to happen. I do not push the panic button. I cannot give you the exact number percentage. There are claims that go beyond coverage limits. They happen. We know, I have written about this, there have been some famous cases. An orthopedic surgeon who took care of a Philadelphia Eagle was sued successfully for forty million dollars, etc., etc. But it does not happen all that often.

Now, there are other types of claims too. We have had clients who have gotten in trouble for HIPAA violations, for things that do not have to do with treating a patient, like wrongful termination for an employee, all the kind of things we deal with if we own our own practice that we have to think about. My brother was more concerned about teenage drivers driving around South Florida than he was about his patients.

But what I tell clients is this: When it comes to asset protection planning, whether it is legal tools or insurance or exempt assets, everything should be a cost-benefit analysis. So let us not go overboard. Some doctors come to me, Kevin, and they have gone to some back-of-the-room seminar and they say, “I paid ten thousand dollars for this book of trusts. I do not even know how it works.” And I feel bad. I am like, “Listen, that is not really what you need. You do not need to spend that much.” It could be just a couple of adjustments that really depend on your state; it is very state-specific. But I am always telling clients, “Cost-benefit. Let us look at the assets. What can we do to protect them better that does not cost a lot, that is not disruptive? You do not have to give away assets to irrevocable trusts. Let us make it reasonable so you can sleep better at night but not interrupt your planning.” Big picture, it is just like a patient coming to you. There is some concern about this risk that is out there, but we do not want the medicine to be worse than the disease. So it is all balanced.

Kevin Pho: You are, of course, the author of the book Wealth Strategies for Today’s Physician: A Multimedia Playbook. I will make sure a link to that book is included in the show notes. So, taking a step back, what are some of the other key messages you want readers to come away with after reading your book?

David B. Mandell: I think you should think of your wealth health like your physical health. And again, doctors are not always so great about their own physical health. I know you have a lot of articles on burnout and all of that, and that is important. But the point is there are different specialties. In my firm, my background is as a lawyer. I know asset protection extremely well, have been doing this and writing books on this for thirty years. My partner Carol is a CPA with thirty years of tax experience. I make the joke that she knows tax so well, she has now two kids who are seniors. We have got wealth managers, we have got CFPs, insurance people, etc. That is the kind of approach you want to maximize and be efficient with your wealth time. It is really hard to go to just one advisor or even try to do it yourself because it is like the body. Cardiology is different than gastroenterology, etc. They relate to each other, and the best health, I think most doctors would agree, is having those specialists and having them talk to each other and be coordinated. That is why if I am a CEO and I go into a major medical center, they are going to do all the testing and coordinate. That is what we have tried to replicate at OJM Group. We are not the only firm who does it. You could even do it yourself by being the quarterback and having the CPA talk to the attorney and having the attorney talk to the insurance professional. It is possible. We try to make it easier than that.

I think that is the main lesson. The other, which obviously resonates with your audience, is you are the CEO of your financial life. You are. You are the one who is ultimately going to benefit, you and your family, and you are the one who is ultimately responsible for trying to get to those goals, whatever they are. My father was a radiologist. He passed away last year. He worked until six months before he passed away, fifty years in practice. My brother is a cardiologist. I do not know how long he is going to work, but every doctor that we work with has their own goals. We are just trying to help them get there. But typically, along the way, just like with health, you may need to see the orthopedic surgeon. I have got something for my elbow here. You may need to see the cardiologist. You may need to see the gastroenterologist and get the colonoscopy. Wealth planning is like that. You probably need different experts along the way, so either try to put together that team yourself or obviously we are here to help.

Kevin Pho: And I just want to reiterate that point that you mentioned earlier, that as a physician’s salary and assets grow, their financial needs are also going to grow as well. So the financial advisor that they may have met during residency or fellowship, or if they were to do it themselves at the beginning, eventually that may not be enough for the assets that they are eventually going to have.

David B. Mandell: That is right. I can think of a client who actually lives in South Florida down by me. Our clients are all over the country, from Hawaii, Alaska, everywhere, but this one just happened to be down here. He managed his assets on his own. He was like his own wealth manager, and he said, “Listen, I am sixty-two, the numbers are bigger now. I am close enough to retirement.” For those football fans, it is the retirement red zone; it is there, but not there yet. “And my wife and I are concerned that I need some help. Like I should not just be doing it on my own. I have got a full practice as a surgeon. I have got kids, things are running around. I might have grandkids soon, etc.”

That is my other point. It is not only the physician, and we have lots of two-physician spouse clients, but it is also, if you are married, the spouse too. You both have to get on the same page, and oftentimes one may feel comfortable that they are doing it themselves and the other may not be so much, and that becomes some strife.

The other point I will make is it is not zero to one hundred. I mentioned this before, meaning that we have clients who say, “Yeah, I really love doing some of the investments.” We will say, “Fine, you do a piece of it. Continue. Whatever it is, crypto trading, watch the markets, etc. Let us be your quarterback and look at everything and bring those other ideas to the table so you are getting where you want to go, and you can still do the piece that you want to do as well.” That is important for people.

Kevin Pho: We are talking to David Mandell, an attorney and wealth manager, author of the book Wealth Strategies for Today’s Physician: A Multimedia Playbook. David, let us end with some take-home messages that you want to leave with the KevinMD audience.

David B. Mandell: I think you should spend some time, and I think this is sort of self-selecting for people who are on your site, people who are listening or watching us, you care about your career, you care about your personal wellbeing, and you care about your financial wellbeing. So keep doing that. Keep being on KevinMD. Get educated. Get a copy of our book. You can get it for free. You can see it there. It will be in the show notes. Because you are responsible for that, and if you get educated, you can ask the questions of your present financial planner and make sure it makes sense, or of the ones you might interview, etc., and learn from your colleagues.

One thing about this book is it is multimedia, so throughout it there are links if you get the PDF, or QR codes if you get the hard copy, to podcast interviews that I do because I have a podcast with other physicians. So they are talking about, “Hey, this is how I protected assets in the past. This is what works, this is what has not. This is the tax mistake I made. This is what I should have done when I took my first job,” etc. So learning from colleagues is also crucial, and we try to give a little piece of that.

Kevin Pho: David, thank you so much for sharing your perspective and insight, and thanks again for coming on the show.

David B. Mandell: Happy to be here. Thanks for having me, Kevin.