Doctors, I like to think, are fairly intelligent people. We worked hard in school, extremely hard in residency, and continue to refine our skills decades into practice. In addition to being intellectual, we are often experts in our fields. We enjoy more respect and higher salaries than most professions. Our work can be humbling and challenging, and it exposes us to the flawed nature of humans. Despite deeply understanding that human beings are fallible, we are still at risk of thinking such imperfection does not apply to how we manage our finances.

This website has already addressed how this mindset can literally lead to doctors crashing planes. But the phenomenon can also wreck our finances if we do not take appropriate steps to mitigate it. The Dunning-Kruger Effect (the tendency of the least capable to overestimate their capabilities) is not the only threat to our retirement. Overconfidence and arrogance also jeopardize our investments, likely more than we care to admit.

All humans are hardwired to remember their successes but forget, or at least minimize, their failures. This selective memory can falsely boost our confidence in our financial aptitude. Thinking that you are smarter than the markets risks derailing your savings. Given that we selectively forget mistakes, identifying when arrogance and overconfidence have taken a hold of our decision making is a challenge. As such, it is worth understanding what it looks like in practice. In finance, one big sign of overconfidence is overtrading. Trades come with costs and taxes, and can lead to excessive risk-taking, which is particularly dangerous for older adults who do not have the time to recoup losses.

These beliefs show up in other costly ways. Investors who believe they can outsmart the markets often pull their money out too early, forgetting the age-old adage that time in the market beats market timing. The subsequent loss of capital means fewer funds for compounding growth. Overconfident investors suffer from overall poorer portfolio performance. They are also less likely to plan for retirement and more likely to under-diversify. Inadequate diversification means increased risk during a market downturn. Overconfidence and arrogance can even persist as one’s cognition declines, which I am sure will come to no surprise to those of us who care for older adults.

So, what is an investor to do? The first step is recognizing this cognitive bias. You don’t need to dwell on past mistakes but you certainly should remember them. This awareness will help you monitor your behaviors and check in with yourself. Are you trading too much? Is your portfolio properly diversified? Is whatever financial decision you are making rooted in wisdom, or do you think you are outsmarting the markets? It is important to note that you shouldn’t avoid risk at all costs. Without any portfolio risk (diversified, timeline-appropriate risk) your long-term returns are likely to be inadequate, as risk and reward are related. Instead, continue to educate yourself about finances, the market, and your potential future needs. The more you know, the more you’ll realize how much you don’t know.

I also recommend that you review your account statements regularly and track your performance. But remember, just as you wouldn’t be your own doctor, you shouldn’t always be your own financial advisor. Professional guidance is of particular importance as your finances increase in complexity. A licensed professional, particularly a fiduciary you trust, can oversee your investments, helping offset any self-induced errors. While patients don’t always listen to our advice, hearing it rarely makes them worse off. The same is true with a financial professional. A good advisor will defer to you where you feel strongly, but also warn you when you are at risk of making a foolish move, just like a good physician will counsel a patient to quit smoking.

Being disciplined with your financial plan made in advance, increasing your contributions on a regular basis, and avoiding market hysteria are also solid ways to preserve your nest egg. Overconfidence threatens all of us. Being medical experts does not mean we are financial experts. Just like in medicine, approaching finance with humility will lead to better results. Balancing risk and caution, thinking out our financial plans, and taking on the counsel of a financial advisor will help us make it to retirement and succeed in our long-term goals.

Wesley J. McBride is an internist and hospital-based physician in California. He also works at The McBride Group, a fee-only financial planning firm that helps physicians and professionals make smarter financial decisions. Drawing on two decades in medicine and a deep interest in behavioral finance, Dr. McBride writes about the intersection of health, money, and mindset. His goal is to help doctors and high-achieving professionals build wealth without burning out or losing sight of what matters most. He believes financial health is a form of self-care and that the same discipline and empathy that make good doctors also make wise investors.