Ask Me Anything Volume 2: Your Financial Questions Answered
Welcome to another round of “Ask Me Anything,” where we tackle your financial questions with straightforward insights. If you caught the previous volume, you know the drill: same shirt, a fresh lineup of questions. So, buckle up and dive into today’s hot topics in finance.
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Watch our YouTube video as we dissect this blog post for you 🎥
Engaging with Your Questions
First off, a huge thank you for your questions. They’re the lifeblood of this series, and we’re excited to delve into them. Whether you drop them in the comments or prefer the privacy of our Google form, every question counts. Rest assured, your privacy is our priority, so feel free to use a pseudonym if needed.
The Five Big Questions
Here’s a sneak peek of the topics we’re covering today:
- Are financial advisers trustworthy, or are there hidden pitfalls?
- What impact does a college sports injury have on disability insurance?
- How should you approach umbrella insurance coverage?
- Backdoor Roth IRA: What are the essential steps?
- What changes should you make to your disability insurance as you become an attending physician?
Financial Advisers: Friend or Foe?
Let’s tackle the first question about financial advisers. You’ve probably heard the mixed reviews—some say they’re essential, while others warn of their predatory nature. The truth is that both sides have merit. Our industry is infamous for shady practices akin to used car sales, but not all advisers fit this mold.
The key is to ask the right questions. “How are you paid?” is crucial. If an adviser operates on a flat fee based on your income or net worth, that’s a promising start. Beware of those who earn commissions exclusively through selling you products—they might not have your best interests at heart. Always do your homework. Use FINRA BrokerCheck, and don’t underestimate the power of a simple Google search.
Financial Adviser Credentials
Credentials like CFP, CFA, and CPA are great but not foolproof. Some highly credentialed advisers peddle poor financial products, while those without formal qualifications can offer stellar advice. Your best bet is to assess the individual, not just the letters after their name.
Research Tips
Understanding payment structures is vital. A flat fee model is generally more transparent than a commission-based one. Use FINRA BrokerCheck for a background check, and check out reviews and testimonials on the web. They provide insight into the adviser’s reputation and client satisfaction.
Disability Insurance and College Sports Injuries
Moving on to question two, let’s discuss how a college sports injury can affect your disability insurance. Working with a good independent insurance broker is essential. They won’t just sell you products; they’ll also help gauge what exclusions might apply due to a pre-existing condition.
For example, if you suffered a back injury in high school hockey, this could lead to exclusions on your policy. Yet, unrelated disabilities would still be covered. This is why consulting with a knowledgeable broker is crucial—they’ll know what questions to ask and how to approach insurers.
GSI Policies for Residents & Fellows
If you’re a physician still in training, consider a Guaranteed Standard Issue (GSI) policy. This allows you to bypass health questions and secure coverage effortlessly, often at unisex rates, which can be a cost-effective advantage.
Umbrella Insurance: Do You Need It?
Question three concerns umbrella insurance, a personal liability coverage that supplements your home and car insurance. Umbrella insurance is especially important for high-income earners—doctors, lawyers, and other professionals who might be targeted in lawsuits. It’s about protecting your assets from hefty legal claims.
Coverage Amount Guidance
As a rule of thumb, your umbrella coverage should match your net worth. So, if your net worth exceeds a million dollars, customize your policy to cover that. It’s an affordable safety net that varies by state but is usually well worth the cost. Also, consider unique scenarios, like having teenage drivers, which can impact your coverage needs.
Navigating the Backdoor Roth IRA
Question four addresses the common pitfalls in establishing a Backdoor Roth IRA. The most frequent issue is having existing IRA balances. They can’t coexist with a Backdoor Roth IRA due to the pro-rata rule, which affects tax benefits. Ensure your traditional IRA balance is zeroed out by the end of the year.
Clearing Out SEP and Simple IRAs
If you have 1099 income, consider shifting from SEP or Simple IRAs to a Solo 401(k) to avoid conflicts with your Backdoor Roth IRA. It’s a bit of spring cleaning but worthwhile for long-term tax advantages.
Transitioning Disability Insurance as a New Attending Physician
Lastly, we explore the transition needed in your disability insurance policy as you step into an attending physician role. Increasing your coverage is paramount. During residency, minimal coverage suffices, but as an attending, you’ll want the maximum private disability insurance from reputable providers, as private policies offer stronger protection than group plans.
Level vs. Graded Premiums
Beware of policies with initially low premiums, as these can escalate. Transition to a level premium to avoid steep increases over time. This strategic adjustment ensures your policy remains affordable and effective throughout your career.
Navigating financial queries can be daunting, but understanding key topics like insurance and investment strategies can significantly impact your financial well-being. As you continue your journey, remember that you’re not alone. You got this! 💪
Looking for a more thorough all-in-one spot for your financial life? Check out our free eBook: A Doctor’s Prescription to Comprehensive Financial Wellness [Yes, it will ask for your email 😉]