Physicians often feel pressure to either manage their finances entirely on their own or hand everything off to an expert.
In reality, it’s usually best to land somewhere in between.
Today, Daniel Wrenne is joined by Heather Lovallo to discuss how to think intentionally about whether to do it yourself, collaborate with a professional, or fully outsource your financial planning.
Listen in to hear the real considerations behind each approach and the factors that matter most.
You’ll get practical guidance for early-career physicians setting a foundation, as well as a simple self-assessment to help identify where you fall on the DIY-to-outsourcing spectrum.
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Links
- Delegator, Validator, or DIYer? | White Coat Investor
- Vitals Check: Your Money Game Plan for Post-Residency Life
- YNAB
- Connect with Heather Lovallo
- Connect with me on my LinkedIn
- Contact Finance for Physicians
- Finance for Physicians
- To schedule a call with one of our awesome planners, book HERE.
Full Episode Transcript:
Daniel Wrenne: A lot of times you’re like, “Yeah, I got it, but I still don’t know. I haven’t experienced this, so I still have no idea what to do.” And so the best thing a lot of times is just to literally like jump in and see how—try to do it right, prepare a financial plan for yourself, and start executing on it.
And then see how it’s going.
Welcome to Finance for Physicians, the show where we help physicians like you use money as a tool to live a great life. I’m your host, Daniel Wrenne, and I’ve spent the last decade advising physicians on their personal finances with the mission to help them understand that taking control of their finances now means creating a future where they can practice medicine where, when, and how long they want to.
Daniel Wrenne: Heather, good morning. How are you?
Heather Lovallo: Hello. Doing well. Glad to be back. How are you today?
Daniel Wrenne: I’m doing great. I’m excited to—we’re gonna talk about delegating/outsourcing versus doing it yourself, and I’m fresh off of a—we will say delegate or outsource projects that I didn’t do.
Heather Lovallo: Okay.
Daniel Wrenne: So actually, I think this was why we were gonna record this a couple days ago, and turns out the plumber was coming, and they had a super loud saw operating during when we were gonna record.
Heather Lovallo: Yes.
Daniel Wrenne: that all started because my wife texted me while I was working out and she says, “This is like a dreaded text for me.” She’s like, “There’s water coming out of the main pipe.” And I’m like, “How much water?”And she didn’t gimme much detail, so I rushed home and it wasn’t much, it wasn’t much water, fortunately.
But if I think about myself 15 years ago, I would’ve assessed the situation. I’d have been like, “Okay, I got this.” It looked like there was a leak or a corrosion in the mainline, and I’m sure I would’ve Googled it and watched some YouTube videos and thrown some whatever cement on there, I don’t even know. And then moved on.
But I have definitely gravitated pretty far towards the when in doubt, delegate, outsource, view. And so then the plumbers came and they’re like—at first the plumbers came and they’re like, “Actually a screw was loose.” And I’m like, “Maybe I should be doing it myself.” They made a mistake.
The leak was still leaking and so they were wrong. It turns out that the pipe had corroded a lot and there it was like cracked and so they had to cut the whole thing out, put a brand new thing in. That would’ve been way beyond what I would ever want to get into. So anyway. I have shifted way towards delegation.
I would’ve been on the YouTube like seven hours in like, “Why did I do this?” That’s how it’s gone for me in the past and why I’ve shifted that direction. It always takes longer than you expect and all those things. So we’re not gonna talk too much more about plumbing, but we’re gonna talk more about personal finance.
I think a lot of you guys listening are in medicine and I think it’s interesting. I think the philosophy in healthcare is more towards like specialization, and so that requires delegating. ’cause you know you have to stay in your lane and when it’s outside your lane, you delegate to the other expert.
And it works well ’cause you can really specialize. The more you delegate and outsource, the more you can specialize. Whereas with personal finance, I think it seems like I’ve worked with physicians for a long time, like 20 years-plus, and I think that there’s been, there’s a little bit of a—it’s harder with finances because that’s further, way further outside your lane even than just referring to another specialist in medicine.
And so I’ve seen a lot of physicians shift over time, like probably 20 years ago, there was a heavy lean towards delegation, but a lot of physicians have been taken advantage of over the years. Like you have a target on your back. And I think for good reason, people have reigned it in a little bit on that as a result of getting hosed for years by financial salespeople, advisors, whatever, and have shifted more towards DIY as a result of that.
There’s also a lot of like influencers out there that kind of emphasize you should do it yourself—If you have any sense, you should be able to do it yourself with your finances. If you’re smart enough to get through medical school, you should be doing it yourself with your finances, which can come across like you’re not smart if you delegate. And so I thought it would be good to talk through this. There’s not a right answer for this kind of thing, but I think there’s a little bit of—it says somewhere in the middle of a lot of this and it’s difficult to know where you stand in the midst of all this, especially when you don’t have a lot of experience with it, and you have a lot of people telling you, you should do it this way, and you’re like, “I don’t know any better.” “I guess I’ll just do what they say.”
So we wanted to start out with talking through, I don’t know what to call this, I guess a DIY versus outsource quiz
Heather Lovallo: Or middle of the road, that’s also an option… Yeah, we got a quiz for everybody in talking about this.
Daniel Wrenne: And there’s Jim at The White Coat Investor. I think he probably created—has a pretty good quiz. I don’t a hundred percent agree with his stance on it, but you can check it out. I have a little bit of a shifted view one way or the other on how this might look for someone. But that’s another resource.
I think he’s written about that relatively recently, so I’m glad to see more resources being put out to help you guys like navigate the decision and less like shoulding.
Heather Lovallo: Yes, the peer pressure is strong, and certainly, if you are a physician, you have done years of training. You have proven that you are able to do the hard work and to acquire very specialized knowledge.
I don’t think that anybody would question that. Really, I see a couple of things at play here. So one of them being this idea of being able to do all things because you are smart and capable, and certainly there are other components to it than just, “Can you? Do you want to? Do you have time for it?” And also, one would argue a lot of times the deeper you get into something, the more you realize that there’s a lot that you don’t know and can’t possibly know all of it.
I think really even within our field as certified financial planners. We know enough to know that there’s a lot out there and we know when we need to collaborate with other people within our field who specialize in very specific areas of finances because it really is impossible to know everything.
Just like I’m sure any doctor would say, it’s impossible to know everything about the human body. All that to say there’s that side of it, and then there’s also what is the value of you doing it versus somebody else doing it, assuming that, yes, I want to, yes I can. What is the value there for you to spend the time and the energy doing it versus somebody else and or getting a second opinion?
But yeah, let’s just get into the quiz and then we’ll have lots to talk about afterwards to dig into some different considerations then I don’t know. We may or may not even agree on what to do with what the answers are, alright, so here we go. We’re just gonna do five quick questions. So listeners out there, just keep a mental tally of whether you are picking mostly A’s, B’s, or C’s as far as the answers as I go through these questions.
So first one, how do you feel about managing your own finances? So A is, “Yes, love it. Really enjoy it, want to do it.” B is, “Yeah, I enjoy some of it, but I don’t mind having some help, and I probably don’t wanna be doing this all of the time.” Or C, “Ew, no thanks. Don’t wanna do this. Would love it if somebody else would take this off the table for me.”
So that was number one. How you feel about managing finances.
Number two. How much time do you have available for managing finances? So A is “Plenty,” B is “I got some,” or C is, “Nope, I don’t have time for any of this.”
Number three. How would you describe your instinct about making big decisions? So thinking through big financial decisions, how you go about it. So A is you just research it yourself. B is you do some research, but then you’re gonna ask for a second opinion before you make a final decision. Or C is, “I don’t wanna do research, I just wanna go straight to an expert and have somebody tell me what to do.”
All right. Fourth question. How would you rate your confidence in spotting blind spots?
So thinking through again, what you don’t know, knowing what you don’t know. All right, so rating yourself in confidence here. Okay. So you would say A is “Hi, I’m really good at knowing where I have a blind spot.” B is somewhere in the middle. C is, “I am not good at this at all. I don’t know where my blind spots are. I don’t even know what that would be.”
Daniel Wrenne: If you answer A to that, wouldn’t that make it not a blind spot?
No. Here’s another thought on that is maybe that’s a good question for you to ask someone else that knows you really well.
Like your spouse would be great ’cause they know you in all sorts of settings.
Maybe you could ask your spouse. You might be like, “I know all my blind spots.”
Heather Lovallo: Which might indicate that you in fact, do not. Alright. So then last question number five. When you think about approaching your finances, which of the following would be the most appealing to you? So A would be staying in the know on all things financial and pulling all the strings as a do-it-yourselfer. B would be somewhere in the middle of balancing your own financial knowledge and actions with backup from a pro. C is having the peace of mind that somebody else, an expert, has just handled it all for you.
All right, so Daniel, it looked like maybe you were taking some notes or writing down your answers as you were going along. So I’m curious to know how you shook out. But let me just go through real quick, the basic profile based on what you selected for the most part for your answers.
So if you are mostly As, you are gonna be the classic do-it-yourselfer. Meaning you like having that control. You’re probably the type who maybe has spreadsheets. You do research, you take time. Digging into maybe things like your budget, you might really get into investments and selecting your own funds.
You might really enjoy that process. So that’s gonna be more of the classic do-it-yourselfer. If you picked mostly Bs, you’re more of a collaborator. So somebody who’s comfortable handling some things when it comes to finances. Maybe also similar in having some spreadsheets, getting into the budget, but you really value having a second opinion whenever it comes to maybe some bigger decisions surrounding your finances.
How much should I put towards my retirement plan? What should I invest in? A And getting somebody else’s opinion there. So that’d be more of a collaborator. And then mostly Cs, if that’s what you answered, you’d be a classic outsourcer, meaning you really prioritize having the peace of mind and the time to spend elsewhere and having somebody else who’s an expert in finances handle things for you.
So Daniel, how’d you shake out?
Daniel Wrenne: I’m like in the middle. I’m like 10 or 15 years ago, like I was saying earlier is I’d be definitely DIY. But it seems every year that goes along, I shift more towards outsourcer. I still have a little bit of a DIY in me.
And it’s hard to, we’re also financial planners, so we’re talking, feels like a—but we have a much higher chance of probably enjoying personal finance. But still, some of us might be fully, or where? Where were you? You were in the middle too, right? Is my guess.
Heather Lovallo: Yeah. Yeah. So I am super nerdy whenever it comes to budgets, spreadsheets. I love digging into details like that.
But at the same time, I think really it gets back to that question about blind spots and also the idea of the world of personal finance is so vast that it’s difficult to truly be an expert in all things at all times. And so I feel like it is very beneficial, especially as somebody who knows a lot in the field, to have somebody else that I know and trust who also is an expert to give a second opinion on, “Hey, have you considered this thing that might really tweak your plan and make it that much better?”
So that’s where really that collaboration comes in, is just knowing that I don’t know everything. It’s not possible to know everything, and I like having that second opinion from somebody else who understands my values also.
Daniel Wrenne: Where would you say a lot of the families that you work with, if you had to guess, like physician families you work with, where would you guess that they would end up in this?
Heather Lovallo: That’s a good question. And I think it really depends on which facet of the personal finance you’re that we’re talking about, because I feel like a lot of the people that we work with really value understanding the jargon. They want to be educated on what’s going on with their finances. They want to understand why we make the recommendations that we make, which I think is very wise and very helpful when it comes to actually implementing the action items.
At the same time, a lot of our families are busy with their personal lives, with their work and when they are home from work, they wanna be able to spend it with their families and not necessarily having to research things and be completely responsible for all of those decisions. I don’t know, I think probably shaking out more towards that collaborator with maybe some skewing a little bit more towards outsourcer.
They really just want to have somebody else handle when it’s time to do those backdoor Roths. “Hey, somebody else, please draft the funds. Please go ahead and invest the funds for me.” Whereas some others might be a bit more of do it yourselfers with regards to how much they enjoy maybe doing the the YNAB budgets, really digging into this is where our money’s going every month. Really wanting to be on top of that and fact checking all of the numbers and really getting into the weeds with us. So yeah, mostly collaborator, probably.
Daniel Wrenne: Yeah, I would say a lot of families I work with are probably lean towards DIY at first, maybe in the middle, but definitely there’s plenty there lean towards DIY because I think that they feel like they need to be more—
When you’re not knowledgeable in an area, I think the first thought is, “I need to understand it more.” It’s so there’s the challenge of like even out knowing how to outsource, you have to be able to keep your person, you’re outsourcing to accountable.
So there’s. I think that there’s a lean towards DIY just for—or people have told ’em they should be that and like I was saying earlier, and they don’t, the actual act of execute on it, executing on it has been super challenging over the years and they’ve definitely shifted way more towards outsourcing.
I think, like I have myself, I’ve seen a lot of them shift over time to where they’re like, “I just want to find somebody that’s really good and have less on my plate. I got too many things on my plate already.”
Heather Lovallo: Sure, sure. And even for those who maybe really enjoy selecting those investment funds, really enjoy doing that aspect of making trades.
Are you actually gonna have the time and the schedule to prompt yourself to be going in and looking at things and rebalancing things on a regular basis? I think that there are plenty of people for whom they might enjoy that if they had unlimited time, but they don’t. There’s just so much going on, and so in order to do it well, it makes sense to pick somebody that you trust who’s going to, as I said before, align with your values and be out for your best interests whenever it comes to your finances, and still collaborate with them.
Still talk with them about the strategy. Still be in the, know about the strategy, but the actual execution, like you said, somebody else is taking care of that, taking that off their plate.
Daniel Wrenne: Yeah. So I think looking at where your career stages or life stages is super helpful to, ’cause I think if you are at, if your early career, like if you’re in training and starting a family and it doesn’t—
Heather Lovallo: Not getting paid much in your career.
Daniel Wrenne: Not getting paid much. Yeah. And so in that situation, you’re gonna have very limited experience with this kind of thing. Or maybe even none. And then income is lower, so it feels pretty straightforward, but like time is typically non-existent.
Heather Lovallo: Yeah.
Daniel Wrenne: Not only do I have zero time.
A lot of times in training is the feeling that people have and then also limited knowledge is pretty common, like in terms of personal finance or financial literacy is typically pretty, pretty low in that career stage or phase. So that’s a tricky balance of circumstances because it costs money to hire help.
And it’s also best if you have some knowledge to be able to know where to start there. And they can’t do it all for you either. And nobody’s gonna care about your money as much as you do. So you can’t delegate all of it. So that’s just a challenging time.
And then also the costs are more—what people don’t realize in that career stage. I am sure I was this way myself at that life stage. You don’t realize how it doesn’t seem like the finances are that complicated, but like the decisions you make are much more costly because typically people get set in their ways, and they set their habits, and then they keep them for a long time.
So for example, your savings habits or whatever, when you set those habits, kind of thing typically stays around for the long haul, even when your income goes up. And so those decisions on the front-end can have a bigger impact and you’re setting the foundation.
Heather Lovallo: I do think that this one is nuanced, a nuanced stage in the sense of you’re working your tail off, but there might also be less of a time commitment at this stage with regards to responsibilities towards family like this may be a transition point where you have very high motivation to start learning about things as maybe you are getting married, as maybe you are starting to have kids.
But you might not be in the full throes of family life. And so there might be a little bit more time in your limited off hours to do some research and to have that awareness of, “I’m about to get a very big pay raise once I’m done with training. And what do I do with that?” So yeah, it is all over the place with that.
But definitely a very important point to make as far as when we think about the success of our families, a lot of it has to do with the habits that they put into place whenever they’re on a shoestring budget, and being very intentional about how they’re going to manage their money before they get that big pay bump.
AD BREAK
Daniel Wrenne: Let’s take a quick break to talk about our firm, Wrenne Financial Planning.
The goal of our podcast is to empower you to make better financial decisions, but sometimes the best financial decision you can make is to work with someone who understands your financial goals and has the expertise to keep you on track to reach them. That’s where Wrenne Financial Planning comes in. We are a full-service financial planning firm that works with over 400 physicians and their families across the country.
We charge a transparent monthly flat fee for our services and offer virtual meetings you can take from anywhere. Best of all, you’ll get to work with a team that specializes in working with physician families. So whether you’re starting out and wondering how you’ll balance your student loan payments and saving for a home, or you are established physician trying to figure out how to pay for your kids’ college and how much you need to save to reach financial freedom, we can help.
I’ll put a link in the show notes to schedule a no-obligation meeting with one of our certified financial planners. Wrenne Financial Planning, LLC is a registered investment advisor. For more information about our firm, please visit wrennefinancial.com. That’s W-R-E-N-N-E financial.com.
AD BREAK END
Daniel Wrenne: Yeah, and I think some of the things that—so we can sprinkle in some of the benefits of—so we’re working, I guess, as the party, the third party that people delegate to in this sort of, in the context of this conversation, we would be in the role of the person they would hire to delegate to.
So one of the things I’ve noticed that is especially valuable, just in addition to what Heather was saying, is setting the foundation is helping remind them of what’s most important as they make big decisions, not only like having the good habits, like everybody knows like save adequately and get insurance and whatever, but also constantly reminding them or using their values as a lens in their big decisions.
So for example, like everybody, not everybody, pretty much, most people listening will go through the experience of having to buy a house. And so that’s a really tough one a lot of times. It’s like spend more on house equals have less for other things. So you have to look at what’s most important.
Like maybe a lot of times families I work with, their number one thing is time with family or something like along those lines. And that’s what it is for me. That’s a super high value for me. So I know if someone—you think that the house is purely about the family because they’re living in it.
But really, a pretty common situation we see is people spend more and more, or their budget goes up and up on the house to the point where it starts to—‘cause the more you spend on the house, the more you’re a slave to your job, which means the more time you’re out of the house. So it’s easy to get in a position where you’re working extra hard to pay for the mortgage.
Heather Lovallo: And it would be less to spend on other things with the family like travel, which we hear a lot from our families really want to do more travel and certainly the lifestyle expenses in the day-to-day, including mortgage can eat into how much is left over for things like that.
Daniel Wrenne: And so I found that’s really hard to do yourself, or it’s really easy to get caught up in the day-to-day or the emotions of big decisions. And it’s really hard to be like, “I’m gonna take a step back and consult my values.” Nobody does that. It’s just not normally the frame of thought.
And so by having a third party, they’re gonna constantly remind you of those. Now if you’re doing it yourself—it’s not to say you can’t do that—but if you’re doing it yourself, you just have to have the discipline to be constantly referring to your—like a good financial plan.
So constantly you’re referring to your plan. A good financial plan incorporates your values or has your values listed or is along those lines. And so that can be like your compass in big decisions. Another thing I was gonna throw out there is in that early career stage, something I would, if you’re still, this quiz is intended to help you think about this.
But a lot of times you’re like, “Yeah, I got it, but I still don’t know. I haven’t experienced this, so I still have no idea what to do.” And so the best thing a lot of times is just to literally like jump in and see how, try to do right a—prepare a financial plan for yourself and start executing on it, and then see how it’s going.
Or we have a course that’s designed to help you set the foundation of your finances. And so if you can’t get through a course and it’s not easy to get through it, a lot of times that’s a good test in itself. It’s if you can’t get through a course like that’s probably a good sign that it’s like maybe you should look at hiring help.
Heather Lovallo: One other thing I’d throw out there too, especially for those that are managing finances as a couple. It can be sometimes difficult to navigate whenever one might be more of a do-it-yourselfer. One might be somewhere in the middle or more of an outsourcer, but maybe still wanting that second opinion outside of the couple.
Just to be able to have insight into how each person maybe relates to money, how they relate to money as a couple. And seeing blind spots that can be factored in, that can come up later on in difficult discussions as far as what is the plan, even if you are actually going through the exercise together of talking through your values and your goals.
The way that you accomplish them can be drastically different between two people’s opinions and two people’s ways of relating to money. And so that’s something else that a third party can bring insight and help into is navigating that as a couple.
Daniel Wrenne: Yeah. We have families, I can think of several families we work with that are, it’s like if they weren’t married, like if it was just the one spouse that like means DIY, there’d be zero chance we work with ‘em.
They feel fully confident. The other spouse doesn’t feel fully confident. Maybe they’re not even confident in their spouse’s DIYs abilities. Remember the show Home Improvement? That’s like the classic DIY show.
Heather Lovallo: Oh yes.
Daniel Wrenne: And then he blows everything up. So he was like, who’s the guy in there?
Heather Lovallo: Tim Allen.
Daniel Wrenne: Tim Allen. Yeah. Tim Allen was the guy. Yeah. Anyway. I’ve even worked with people that tell me this. They’re to the point where they’re like, “I’m hiring you. I’m a DIY-er, but I’ve been doing this myself, but like I’m doing this for my spouse” because either they’re concerned about like succession, like if something happens to the person that’s doing it or they’re just like concerned about their abilities to do it, or they’re like, “I don’t ever see you. Like you work a lot and you’re doing all this, come on, like what are you gonna hand, you need to hand some stuff off ’cause you’re already like away from the family enough.”
And so they have compromised and agreed to hand start to hand some things off and save the time and the headache.
Heather Lovallo: And sometimes too, it can just be difficult to communicate about some things, and sometimes the person who maybe has a lot of knowledge might struggle with being able to communicate that in a way to the other partner that doesn’t come off as condescending or talking down or making them feel uncomfortable.
And so sometimes having a third party is very helpful just to be able to communicate—here are the options, here’s why this recommendation is pertinent to your situation as far as the strategy is concerned. And being able to get that buy-in so that both parties are on the same page.
Daniel Wrenne: Like I’ve come across a couple that—I’ve got lots of stories— where one spouse is doing it all themselves. They’re like “Harvard tuition, room, and board for all of our children” is in their head for the goal for education for their kids, and they’re doing it all the finances. So the other spouse is not involved.
They’re not as into it. They don’t really know. They’re like, yeah, they’re handling it. But then when you sit down with ’em, the one spouse that’s handling it is like, of course, Harvard tuition, room, and board. The other spouse is, “Are you kidding me? I thought we were gonna do like the local state school at most, and maybe not even fully cover it.”
And that causes tension usually, but it’s better than like last-minute tension or whatever. That eventually will come up as a problem.
Heather Lovallo: Right.
Daniel Wrenne: And there’s all kinds of things like that come up with finances. I’ve come across people that are like, “If we end up working with you, I need you not to tell my spouse about this debt that I just told you about.”
Heather Lovallo: Ooh dicey.
Daniel Wrenne: That’s not gonna work. I can’t do that. We work for both of y’all so.
Heather Lovallo: Yeah. Yeah. It does help to—working with a third party certainly helps to enable the conversation. So the scenario you’re just describing where one person has got it handled but has a very different goal from, say, the other person.
When you talk through the projection of this is what it costs in order to fund an education at private school, wherever the kids wanna go versus in-state tuition. You see that difference there? The big translation there is what does this look like in your current cash flow? And so maybe talking through, are there any concerns or strains in the current cash flow that can be resolved by talking through that long-term goal?
And if we are making it something different, oh, now we have more cash flow in the present in order to maybe do more travel in the present, that might be what the other spouse is really desiring and just helping to even things out there.
Daniel Wrenne: Yeah. So these are just things to think about. Like I said, there’s no right or wrong answer if you’re going to do it yourself versus outsource. Doing it yourself, you really need to be making sure you’re like on the same page with your spouse, especially about values and then big decisions, and what’s the purpose behind it? Why are we doing it? What’s the steps involved?
So a lot of times, I think a lot of DIYers aren’t the best with communication. I don’t know. That’s probably not, that’s probably a stereotype, but I think. Like for example, my dad is the classic, he’s a very DIYer type. And so his logic is that it is like taken care of.
He’s doing it himself. So he doesn’t really communicate a lot of the things that are getting done ’cause they’re getting taken care of. But you have to go above or go outta your way, I think, to make sure you’re living in your spouse, if you’re going that route.
Heather Lovallo: Yes. Absolutely.
And that’s where it can get tricky, especially if you aren’t the best at communicating those things. And certainly if it’s not being communicated well, that’s how you get a partner who’s disengaged. And that leads to both of you not being on the same page whenever it comes to that strategy.
And it starts to undermine the strategy that one person may have created, the other person doesn’t have buy-in, and now we’re not really able to do the action items and implement things in the way that maybe would be better facilitated if there was a third party speaking into the situation.
Daniel Wrenne: Yeah. So I think we’ve hit on a lot of the big factors.
There’s a couple more that come to mind. Just your mindset towards finances. Like the big ones I think of are like abundance mentality versus scarcity mentality. So I think I definitely come from a scarcity mentality mindset. And that’s partly why I lean heavy DIY early on. So scarcity would be the view that there’s a limited resources and especially in your household, you have to preserve every dollar and be counting your pennies and be careful and there’s ’cause there’s a limited amount.
Heather Lovallo: Yeah. And be responsible for it all. Like it’s all on you, it’s all on your shoulders, you gotta get it done.
Daniel Wrenne: Correct. So scarcity mentality is, I would say. When you have a scarcity mentality, it’s just gonna even, it’s just gonna be really tough to delegate finances.
Even if you don’t have financial literacy and confidence in the abilities, it’s just gonna be hard ’cause you feel like you need to do it yourself. ’cause it’s limited resources because, and so I think if you’re in that position, you can explore, like I said, I’ve shifted, mine has shifted over time. You can explore more like why you’re there, and also work more towards gaining financial literacy.
I think it’s good to gain financial literacy no matter where you’re at, but especially in the DIY lane.
Heather Lovallo: And it’s something that requires longevity in doing that research, right? Like you can’t just do it one year and say, okay, I’ve learned everything I need to know, and now I’m done.
It’s an ongoing process.
Daniel Wrenne: Yeah. I think that’s also a misconception. It’s we’re talking about delegating versus doing yourself with your personal finances. Personal finances is lifelong. Even financial plan is really financial planning. It’s a lifelong exercise of re-tweaking the financial plan, and financial plans never work out perfectly either, and then the world changes around you.
So constantly tweaking over time as stuff changes.
Heather Lovallo: Sure. Tax laws are gonna change, retirement contribution, max limits change. In your workplace, what’s offered in one place for your benefits and your work retirement plan is different from the next. What do you do with the old one?
How does that compare with the new one? Now you’ve got two options instead of one, life changes, goals change, family size change, all of these things, put together means a constant going back, looking at it, is this the best way to approach our strategy and tweaking things. So yeah.
Daniel Wrenne: Any other big factors that come to mind?
Heather Lovallo: Yeah, I just keep coming back to what I guess brings you joy as far as if personal finance is something that you really do enjoy. It’s something that you get into and that you are good at, you’re organized, you’re detailed. Wonderful. A lot of the families that we work with obviously are gonna say even if there’s a part of it that they might find interesting or that they enjoy doing, it’s not gonna be all of it.
And for a lot of people, there are certainly aspects, the B word—budgeting—that they dread, especially whenever it comes to trying to navigate that between a couple, for example. And we have all these different accounts, all these different credit cards, and trying to go through all these transactions.
It’s just, “Ugh.” So there’s that. And also, again the time factor too. Even if it is something you do enjoy, do you have the time to actually commit to it, to be doing the active tasks whenever it comes to investing, for example, rebalancing your accounts, when it comes to taking a look at the beginning of the year.
But IRS contribution limits and making sure that you’re going in and adjusting things. Doing that backdoor Roth, facilitating that process yourself, is that something that you have the time to do in addition to wanting to do it as opposed to putting that time elsewhere, say, family, travel, work, that kind of thing?
Yeah. And then as we talked before about the blind spots, I just find that with anything, it’s practically impossible not to have blind spots in some way, shape, or form, and practically impossible to completely be an expert in all things. And so I think very rarely would one not benefit from having a second opinion, at least at certain points in the process.
Daniel Wrenne: Yeah, I think financial security is another one. And you don’t have to, when I say financial security, I don’t mean you have to be loaded. What I would define that as is like feeling secure or good about your overall finances. And I think I’ve worked with people that are completely financially secure and have very low net worth. Balances in their accounts are not massive, they’re low or they still have debt or whatever.
And then I’ve worked with people that have a ton of money and that are not financially secure at all. And so I think that’s a big factor because I think when you’re not financially secure now, it can go both ways though. If you’re not financially secure, a lot of times you’re just worried about your money and you’re like, “I gotta fix it.”
I guess that kind of ties into maybe scarcity mentality, but you’re like, “I don’t have the resources. I gotta get to a point where I’m secure and then I don’t have the money to do anything else.” Versus if you’re confident in your finances, a lot of times you have that, you already have that baseline confidence to where you’re just like.
It would be nice to not have to do these things, all these things myself, and I’m financially secure already. And so I would love it if I could pay for some help to take some of these things off my plate, ’cause I’m already confident in my finances. It’s just maybe they can help me a little bit to feel even more confident, but really it’d be great if I could take a lot of these things off my plate ’cause I live a busy life already. And it would just be nice.
So I think a lot of different factors. It’s a personal decision. I guess that’s why they call it personal finance.
Very personal with your finances especially. And so I think as we wrap up, Heather, maybe we can go through some specific action items, maybe based on where you’re at spectrum of DIY versus outsource.
Heather Lovallo: Yeah. Yeah. One of the things, I suppose, that might even be a good measurement of where you’re at is just the question mark of do you have all aspects of your financial plan in place? If you truly are a do-it-yourselfer, odds are good. You’ve at least started that process. You are walking down that road of actually implementing things. Not just researching, but putting it in action.
If it’s something where you know you’ve been meaning to do this for a long time, maybe that tells you a bit more about where you’re at with, maybe you need some collaboration, some accountability there to have somebody address some items that you have question marks about so you can actually pull trigger.
Or if you’re that person again, that outsourcer to say, “Oh, I want somebody else to do it,” you still have to actually take the act of finding somebody. So starting with the do-it-yourselfer, there’s a variety of tools that are out there to use in order to accomplish all of the aspects of financial planning.
I think the key with do-it-yourselfers is to pay particular attention when you have big life transition points in which there are bigger decisions to make in order to tweak the plan and readjust that setting. So for example, when you go from resident to attending, or maybe you are buying that house or getting married or having a kid, those tend to be big points at which it’s time to probably look at that plan with fresh eyes.
And then just double-check what needs to be tweaked. And then you might consider having a check-in with an expert, either annually or looking into one-time plans to head off blind spots. When you’re a collaborator, also, still using tracking tools perhaps for budgeting or financial tools and systems that might help you stay organized.
If you’re leaning more towards that, do it yourself. You might look into financial planning, that’s more like an hourly planning or one-time-based plans that you do every now and again. Basically getting that second opinion, setting that strategy and getting to that point of being able to pull the strings yourself.
If you’re the collaborator that maybe leans a bit more towards outsourcing, then traditional ongoing financial planning is likely a better fit. And you’ll wanna find a pro that’s gonna help educate you on all of your options, talk you through the most ideal strategy, and actually assist you with the steps of doing what needs to be done.
So within that, probably that collaborator is gonna want to find somebody who has maybe some flexibility. And who’s doing what of the action items, who’s actually pulling strings on each thing? For those that are outsourcers, definitely looking for financial planners that offer the comprehensive services so that you can consistently and proactively address every facet of your financial plan, not just the investments.
And for everybody, I’d say no matter what you’re looking for, if you’re gonna be working with a financial planner, we’d always suggest that you interview a variety of people who are fiduciaries, CFPs, certified financial planners, fee-only firms. Very important that you ask about exactly what the scope of the services being offered are.
What did the fees cover? What’s the communication style of the advisor that you’re working with? Very important, no matter what, to have a good rapport with your financial planner and to be able to communicate well with them as far as getting the information that you need to do what you need to do to implement the plan.
So those are the biggies.
Daniel Wrenne: The only thing I’ll add is if you’re an early career and you don’t know where you’re at, even after hearing, through hearing us go through this, I would suggest checking out our course, which is linked on the finance for physician’s website. It’s called Vitals Check: Your Financial Game Plan for Post-Residency Life.
But the gist of it is, it’s like a foundation setting, walkthrough, not just a educational resource, but more of a workshop-style walkthrough to help you like get the foundation set up. And the reason I go there is because I think, hopefully if you guys check it out, you can get through it and that’s a really good like reassurance.
You’re probably on the right track in the DIY lane. On the other hand, if you get into it and you’re like just stuck, you just can’t get through it. That’s pretty common. That’s okay. Then that’s a signal, like hire help. Probably a good signal to consider hiring help. And then if you’re further down in your career, this can also be a good resource there, but I think the, hopefully our conversation is helpful and your experiences are a little more helpful.
The other thing too I’ll throw in there is, Heather didn’t mention this, but she is, she’s great about, she’s acting as a financial planner in this capacity, she’s fantastic. She’s serving clients in this role. She’s a little bit, I’m more quick to say hire a financial planner. She’s very objective with this thing.
Of course, I’m biased. We all have a bias, but Heather’s a fantastic resource and she’s great about talking to people that we’re not necessarily working with to have like introductory conversations to help them like talk through the decision. We’re just talking through right now in itself because a lot of, I think, isn’t that right Heather?
Like a lot of your introductory calls, like a lot of times people are like, I’m not sure, let’s talk.
Heather Lovallo: Yeah. Yeah. A lot of times I will ask questions that kind of head upon the different facets of financial planning that we do. Let’s talk a little bit about where you’re at with budget and cash flow.
Let’s talk about what your strategy has been so far with retirement savings, with paying off student loans or other debt. How do you feel about your confidence in your risk management plan? What are goals aside from the, maybe the more traditional I wanna plan for retirement, I wanna plan for—Having a family and maybe being able to pay for my kids’ education.
Aside from those things, what else? Short term or long term is on your horizon, and then just talking through these are the services that we provide that might be able to address each facet of that financial plan. This is what our process looks like, what our fee looks like, and hopefully help them decide by the end of the meeting whether or not we’re a good fit for what they’re looking for.
But I think really in wrapping it up, I just wanna emphasize that there’s no right or wrong way to go about financial planning. I think every financial planner would just advocate: do something, be intentional, and don’t just drift into being a do-it-yourselfer because you feel pressured to do it, or be feel pressured to outsource things if that doesn’t align with where you’re at.
And also be open to whichever way you’re leaning. That’s probably gonna change over time, just like life changes over time in life circumstances. And it’s okay to make a switch to a different financial planner or a different model of service, when and if that happens.
Daniel Wrenne: Well said. All right, Heather, it’s been fun as always.
Heather Lovallo: Absolutely.
Daniel Wrenne: We’ll look forward to next time. Thanks for getting on to go through this with me.
Heather Lovallo: Sure thing. Hope it’s been helpful to our listeners.
No guests or clients appearing on the podcast received any form of compensation for their appearance and obtained no other benefit from us. It should not be assumed that every client has had the same experience.
