Article In Brief
Whether considering a move for a new job or job change in the same city, neurologists need to weigh the financial implications. Experts offer advice and practical tips to help weigh the financial risks and potential benefits.
When neurologists consider their career options, financial concerns often figure into their decision-making. Ideally, every move to a new job brings higher pay and career advancement, but the real world is not always ideal.
Jayant N. Acharya, MD, FAAN, professor and chair in the department of neurology at Southern Illinois University (SIU) School of Medicine, advises neurologists to balance the financial implications of a new job opportunity with the impact it will have on their career.
During a job search, it's easy to get distracted by lucrative offers that do not provide the increase in responsibility and job satisfaction you are looking for, he said. Likewise, it's easy to misunderstand exactly what the new employer expects from you.
“Sometimes people get very attracted—‘Somebody's offering me twice the salary that I'm getting here’—and that becomes a driving force,” Dr. Acharya said. “But once they get there, they realize that the job comes with a lot of additional things that they didn't anticipate doing.”
Hannah Watene, a neurology recruiter and search consultant for RosmanSearch, said it is rarely a good idea to take a pay raise without career advancement. “Not if you're sacrificing career growth for the pay raise and thinking the same career growth opportunity will come back around for you to consider,” she said. “If you're happy making a lateral move, then it's definitely great to find one that will pay you even more for the work you're already doing.”
On the other hand, taking a new job that offers too little career advancement or pay increase may not be worth the pain of moving, especially if you are uprooting your family, Dr. Acharya said.
“You probably wouldn't want to move unless there's a substantial advantage to it,” he said. “Small differences—for instance, maybe a 10 percent increase in your salary or a small increase in the quality of work—probably won't do it. You need something fairly significant.”
That said, personal circumstances—a spouse's work, the school you want for your children, moving closer to extended family—may justify taking a job that advances your career without a significant pay raise, Watene said.
What constitutes a pay raise, of course, depends on the cost of living in the city you will move to. “It's definitely important to do research on the area before accepting an offer,” she said. “Talk to people you know living in the area. Ask the current neurologists where you're interviewing about their experience with the affordability of the city, especially those neurologists who've recently joined.”
Many neurology departments will schedule a meeting with a real estate professional during your onsite visit so you can get an idea of renting or buying options.
The benefits package that comes with a new job also determines how much—or if—you will be better off financially, said pediatric neurologist Sotirios Keros, MD, PhD, now working full-time as a tax preparer and financial planner.
Benefits—such as various types of insurance, contributions to retirement accounts, paid time off, and more—all can be quantified as dollars. Doing so requires understanding of all the details, such as how much the employer contributes to a retirement plan over time, since the amount may vary based on the physician's age or other factors. Until those calculations are made, a physician doesn't know what the benefits add up to, let alone how to compare them to those offered by other potential employers.
“I have seen people take jobs at new institutions for a higher salary, but after taking into account their benefits, they have actually gone backwards,” Dr. Keros said.
The Importance of Savings
It's easy for physicians to make financial mistakes because, in many cases, they have no knowledge or experience with personal financial management. Their first jobs typically have relatively high salaries—and, often, doctors need to repay huge education loans—and managing them properly requires more sophisticated skills than they used to get by on low wages during their training years.
Indeed, many physicians feel trapped in their jobs because they lack the financial cushion needed to take calculated risks in their career, said Brad Klein, MD, FAAN, a partner in Abington Neurological Associates in suburban Philadelphia.
“During their training, physicians and advanced practice providers are given the resources to take excellent care of patients, but they are not given the resources to take care of themselves,” Dr. Klein said.
Dr. Keros, who recently left his position at Weill Cornell Medicine to focus on financial management full-time, works primarily with physicians, and he sees them falling into two camps.
One group is those who have saved and invested sufficiently throughout their careers. “Then there's the other side: people who simply don't save or contribute to their retirement accounts,” he said. “I see that much more than you would think.”
“Buy term life insurance and don't be sold by these hybrid products. That's probably one of the biggest abuses that I see, and it leaves a lot of physicians much less well off than they otherwise could be.”—DR. SOTIRIOS KEROS
“During their training, physicians and advanced practice providers are given the resources to take excellent care of patients, but they are not given the resources to take care of themselves.”—DR. BRAD KLEIN
“I was just a common victim of financial illiteracy. Insurance companies are out there to make a profit, and making a profit off of doctors' financial illiteracy is not illegal.”—DR. RIKKI RACELA
Raghav Govindarajan, MD, FAAN, a neurologist at HSHS Medical Group Multispecialty Care in O'Fallon, IL saw that first-hand when he was a young neurologist. He worked with two senior neurologists he respected for their patient care and the pride they took in their work. One of them had some health issues and wanted to retire but could not afford to do so; the other was showing his colleagues photos of homes in Florida and Arizona as he considered where he wanted to enjoy his coming retirement.
“So both were really good clinicians, and one had his retirement in order and a plan while the other was struggling despite working for many years,” Dr. Govindarajan said. “That's what made me start thinking about the financial aspect of my career.”
The Perils of Financial Illiteracy
When he was working on his undergraduate degree at Princeton University, serving as chief resident in neurology at NYU Grossman School of Medicine, and pursuing a fellowship in clinical neurophysiology, Rikki Racela, MD, never expected to have financial problems after he launched his career. His wife is an anesthesiologist, and they assumed their high-income household would protect them from money worries.
“But after seven years of being attendings, despite my wife and I making hundreds of thousands of dollars a year, we found ourselves with $31,000 of credit card debt,” said Dr. Racela, who practices at Bergen Neurology Consultants in Englewood, NJ. “I was rushing through patients, trying to make more money so we could get out of credit card debt.”
The core problem is that he had purchased a whole life insurance policy—a hybrid of life insurance and investment—from a friend whose job title was “financial adviser,” not realizing that insurance companies use that term for salespeople who work on commission.
The policy carried a $28,000 annual premium, more than Dr. Racela could afford and not a good way to invest for his long-term future.
“I was just a common victim of financial illiteracy,” he said. “Insurance companies are out there to make a profit, and making a profit off of doctors' financial illiteracy is not illegal.”
His moment of crisis came when a professional acquaintance called Dr. Racela out for not giving her brother, who had a brain tumor, the time and attention needed for high-quality care. That forced him to recognize that he was rushing through patients as a way of making more money.
“I feel very ashamed of that, but I think my story is a very minor example of how financial illiteracy affects patient care,” he said. “I think it's happening very commonly to other doctors.”
That perspective is based on Dr. Racela's experience as a columnist for White Coat Investor, a website that provides financial education and information for physicians. He started writing for the website after using it and other resources to become financially savvy.
“I applied the approach I used to learn medicine to learn about personal finance, and it actually was very easy,” he said. “Now I have an appropriate financial plan. I'm meeting my financial goals. I'm actually spending more money than ever on myself. I'm spending more time with my family, and I'm spending more time with my patients.”
Dr. Racela's advice: “Take your finances seriously. You will not be able to avoid learning about personal finance just because you have a high salary.”
He recommends a book, “The White Coat Investor: A Doctor's Guide to Personal Finance,” by Jim Dahle, MD, an emergency physician. Other steps to consider:
- For a good overview of issues that need attention, head to the AAN website and check out three short webinars under the Personal Finances subheading on the Resources for Residents and Fellows tab. Dr. Klein presents “Goals and Overall Financial Management” and “Debt Management and the Impact of Retirement Planning.” Dr. Govindarajan presents “Insurance: Disability and Life.”
- Doctored Money, a not-for-profit organization Dr. Keros and a colleague co-founded, provides commercial-free online education about topics of importance to physicians: student debt, taxes, investing, and insurance. Search for “Doctored Money” to find the website.
- Dr. Govindarajan recommends the Investopedia website, which provides both beginner-level and in-depth education and information about personal financial management.
Dr. Govindarajan also encourages neurologists to choose a financial planner that acts as a fiduciary, meaning their legal and ethical responsibility is to represent a client's best interest rather than to sell products. Many financial advisers and planners, including stockbrokers, are not required to act as fiduciaries, so make sure you understand how a financial planner is paid and who they are beholden to.
His financial planner regularly reviews his investment portfolio and insurance coverage to make sure they are sufficient to meet his financial goals.
“We sometimes think we don't need a financial advisor,” he said. “But I will tell you that as your career and life gets busy, this goes onto the back burner, and before you know, you're already 50 and ‘What happened!?’”
He advises young neurologists to work with a financial planner as soon as they start earning money. “It's never too early to start, and it's never too late to start,” he said. “So now is the best time.”