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Here is our situation - my wife is a medical resident and soon will be graduating program, every year there is this company which representatives take whole cohort of residents to nice dinner and present their services. Basically its a team of financial advisors. They sell insurance (malpractice, disability & life), have CPAs for hire, have Fiduciary Investment advisor and financial planners..

Where I see most value is that they are claiming they have couple strategies how to get rid of student debt

Also this transition from residency to job, they been there with graduates million times and probably know couple tricks and what to look for, or how to evaluate the contracts.

But they offer much more than that (taken from their presentation)

  • Create a Budget and Emergency Fund
  • Maximize Employer Benefits
  • Initiate Insurance Strategy
  • Evaluate your debts
  • Implement an investment strategy
  • Recruit your personal finance team

And those are the roles they are bringing along in their financial team (taken from their presentation)

  • Fiduciary Investment advisor and financial planner
  • Independent Insurance brokers
  • CPA- Certified Public Accountant
  • Estate Planning Attorney
  • Business/personal Banking Relationship

The question is if those companies are legit and creates value, or they cost more then they bring, how can I evaluate them and what are some red flags I should look for.

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  • 4
    Do you actually need any of that? Free dinner is nice for a medical resident, but do you actually need these services?
    – littleadv
    Mar 11 at 17:57
  • 3
    Lean on your wife's network of current and past med professionals. Every single one of them has been approached by at least a handful of these companies, and if you trust their opinion, it's more valuable than the generic advice you can get online. Mar 11 at 19:29
  • Just remember that nobody but the fiduciaries is necessarily putting your interests ahead of their own, and that you aren't obligated to take their suggestions.
    – keshlam
    Mar 11 at 23:15
  • And that much (most?) of what they will offer you has equivalents that are straightforward enough for you to manage yourself, possibly with an advising session now and then.
    – keshlam
    Mar 13 at 12:56

4 Answers 4

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What do you actually need? Let's look at your examples:

  • Create a Budget and Emergency Fund: Ok, they tell you to save money
  • Maximize Employer Benefits: How? All they can do is to look at the available benefits and help you get them. Unless you are extremely busy, talking to HR and colleagues should get you everything there is without much hassle.
  • Initiate Insurance Strategy: There isn't really such a thing called insurance strategy. You need certain minimum insurance. On top of that, you decide what else you think is useful. E.g. if you like to travel oversees for skiing, you might want to make sure you don't need to pay it yourself if you get airlifted. On the other hand, you probably don't need to have an alien abduction insurance.
  • Evaluate your debts: Ok, they tell you what your debt is and what interest you pay.
  • Implement an investment strategy: That usually does not result in better returns, just higher fees.
  • Recruit your personal finance team: Is this even a thing? What is this team doing on top of evaluating debt, implementing Investment strategies and initiating insurance strategies.

Translate this into someone interested into making sure they live a healthy life - do you think they intend to hire / pay

  • a nutritionist
  • a dietitian to support your nutritionist to maximize your optimized intake
  • a psychologist to assess your general well being
  • a mental health counselor to focus on a holistic treatment
  • a cook to implement the strategic intakes outlined by your nutritionist
  • a sleep consultant to help you achieve maximum recovery
  • a personal fitness team including a yoga trainer, cardio expert, ..
  • a dental hygiene consultant
  • ...

I assume there will be people opting for the full list. Likely, they will be so busy thinking about their health that it actually makes them sick.

Others will simply visit a doctor if they feel sick, try to eat and drink mostly healthy stuff and work out by going for a run, hike, or ride their bike. The money you saved as opposed to hiring all these experts will allow you to get plenty of nice dinners. On the other hand, you might realize eating out at fancy restaurants costs a lot of money, which brings me to the final point.

If you are completely uninterested in your financial matters, finance in general and like to outsource everything so that you have to do as little as possible yourself, they are likely worth it for you.

Others might think it should be obvious you need some emergency funds. That your budget is really just what you earn vs what you spend (e.g. those fancy dinners) and that money not spent can be invested. What to invest in can probably be figured out if you spend a couple hours on this page. Personally, I found this summary to be quite good to get an idea about the overall usefulness of investment advisors.

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The question is if those companies are legit and creates value, or they cost more then they bring,

Completely taking the description at face value, and knowing nothing about their credibility, they create value by doing something that you may not want to spend the time to do yourself. It's akin to paying someone to clean your house, or do your laundry. How much would you pay to have someone else do those things?

It can be very valuable to have someone help you manage your money in a way that accelerates paying off student debt instead of "living like a doctor".

How much is that worth? It's completely up to you. Are you disciplined enough to set up a reasonable budget for your income and debt? Do you know enough about finances and have the discipline to set up proper retirement and investment accounts? Are you comfortable doing your own taxes? Setting up an estate plan?

If they are asking more than you'd be willing to pay, you can always say no (or "not right now"). Some of those things may not be needed right away if your debts cover more than your assets (no need for an estate plan if your estate is broke) and you can afford to experiment with investing and retirement when you're young. You may want to wait until you are more established in your career before looking for such services.

If they proimising to make you more wealthy that anyone else could, then I'd be suspicious. If they're selling their services as taking care of these things for you, then I would at least hear them out.

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The question is if those companies are legit and creates value, or they cost more then they bring, how can I evaluate them and what are some red flags I should look for.

They're selling convenience, whether or not they actually deliver convenience/value will vary company by company.

You'll probably pay more for any of the services you utilize through them as they are likely part of or running an affiliate/referral network. They'll probably try to sell you services you don't need.

For specific companies look up reviews, check for complaints against them, solicit opinions on a forum site. In general, shop around for services, find out what more established doctors did/would recommend.

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My wife is a NP, who works closely in a practice with Obstetricians. Before considering this you need to understand the backout clauses and if you can ala carte services. What is your wife's specialty? Does she have a job yet?

Unless you are starting your own practice, malpractice insurance will probably be supplied by your employer. Certainly, if you are a hospitalist.

Long term disability is very important, but may also be supplied by your employer, and short term should be purchased until you have sufficient reserve savings. But again, through your employer is often the best deal.

When a presentation includes life insurance it almost always means whole life. Whole life is a terrible deal. Buy long term level term insurance. This can easily be purchased online.

In my wife's practice, the former owner (they were bought out by the hospital system) and now head has a guy for money management. Just about everyone in that practice uses that guy. I imagine he is very good. For us, I do the money management.

Practices spend a lot of money recruiting doctors. The recruiter will likely have information on programs to help with paying off the student loans. They will help educate you on the benefits they offer and why they are better than others. One important thing you want is "tail" coverage on your malpractice.

So, the student loan service may be worthwhile to purchase from them, but only if you can do it ala carte and the recruiter was not of much help. This is the only service that has any value IMHO.

I'd encourage you two to build a budget and financial strategy together. Since money touches all aspect of your lives it is good for husband and wife to talk about money together. IMHO, income should be looked at as shared, and just because a person makes more than the other does not give them a bigger vote. You two will screw it up, but eventually you get better at it. Its a great thing to get good at.

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  • she's anesthesiologist and does not have a job yet, she will graduate next year in July I think.. Thanks for encouraging words
    – vmachacek
    Mar 13 at 16:58
  • Yea, don't bother with these guys. Its about 99% that your malpractice will be provided by your employer. Congratulations to her (and you) she will be making bank. What do you do for a living?
    – Pete B.
    Mar 16 at 20:15
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    I'm a software engineer about.me/machacek , seems like we are in similar trade
    – vmachacek
    Mar 17 at 17:04
  • @vmachacek yep. For me, especially if I am working from home, I have to take care of my wife when she works. She is an NP, so earns less than I do but her job is so demanding and she is often running around like a crazy women trying to keep patients from dying. It takes a lot out of her.
    – Pete B.
    Mar 17 at 23:36
  • @vmachacek the wife's advice is that you may want to have someone manage your money, but you should interview many people and get recommendations. Just because they give you a nice dinner does not mean they have your best interest at heart. The key would be to get recommendations from other anesthesiologist/doctors.
    – Pete B.
    Mar 17 at 23:38

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