Latest / Off the Chart: A Business of Medicine Podcast / S1 Ep92: Building true wealth, with Bryan Jepson, M.D., CFP
Transcript
- Brian Jepsen 00:00:00 Well, that's the power. That's the great thing about true wealth is it actually gives you choices. And one of those choices is the power to say no. Austin Luttrell 00:00:19 Welcome to Off the Chart: A Business of Medicine Podcast featuring lively and informative conversations with health care experts, opinion leaders and practicing physicians about the challenges facing doctors and medical practices. My name is Austin Littrell. I'm the assistant editor of Medical Economics, and I'd like to thank you for joining us today. In this episode, Medical Economics managing editor Todd Shryock spoke with Dr. Brian Jepson, a practicing physician, financial planner and author, about how physicians can build true wealth and prepare for retirement. Doctor Jefferson explains why financial planning isn't just about money, but about creating freedom, balance and fulfillment throughout a physician's career. He discusses how doctors can overcome common financial hurdles like student debt and late career starts, and why saving early, diversifying investments, and aligning spending with personal values are key to long term success. They're also going to talk about what true wealth really means, and how physicians can design retirement plans that allow them to live well today while securing their future. Austin Luttrell 00:01:11 Dr. Jefferson, thank you for joining us. And now let's get into the episode. Todd Schrock 00:01:20 Joining me today is Brian Jepsen, a doctor, financial planner, and author of The Physicians Path to True Wealth. Brian, thanks for joining me. Brian Jepsen 00:01:30 Yeah, I appreciate it. Thanks for the invitation and it'll be fun. Todd Schrock 00:01:33 Brian, how do you define true wealth? Brian Jepsen 00:01:37 Well, to me, I think you have to distinguish between what is being rich and what is being wealthy. And to me, you know, those terms mean different things. And so, you know, when I think about what it means to be rich, it's kind of more what you spend your money on, right? So if you kind of have that image of your head about what a wealthy person or a rich person is, you're thinking about, okay, well, they're driving expensive cars. They go on big vacations. They have. They live in a big house. but to me, that's not wealth. I mean, that's that's riches. Brian Jepsen 00:02:08 And all you really need to be rich is a source of income, source of money. And it's got to keep coming in to sustain that lifestyle. Being wealthy, true wealthy is not very sexy. You know, it's not the stuff that you post on Facebook about what you're doing with your life. It's it's how much you're saving, how much you're investing. you know, kind of creating the assets that will allow you at some point to buy back your time. So, so being true, wealthy, truly wealthy means that you have freedom to spend your time how you want to spend your time. And so that may be, you know, it means that you don't have to work anymore just to sustain your lifestyle. Although you can work if you if you enjoy it and it's fulfilling to you. it means you can retire when you want to, not when you have to. It means you can spend time with your family and friends as much time as you want. Means that you can create habits, or you explore hobbies and interests and other things to make your life fulfilling. Brian Jepsen 00:03:09 and I also think a big part of it is that you have the time and the resources to give back to other people, right? To make their lives fulfilling also, because I think ultimately that's the source of true happiness. It's not money. It's it's creating meaningful relationships and being able to make the world around you a little bit better. So that's how I define what true wealth is. And to get there, you have to create assets, because the assets are what replace your income and ultimately allow you to have that freedom of, of spending the time how you want it to. Todd Schrock 00:03:41 Many physicians postpone personal finance planning until mid mid-career. What mindset shifts need to happen early on to move from earning a good salary to intentionally building true wealth? Brian Jepsen 00:03:56 Well, I mean, I think the mindset shift is that it has to be intentional physicians. You know, I think lots of times just assume that because they make good money and they have a high salary, that it's all going to work out for them in the end. Brian Jepsen 00:04:08 and lots of times that doesn't happen unless you're intentional about, about creating, healthy assets. And so, you know, I think the thing that that gives you the most power, the most powerful tool in all of our financial toolkit is, is compounding interest, the power of compounding interest. And so, basically, this is when your money starts making money on the money that it's already made for you. So, you know, if you're making 8% interest on what you invested the next year, you're making 8% interest on what you invested, but also the interest that you made the previous year. And so it pretty much creates an exponential growth curve over time. and so you want to time that growth curve. So when you're in that sharper, steeper part of that curve, that rising part of that curve is when you're wanting to retire because now that money is your assets, are giving you income and creating money and probably more money than you actually made during your your career as a salary. but if you don't start early enough, then you're never going to hit that sharp growth curve part. Brian Jepsen 00:05:20 when the timing is right and then when, if you're in retirement and you're not in that exponential growth curve, you're starting to spend it down and you have the real risk of running out of money before you die. And so, so really, the earlier you can shift your investing in your career, the more likely it is that you're going to time that growth curve correctly. Todd Schrock 00:05:42 Busy clinical schedules can feel all consuming. Are there practical strategies that physicians can use to carve out time today, so they don't have to wait until retirement to experience, freedom and fun and joy? Brian Jepsen 00:05:58 Yeah. I mean, I think that the beauty about creating wealth is that if you do it right, it's not. It doesn't take that much effort. So it's less about effort and more about. About intention and creating good habits. And so so, you know, I think there's a misconception that you have to spend a lot of time on your finances to be successful with it. Now, I think it is important that you spend enough time that you become financially literate and you know, to to know how to how to apply your income and kind of all the strategies that you need to do to make it all work. Brian Jepsen 00:06:37 And that is an effort. You have to take some time in that, but it doesn't need to consume your entire day, you know. So once you can create a good comprehensive financial plan and a good investment strategy plan, a lot of it is just just letting it do its thing. You know, you just got to be intentional and kind of keep doing it. Be consistent. Be patient and let it do it. Let it do its thing. And so, you know, I really think that that's that's the most important thing. you know, I to to answer the other part of that question is, is, you know, basically what are the strategies of carving out time so that they don't have to wait? again, you know, I think there's lots of ways to do that. I think working with a financial planner who can help kind of understand your entire situation can can make a difference because, you know, everybody's personal financial situation is different. We call it we say personal finances personal. Brian Jepsen 00:07:37 and so, you know, just creating the right strategy for you is an important thing. Multiple Speakers 00:07:46 Say, Keith, this is all well and good, but what if someone is looking for more clinical information? Multiple Speakers 00:07:51 Oh, then they want to check out our sister site, Patient Care online.com. The leading clinical resource for primary care physicians. Again that's patient care online.com. Todd Schrock 00:08:04 How should physicians balance traditional retirement vehicles, such as a 400, one K or an IRA, with more flexible investments or pursuits that create greater autonomy over their time? Brian Jepsen 00:08:17 Well, so I think those other, flexible investments, can come with time. as you build your wealth, as you build your nest egg. But I think that the core component needs to be your tax advantaged retirement accounts, you know, so that's your 401 KS, that's your IRAs. That's, to be sure that you're paying yourself first, that you're being consistent with that and that that's the bulk of your retirement savings. Because the reason for that is that if you do it right and you're consistent, you don't go in and try and mess it up too much, then you're almost guaranteed to to be successful with that. Brian Jepsen 00:08:56 You know, I mean, you're almost guaranteed to, to, earn money on long term investments. And you know, if they're reasonable, if they're low cost. and so I would still use that retirement account as your, as your main vehicle to be successful. Now once that's on the path and you know that that's successful and you've got the plan in place and it's continuing to build and you want to start looking at some of the alternatives, whether it be real estate investing or private equity investing or even crypto or things like that. If you're interested in stuff like that, it's fine to do that. But you have to realize that takes a little bit more effort on your part. You have to really do a lot more education. There's tends to be a lot. It tends to be a lot more active investing, and it has higher risk. And so if you just do that and you forget all the other stuff, you might, you might do well. But there's also a really high chance that you could lose all your money or lose a significant portion of your money and really jeopardize your retirement. Brian Jepsen 00:10:02 So, so I think there's a place for those kind of things. I think it does add some diversification. but not at the expense of just the standard for one K savings. Todd Schrock 00:10:16 What are some effective ways physicians can weave philanthropy or service into their financial plans without jeopardizing their personal financial security? Brian Jepsen 00:10:27 Well, so to me, I think the ability and the willingness to give back to others is really a key component of true wealth. Because if you're if you can give some of what you have to other people, then you're telling yourself that you have more than enough and that's that's being wealthy as part of that. And so, and I don't think it's just a matter of writing a check all the time. I mean, I think giving of your time can be just as valuable. You know, whether it's even to people, you know, maybe most importantly, to the people that are closest to you, you know, being sure that you're not spending all your time making money, that you're neglecting your relationships with your family. Brian Jepsen 00:11:08 or, you know, if you have charitable interests that that you want to volunteer your time at or donate or whatever. I think that that's super important. I think that if you in your early in your career and or mid-career, when you're super busy and you don't have a lot of time and may not have a lot of money yet, I mean, you can even think about it as just how can I make the world around me a little bit better? Maybe it's being more charitable with smiles just being kinder to people. you know, being more patient with your patients, you know, all that kind of stuff I think can make, your life wealthier, their life wealthier, and, you know, just add happiness to the world. And I think that's important. Todd Schrock 00:11:56 Burnout and career dissatisfaction are rampant in medicine. How can following a true wealth framework help physicians decide whether to downshift, pivot, or even retire early while still feeling professionally and personally fulfilled. Brian Jepsen 00:12:12 Well, that's the power. That's the great thing about true wealth is it actually gives you choices. Brian Jepsen 00:12:17 And one of those choices is the power to say no. Right. So so if there's part of your career or your job that you don't like and you have enough assets to, you know, be able to jeopardize that. you can say no to those things. You can start selecting the things in your career that you like and enjoy doing, and get rid of those things that you don't like so much. And that may come with a cut in pay or, you know, but, you know, if you're wealthy, that that doesn't matter because you have enough. so or, you know, if you are willing to, it may even help you earn more money because you can negotiate with some with some power, you know, if you're willing to walk away. if you if you don't get what you want out of out of that negotiation, you have more power on the table. And so, so I think that there's a lots of ways where true wealth can make your life, your work life better and prevent some of the burnout that we feel. Brian Jepsen 00:13:21 I think a lot of the burnout is where we just we feel trapped into our job and trapped into our, you know, all the administrative duties that we may have or trapped by insurance companies or we just feel like we don't have any power left. and, and even, you know, at some point later in your career, if you decide that you want to do something different, then explore something outside of medicine, and that's fine. That's what I did. You know, so I'm still I still do some shifts in the emergency department, but primarily I'm doing finance stuff now. And that's been a great shift for me. It's it's helped preserve my, my working years and and keeping me, Engaged. And, you know, it just makes my life better to. To stay productive. And so having the assets to be able to do that, is, is empowering. And it actually makes life better and have less burnout. And I think extends careers. Multiple Speakers 00:14:32 Hey there, Keith Reynolds here. And welcome to the P2 Management Minute. Multiple Speakers 00:14:35 In just 60s, we deliver proven real world tactics you can plug into your practice today, whether that means speeding up check in, lifting staff morale, or nudging patient satisfaction. North. No theory, no fluff, just the kind of guidance that fits between appointments and moves the needle before launch. But the best ideas don't all come from our newsroom. They come from you got a clever workflow hack and employee engagement win, or a lesson learned the hard way. I want to feature it. Shoot me an email at Kay reynolds@lifesciences.com with your topic, quick outline or even a smartphone clip. We'll handle the rest and get your insights in front of your peers nationwide. Let's make every minute count together. Thanks for watching and I'll see you in the next P2 management minute. Todd Schrock 00:15:23 I'm a resident or early career doctor asked for a first step toward true wealth. What single action would you recommend they take in the next 30 days and why? Brian Jepsen 00:15:34 I think the first step for everybody, and it can happen at any stage in career or life that you're at, is to start examining your budget and start living below your means. Brian Jepsen 00:15:45 And even in residency, you can do that. You know you don't have to spend as much as you as you might be spending, and you can live below your means. You should be making enough to survive in residency. but you know, it may take it, take some effort to look at what you're spending stuff on, and be sure that you're spending stuff on things that you value and that you're not just wasting money. And so I think that that's the first step for anybody is to just do that. You know, that mundane budgeting look at your look at your expenses and be sure that it's less than your income, because then the next most important thing is to start paying yourself first. Right. Start saving and investing. And the first way to do that is by stop, stop discontinuing paying high interest rates on credit cards. Right. So if you're if you're carrying credit card balances, that's an automatic 27, 29% nowadays that you're never going to get that return in the stock market, at least not consistently. Brian Jepsen 00:16:47 So the smartest investment is to pay down those credit cards, pay off those credit cards, and then never carry a balance. And to allow you never to carry a balance, you need to start building up an emergency savings account. So so I think those those three things would be the most important early steps. You earn, you no spend less than you earn. Pay off high interest rate debt and start creating an emergency savings fund. And then the emergency savings fund is so that when life throws you some curveballs and you know an expense that you're not expecting, you don't have to put that on a credit card to pay for it. You can pay it out of cash. And then at that point, it's okay. I'm going to automatically start saving and investing. Easiest way to do that is through a 401 K account where it just comes out of your paycheck. You never see it. and it's automatically invested and it's just out of sight. Out of mind. You're not tempted to spend it. You can automate that with the savings savings account too. Brian Jepsen 00:17:45 And so, you know, we tend to spend what we see in our checking account. And so if we can just make it as automatic as possible, put it in low cost index funds, you can put it in an S&P 500 index. And that'll match the market. If you match the market, you're doing better than 80% of money managers. So so you know it can be easy enough for everybody. It's it's it's simple. But let me say that it's simple but not easy. Right. So it takes discipline. Todd Schrock 00:18:15 For that emergency fund. Is there any general guideline that you would recommend? Is it like six months of expenses or what do you recommend? Brian Jepsen 00:18:23 Yeah, the general guideline is is 3 to 6 months of expenses. But it depends on income sources. So if you're if you're a single income source in your family your recommendation is a longer amount. So probably six months at that point. If you have a dual income, you can probably get by with a three month a three month savings account. Brian Jepsen 00:18:41 Now you don't want to put all, you don't want to put a lot more than that in a savings account. You can't you. I mean, if you feel like you need a little bit more cushion, that's fine. But if you're putting too much into a savings account, you're not taking advantage of the, the higher the higher rate of rates of return that you could get from investing it in stocks or things like that. So so, you know, a lot of people play it safe. Put all their money into. Cash. But realize you know that the, your purchasing power is is decreasing every year because of inflation. So you're actually, if all your money's in cash, you're guaranteed to lose money over time because the purchasing power. Todd Schrock 00:19:25 Is there anything else you would like to mention that we haven't talked about? Brian Jepsen 00:19:29 You know, I really think that the most important thing, especially for physicians, is to be intentional and to take ownership of your own financial success. Don't just assume it's going to happen because you have high income. Brian Jepsen 00:19:42 You know it won't unless you're intentional about it. And like I say, it doesn't have to be super complicated. But you want to you want to at least understand the basics of personal finance and the book that I wrote. the Physician, the Physicians, Path to true wealth, basically, are all the things that I think are important that we should be learning in medical school and residency, but they don't teach us, right? So we kind of have to learn it on our own. But those are the things that I think if you knew that stuff, you're going to be in really good shape in terms of finances. It doesn't get too far into the weeds. I think that if you get to if you start in the weeds, you're a lot less likely to, to do well over time, actually. So you need to shore up the basics first, understand all that stuff. Once those are solid, then if you're interested in finance and you're willing to take the time and the effort that it takes to understand all the nuances, great. Brian Jepsen 00:20:40 You know, do that and and put it in context of a, of a comprehensive financial plan. But there's a lot of doctors out there that, you know, really don't have that much interest or time to manage all all that on their own. And I think it's okay to get a financial planner at that point. You know, I think that there's there's a lot of belief out there that financial planners are evil and just trying to take your money. and maybe some of them are, but but I think that there's plenty that are. That are good and that are there to help you. I think that the way to, to select the right kind of financial planner is to be sure that you understand how they're being paid, right. Are they being paid on their advice or are they being paid by what they're selling? You know? So in other words, are they making commissions on things that they're advising you on? And if they are, then that's that's they're probably not advisors. They're more salesmen. Brian Jepsen 00:21:37 And so so be sure that you select somebody who has a fiduciary responsibility to do what's right for you and that they're that you're paying for their advice and that you know exactly what what they're charging you. And, you know, I think a fee only certified financial planner is a good place to start. you know, I also have a website that I try to add weekly, blogs about just, you know, personal finance topics that hopefully will be helpful. And, you know, if you are interested in learning more about our becoming a client or how we do things at my financial planning company, it's Targeted Wealth solutions.com. and so those are those are some resources for you. Todd Schrock 00:22:26 Great. Great tips. Brian, thanks for joining me. Brian Jepsen 00:22:29 Hey, it's my pleasure. Thanks for having me. Austin Luttrell 00:22:44 Once again, that was a conversation between medical economics managing editor Todd Schrock and Dr. Brian Jefferson. My name is Austin Littrell, and on behalf of the whole medical economics and physicians practice teams, I'd like to thank you for listening to the show and ask that you please subscribe so you don't miss the next episode. Austin Luttrell 00:22:58 Be sure to check back on Monday and Thursday mornings for the latest conversations with healthcare experts, sharing strategies, stories, and solutions for your practice. You can find us by searching off the chart wherever you get your podcasts. Also, if you like the best stories that Medical Economics and physicians practice, publish delivered straight to your email. Six days of the week. Subscribe to our newsletters at Medical Economics, comm, and Physicians Practice. Off the chart A Business of Medicine podcast is executive produced by Chris Mazzolini and Keith Reynolds and produced by Austin Littrell. Medical economics, Physicians Practice and Patient Care Online are all members of the MJH Life Sciences family. Thank you.