When it comes to financial planning, doctors and dentists are juggling competing goals of paying down high-cost student loan debt with low-risk retirement investments, according to a Northwestern Mutual study.

The 2020 Medical Professionals: Financial Planning Priorities Study is an annual research poll conducted by Northwestern Mutual. Between March 3-9, 2020, Northwestern surveyed 43 of its advisors serving doctors and dentists about their clients' perspectives on wealth and risk management. 

In June 2020, Northwestern collected additional qualitative commentary to provide context for the results through the lens of the ongoing health and medical crisis caused by the Covid-19 pandemic and its impact on the financial security of medical professionals.

Advisors participating in the study said their clients were trying to balance significant short-term and long-term priorities when it came to their financial situation, according to the study’s findings. Two-thirds of respondents (67%) said their clients’ top financial concern was retirement planning. However, doctors and dentists are balancing this long-term goal alongside short-term goals of risk management (life and disability insurance, 63%), debt reduction (51%), and tax management (40%).

One of the key financial challenges medical professionals reportedly face is substantial student loan debt, with 58% of advisors’ clients paying off more than $200,000 invested in their education, while also trying to build towards other long-term goals such as retirement. Only 14% of advisors said their clients are student-debt free, while more than half (51%) said that managing debt was a factor impacting their clients’ ability to reach their financial goals. 

When it comes to investing, Northwestern found that for the most part, medical professionals demonstrate patience and resolve in times of market uncertainty. Almost half of advisors (48%) said their clients do not make changes to their investment portfolios in times of market volatility, and 36% said their clients are no more or less likely to make changes.

Doctors and dentists are reportedly focused primarily on asset appreciation (83%) versus capital preservation (17%) when it comes to their investment portfolios.  Over three quarters of advisors believe that their medical clients prefer to take calculated risks for the opportunity for higher returns in their portfolio. 

Among the most popular investment vehicles are mutual funds (71%), followed by ETFs (49%), stocks (44%) and real estate (44%). Only 5% said their clients are currently invested in private equity. A majority of advisors (78%) said that doctors and dentists also hold cash in their portfolios.

Northwestern found that doctors and dentists are concerned about managing their personal and professional risk, with three times as many concerned about their personal risk, such as incurring a disability and being unable to work (74%), as they are their professional risk, such as malpractice (26%).

Brian Henning, vice president, Northwestern Mutual, said in a news release reporting the study’s findings that the first half of 2020 has been uniquely challenging, both personally and professionally, for medical professionals faced with a dual health and financial crisis.

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