The path to financial wellbeing is far from a one-size-fits all journey. With demanding schedules and complex income structures, physicians particularly benefit from a tailored approach to financial planning.
As an RBC partner, Dr.Bill had the privilege of sitting down with two of RBC’s physician finance experts: Adrian Salcedo and Arsh Singh. Adrian and Arsh have the unique distinction of working from the Humber River Health location in Toronto—it’s the first RBC branch located right inside a hospital!
In this informative Q&A session, they delve into the intricacies of financial management for medical professionals—just in time for Financial Literacy Month—sharing valuable insights, strategies and recommendations.
What makes the financial needs of physicians so unique?
Arsh: Physicians have financial needs unlike those of other professionals due to many factors. It actually starts with the journey of medical education and training. That’s a long process and most new-to-practice physicians start their careers not only later in life than other professionals, but with significantly higher student loans. At the same time, physicians may have delayed major life decisions while in residency, such as buying a home or starting a family. And while physicians may finally embark on their medical careers with high earning potential, those earnings go hand in hand with high tax brackets to navigate—plus other likely complexities, such as incorporation, payroll, partnership agreements, unique expenses and more. Physicians encounter these distinct challenges, but on the flipside, they also have distinct opportunities to build wealth.
Adrian: We should also mention that physicians typically receive no business or financial training in med school. They transition to independent practice with the skills to be a doctor, but they are very suddenly also expected to run a business and manage the new income complexities Arsh outlined. Doctors work hard and deserve to feel in control of the money they make. It’s really important that they quickly have the tools they need to feel confident managing their finances.
What are the top three financial questions you receive from physicians—and how do you answer them?
Arsh: My top question from residents and physicians just starting out is “how do I purchase a home?” Many physicians worry they may have to wait to qualify for a mortgage until they have a few higher income years under their belt, but that’s actually not necessarily true. At RBC, we can use projected income to help physicians qualify for a mortgage even before they’ve worked a day in independent practice. Most new-to-practice physicians also aren’t aware that they can use a medical line of credit to help fund a down payment. Of course, affordability is key at this life stage so I work hard to optimize mortgage rates and terms as well.
Adrian: “How should I approach estate planning?” is another top question we get from physicians at all career stages. Physicians most often want to plan for the smooth transition of wealth to beneficiaries through tax-efficient strategies. There’s no one-size-fits-all answer to this question and we can liaise with specialists in investing, retirement, incorporation and more to support each physician in creating a customized plan.
The third area we field frequent questions about is stocks and investments. Doctors want to be proactive and smart about their money and we can help them understand the benefits of various investment strategies and tailor a completely individualized plan that helps them reach their goals.
How do you work on defining goals with physicians?
Arsh: Goals are the most critical part of financial planning. For me, “goals” are less about dollar amounts and more about what people want to do in their lives. Physicians may want to put their children through university so their kids won’t have to face the same debt they did coming out of school. They may want to buy a first home, a vacation house or a rental property. Many physicians want to explore avenues like buying a clinic, locuming internationally, starting a side hustle or just retiring at age 50. I ask a lot of questions to understand a physician’s short and long term life goals so I can help them work towards what matters to them with a very customized plan.
What is the biggest financial mistake you see physicians make?
Adrian: Not. Enough. Planning. Doctors are just so busy and dedicated to caring for others that they often put their financial planning on the backburner. Some physicians work years paying too much in taxes before seeking the advice of an advisor and changing course to protect more of their income. Alternatively, some incorporated physicians feel that their money is being held hostage in their corporation because they didn’t have a tax efficient plan for getting the money out. We can help physicians avoid these pitfalls—or navigate their way out of them—with a solid plan. In my experience, physicians are excellent at executing a financial plan. It’s just a matter of getting the right plan in place and finding the right team of financial advisors to help.
Speaking of incorporation, when do you typically recommend physicians take this step?
Arsh: The earlier physicians get tax planning advice in their careers, the better. Almost every physician is going to benefit financially from incorporation at some point. It may not always be optimal coming right out of residency… physicians may need all their income at that time to pay off student debt or to fund a home down payment. However, incorporation is likely to become advantageous very early in a physician’s career.
Adrian: We outline all the options for physicians clearly to make it easy to see the difference between incorporating and remaining a sole proprietor. Any advisor should lay out fairly concrete numbers so that physicians can easily see the optimal path forward. Incorporation is a big decision. If a physician is working with a financial advisor who isn’t providing that level of clarity, they may want to pursue a second opinion, speak with a physician accounting firm or medical professional corporation lawyer.
READ MORE: Medical Professional Corporations: Is Incorporating Right for you?
Are there any online financial tools or calculators you recommend to physicians?
Arsh: Even if you aren’t an RBC client, our mortgage payment calculator is an excellent tool for calculating monthly mortgage payment amounts. The calculator also displays total interest costs and lets you modify payment, term and rate variables to see different outcomes. I recommend physicians work with us to secure the best interest rate possible first before using this tool rather than going by the posted rate. RBC also offers a super straightforward TFSA calculator and RRSP calculator that anyone can access. These tools are great for anyone, but especially beneficial for new to practice physicians and residents who have yet to build out their team of financial advisors.
Adrian: For physicians who already bank with RBC, our go-to tool recommendation is always My Advisor. It’s a one-stop holistic tool no matter what your priorities are. Physicians can easily test various scenarios to see how a new investment priority or expense might change their overall financial picture. My Advisor is built right into online banking for every RBC customer.
What is unique about working at an RBC branch inside a hospital?
Arsh: At Humber River, we can provide a level of service unlike anywhere else. Physicians appreciate that we’re on-site and can save them time by coming to them right when and where they have a few minutes to spare—even if that’s outside the OR or in the break room. It’s not unheard of for a physician to leave halfway through a meeting with us for a code red and that’s okay—we understand the priorities they’re balancing firsthand. Physicians work long hours and don’t have enough personal time outside of the hospital as it is… with us on-site, they don’t have to use that scarce personal time for financial planning.
What qualities should physicians look for in a financial advisor?
Adrian: First, physicians should look for advisors who are familiar with the financial needs of healthcare professionals. Second, physicians should feel comfortable with an advisor and have confidence that advice given is based on the physician’s best interests—not to promote products. Third, a good advisor has a team to support holistically and is not afraid to bring specialists in when needs become more complex. For instance, a physician may want to buy a clinic, enter a partnership, buy international real estate and more. These endeavours require unique skill sets and when a physician has a well-connected advisor, they enjoy consolidated expert service. And lastly, it’s important to find an advisor who’s empowered to connect physicians to the competitive rates that their trust and business merits.
About Adrian and Arsh
Adrian Salcedo, BCOM
Adrian is currently the Alternative Branch Format Manager at Canada’s first in-hospital branch at Humber River Health. In this role, he leads a team of advisors supporting physicians' financial needs, ensuring each interaction embodies RBC's renowned client experience.
With over five years of healthcare sector expertise, Adrian caters to physicians at various career stages, from medical school to retirement.
Arsh Singh
Arsh is a Financial Advisor at Humber River Hospital, specializing in advice for healthcare professionals. With a diverse background in the financial industry from the Advice Centre to Integrated Markets, Arsh consistently receives exceptional customer satisfaction ratings, exemplifying an excellent track record of best-in-class service and meaningful interactions, especially with physician clients.
Contact Arsh
