Get A Second Opinion

I had a conversation with my cousin who is preparing to become a hospital radiologist. I felt concerned with what she told me.

On her days off, she joins another radiologist and reviews hundreds of patient scans from the previous week to quickly build up her knowledge.

One patient came in complaining of terrible stomach pain, and the doctor ordered a scan of his abdomen. 

The scan came back looking clean, and the radiologist didn’t report any findings. When my cousin looked at the scan a week later, she found something at the edge of the picture that the other radiologist missed. Something was protruding from the lungs. 

My cousin contacted the doctor and reported the new discovery. The doctor ordered a chest scan. They found a pulmonary embolism in the lung, a blood clot which can be fatal, especially if untreated. The patient, who could have easily suffered a life-threatening event without this new scan, was treated properly and is still alive today. 

This story has many applications in financial planning. 

One of the most important steps of the financial planning process is learning about the client’s family history, personal values and lifestyle preferences. Personalized attention combined with technical expertise gives planners the best chance to give the soundest guidance possible. 

From my experience, clients rarely realize this at the outset of a relationship. Most clients want to talk about their investment portfolio and what to buy and sell. They think this is what financial advisors “do”. Many advisors go along with this, because it gets the client in the door and gets the advisor paid. It also leads to clients exiting the door once the advisor fails to beat the market.

Neglecting the personal or behavioral side of finance can lead to problems down the road for a client. If you’re underinsured and you have to pay out of pocket for a huge medical expense or you can’t work anymore, it doesn’t matter what your investment portfolio looks like because you’ll have to liquidate it in order to cover your costs. This happens all the time and can be prevented with a proper upfront diagnosis.

People who manage their own money overlook areas all the time too. 

I have a client who managed his investments himself his whole adult life, amassing a nice-sized nest egg. He wasn’t convinced I would find anything to improve his situation when we first met.

He was properly insured, had no debt and knew what he wanted to do with his money. He generally understood investing and had solid cash flow. Like most people, he hated taxes. 

When I asked him to explain his investments, I found my opportunity. He wanted to rebalance a specific account, selling some investments that had gone up and buying some investments that had gone down. 

I had asked him enough questions upfront to uncover his family history, values and lifestyle. I knew that the specified account was intended for his kids. He didn’t need the money to live on. I reminded him of his intent for the account, and if he sold a portion of his investments to rebalance, he’d face an unwanted tax bill.

It all started to click. He realized on his own that he could use his existing cash flow to rebalance the account, and he wouldn’t have to sell anything. All he had to do was hold until he passed away and the investments got a “step-up in basis”. If done properly, this could lead the account to have no capital gains taxes (or very little) due when the kids get the money.

Because I had done a proper diagnosis upfront, I knew the answer to the question well before the client did. And I asked the right questions to get the client there on his own. 

He was astounded at the end of the meeting. By changing course, he saved himself over 10x the dollar amount he paid to work with me. Talk about added value!

Whether in health or wealth, it’s vital to get a second opinion. 

If you manage your own money, you might benefit from getting a second opinion from a professional to understand how every part of your financial picture is working together. This will help identify any blind spots and at worst, give you confidence that you’re on the right track.

A health misdiagnosis can be the difference between life and death. Don’t make the same mistake with your money. 

Get a second opinion. 

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