Before we begin, a special offer to all podcast listeners: The OJM Group has published multiple books that address wealth creation and asset protection strategies for doctors. All of their publications are diamonds.

Their most recent publication – Wealth Planning for the Modern Physician – Residency to Retirement – provides doctors with indispensable wealth management strategies. It does not matter if you are a resident or a retiree or in between – these books will serve you well. These books are especially valuable as we navigate the COVID-19 pandemic.

Listeners can get this book (and many of the OJM Group’s other publications) for free by following the instructions below.

Phone: Text code mjpod to 555-888. You’ll receive a link and instructions.

Computer: Visit the OJM Group’s online bookstore and use the code mjpod at checkout.

Without further ado – onto the episode

The COVID-19 pandemic has turned our world on its head – both in terms of our health and our finances. On this episode of the Medical Liability Minute podcast, Medical Justice Founder and CEO, Jeff Segal, MD, JD, discusses asset protection strategies for doctors with David Mandell, JD, MBA. The objective? Help doctors protect their nest eggs during these turbulent times.

David Mandell is a partner at the OJM Group, a multi-disciplinary wealth management firm. What distinguishes them? Their focus on physicians. The OJM Group has worked with over 1500 physician clients in 48 states. David Mandell is an author and renowned authority in the fields of asset protection and general wealth management. We are privileged to have him as our guest on this episode of our podcast.

Listen to the episode on the embedded player below – or click here to read the episode transcript.

Episode Transcript

Jeff Segal, MD, JD 

Greetings, everyone. We are joined today by David Mandell, who’s a partner in the OJM Group – and he’ll tell you a bit more about what the OJM Group does as we do our deep dive. By way of background, he’s an attorney and an author and an authority in the fields of risk management, asset protection, and wealth planning. These are three things of total importance to our audience and physicians. Mr. Mandell graduated with honors from Harvard University, and I’m from Texas, and I like to call Harvard University, the Rice University of the north.  

His law degree is from UCLA School of Law, and he was awarded the American Jurisprudence Award for Achievement in Legal Ethics. And finally, if that’s not enough, he’s got an MBA. Greetings, David. Thanks for joining us this morning.  

David Mandell, JD, MBA 

Pleased to be here, Jeff.

Jeff Segal, MD, JD 

Let’s set the stage for where we’re at – where and when we’re recording. Because the timing of this episode is critical. The COVID-19 virus is marching across the United States. It’s already hit its stride in Asia. And we’re struggling in America. Congress is about to pass the CARES stimulus package, which I think will bring a great deal of relief to our fellow citizens. But right now, a lot of people are worried. 

I’ve been through this rodeo before in 2008. Maybe it’ll be worse, maybe it will be better. We’ll have to wait and see. And medicine is often called recession proof. But there’s a lot of worry in the air.  

David, tell us briefly what you do at the OJM Group. You’ve been working with physicians for decades, and we’ll use that as a way to introduce why, if you have a long-term plan, today should be a hiccup. It doesn’t have to be fatal. 

It should be something that everybody can get reasonably comfortable with, even if it is uncomfortable. And that we’ll not just survive, but we will thrive.  

David Mandell, JD, MBA 

Yeah, absolutely. I come from a family of physicians. My grandfather practiced all the way through the Great Depression. I didn’t get to speak to him much, since he passed away when I was young, but my father tells me much about him. 

My father is 77 and still doing some locums work as a radiologist. He’s very healthy. And my brother is a cardiologist. The Mandell family is approaching 90 years of practice in the United States. 

Jeff Segal, MD, JD 

You must be the black sheep of the family, huh?  

David Mandell, JD, MBA 

Well, I may have started as a black sheep, but now I’ve become a white sheep – because everybody needs legal and financial help. 

Jeff Segal, MD, JD 

Yes, absolutely. Welcome back to the herd.  

David Mandell, JD, MBA 

I tell people that when I was working on my parents’ will, I realized I’d likely be written out of the will if I didn’t help physicians. So, I wrote a book in 1997 called The Doctor’s Asset Protection Guide. And that led us down this road. So, the OJM Group is a wealth management firm. And what’s different about us, I think, is our focus on physicians. 

About 80 – 90% of our clients are doctors. We’ve worked with over 1500 in 48 states. We formed in 2006. Prior to that, I was practicing law almost full time and doing some financial work on the side. When I decided to make the shift, 10% of my time was dedicated to my law practice, and 90% was dedicated to wealth management. My goal was to create a firm that was not only physician focused, but that was multi-disciplinary. 

To introduce a few people from our firm – I have background as a lawyer and as an expert in asset protection. My partner, Carole, she’s a CPA. She’s a tax expert. My partner, Jason, he’s an insurance expert. We have people who specialize in benefit plans, people who specialize in 401(k) plans, profit sharing plans, and things like that. We have CFPs who do the financial modelling. We have investment experts.  

So, to make this relevant to the question you just asked, our investment folks (we manage a little under half a billion dollars for physicians across the country) have been reaching out to all our clients as of late. The objective is to communicate with our clients and convince them not to make mistakes during this time. 

Jeff Segal, MD, JD 

You have clients in all stages of the physician life cycle, meaning some of your clients are young, some are mid-career, some are approaching retirement – and some have fully retired. 

David Mandell, JD, MBA 

That’s correct. My parents are clients, for example, and we manage their money. They are 77. And we have a couple of clients even older than that – and many of our clients are the parents or children of existing clients.  And then we have clients who are residents and fellows. Literally residency to retirement, which is the subtitle of our new book, which I know we’ll talk about later. 

When discussing financial plans with our clients, we look at macro and micro. And if you can look long term, at both macro and micro, it starts to lower stress levels – it starts to lower that cortisol. Though the doctors in the audience will know the stress hormones better than I do. 

Jeff Segal, MD, JD 

Before we go any further, can you tell our audience what you mean by micro and macro? 

David Mandell, JD, MBA 

Absolutely. Let’s start with macro. And let’s start by going back 100 years and considering the state of the stock market a century ago. You said you’ve been through this rodeo before, and as I’m sure you know, there have been “rodeos” every 10 years or so, if you define a “rodeo” as a significant pullback. Now, what we are navigating now is unprecedented – in terms of social distancing and the health aspect. And we can’t overlook the mental health aspects of this particular rodeo, either.  

But in some ways, the 2008 – 2009 pullback was even more threatening to the financial system. 

And before the 08 – 09 recession, you can go back to the dot.com collapse. And before that, you had the oil and inflation crisis in the 70s, and if you keep going back, you’ll eventually wind up in the Great Depression.  

Let’s visualize the country’s economic history as a chart – the left side being 1900 and the right side being 2020. And it’s basically a line going up, with some downturns. But the line is certainly higher, right? 

Even today, the Dow is at 21000 – 22000. In 1900, the Dow was at 50. So, it’s gone up over time. Inflation is a factor, of course. 

Jeff Segal, MD, JD 

Let me add to that – just using your own two eyes, you can see that wealth is being created in our lifetimes. Compare that to our parents’ lifetimes and grandparents’ lifetimes. 100 years ago, or maybe just beyond, the automobile was just introduced. And if you look around today, there are people who landed on the moon. We have personal computers. We have smartphones. Those examples demonstrate that globally, a great deal of wealth has been (and will be) created. And over time, wealth generation is the likely natural trajectory of our society. Societies around the world will continue to create wealth. Even with these hiccups, rodeos, or whatever metaphor you want to use, it is likely we’ll return to “normal” in time.  

David Mandell, JD, MBA 

Yeah, I agree with that. I think it is important to remember that we’ve had downturns in the past, but it typically doesn’t take that long to come back. You don’t have to look hard to find charts that prove it. 

I mean, even the Great Depression eventually ended – and that lasted for nine years. The markets were back where they were before the crash within the decade. And then the 50s and 60s were basically defined as decades of huge economic expansion.  

There’s another thing that I find interesting, and again, a lot of the people in our audience will know a lot more about this than me, but consider this: If you look back to what our current health scare is being compared to, which is the flu of 1918, there was a terrible cost in terms of human lives. We didn’t have modern medicine, obviously, and the flu of 1918 came in on the heels of World War I. 

You can imagine a World War. It is harder to imagine these days, but a World War, with the USA obviously leading the charge, and as a result you see a lot of casualties, a lot of pain and suffering by the troops, and also the country itself. And then just as the war ends, you have this influenza.  

And then what happens after that? Did we go into a depression in 1918? No – we had nine years of expansion. Now, we had no regulation, and that lack of regulation led to the stock market crash, but the Roaring 20s followed both WWI and the flu of 1918. 

The point of the macro perspective is to say:  

“Look – we’re going to have downturns. And this one is significant. But let’s not operate out of fear.” 

That’s what we are communicating to our clients. Put another way, we’re saying: “Hey, listen – let’s make changes on the micro side. Let’s make changes to the things you can control.” We may advocate for a “rebalance.”  

But we made it. You may want to rebalance. 

But I think when people look at their problems in the long term (that is, the macro side) their breathing eases, and they realize: “Yes, this specific thing is something we haven’t dealt with before. But significant threats, and major recessions, and even depressions? We’ve dealt with those before and in the long term, we’ve survived.” 

In time, they look like blips on the screen. 

Jeff Segal, MD, JD 

And the thing that’s fascinating is that during the Great Depression, I don’t think that the United States was considered the world’s foremost economic powerhouse. But after World War II, it was number one. So, in that window of time, we moved from being a strong but not a preeminent global economic power to the preeminent global economic powerhouse. And it happened within a period that most people could see. It wasn’t something that you had to wait generations to see. 

It happened, and it happened while people were watching. 

David Mandell, JD, MBA 

Yeah, absolutely. 2008 – 2009 represents our most recent downturn. And that was a significant jolt to the financial system worldwide. Banks collapsed and became dependent upon government aid. But people have learned from that downturn.  

I think the stimulus, which hopefully gets signed today, (literally as we’re speaking), represents a two trillion-dollar jolt to the system. I think there are some good provisions in there. 

Jeff Segal, MD, JD 

When I was in my medical school, residency, and fellowship, I thought about one thing, and one thing only – which was to learn as much as possible. My objective was to capture as much training and education as possible. 

I was living from day to day – if I had food on my table and a roof over my head, I was OK. I couldn’t think about anything other than just mastering the craft. And even when you graduate, you still have so much to learn. But one thing I know was that we had absolutely zero training in the law. We had zero training in business, and we had zero training in any of these other aspects of life, which include building wealth and keeping wealth and figuring out how to distribute your wealth over time. 

Is it ever too soon to start thinking about it? I know your answer is going to be that you should start thinking about it sooner, rather than later. But for the medical student, the resident, and the fellow who is overwhelmed and believes that they have an infinite amount of time to get things right “tomorrow”, what are the types of things that the newest graduate should be thinking about? And how do you make it painless for people to participate in this process of building wealth? 

David Mandell, JD, MBA 

How do we make this process feel as though it’s not so overwhelming? Yeah, that’s a great question. Obviously, my answer would be to start as soon as you can. And I lived in the same building with my brother when he was completing his cardiology fellowship in New York. 

I know the time demands are brutal. But I think one of the benefits of what we try to do at the OJM Group is provide education in different formats. We’re not just telling people to a read a 400-page book on economic theory. We have lots of bite-sized videos, podcasts, webinars, etc.  

What’s the advantage? People can learn this material while they are exercising – hopefully they’ve found a way to stay active during quarantine. When they’re relaxing at home, they can watch a short video about term insurance versus cash value, or life insurance, or something as basic as five things to think about when negotiating your first contract. Or what you need to know about disability insurance when you take your first job as a fellow. 

It doesn’t have to be overwhelming. It can be bits and pieces. Certainly, we create a lot of free content. We’ll talk about that before we finish and tell people how they can get all our books and all our other materials.  

But that’s the way I would do it. You don’t have to “jump in”, but you can certainly get your toes and feet wet and educate yourself on these issues – ideally before they come up.  

Learning about asset protection and tax planning, for example, may be less critical to the physician who is just starting out. Because in the beginning, it is unlikely you’ll have huge incomes. You likely won’t have many obvious opportunities to reduce taxes until you get into private practice. But most doctors will benefit from learning about those topics eventually. Your assets will grow over time. 

But initially, focus on topics like negotiating your first contract, focus on debt repayment, disability, and if you have dependents, life insurance. These are the building blocks. And in our book, we address many of those topics in the first section. A millennial orthopedic surgeon (who is a client of ours) collaborated with us when writing that first section. A young doctor might get our book and just read the first section of it. 

Jeff Segal, MD, JD 

I have read the millennial’s introduction to the book. The thing that is helpful to keep in mind as you get started is that the main asset of a recent graduate (and everyone has assets) is he is a recent graduate – meaning he has in front of him a life with high earning potential . It’s their ability to earn a living. As long as they’re able to earn a living, they can create cash. They can create wealth.  

How do you protect that? Well, disability insurance, obviously. In fact, disability insurance is kind of cheap. And if you get disability insurance when you just graduate, it’s almost an order of magnitude lower than if you start thinking about it later in life. And if you have a family, term insurance is also cheap. And some people think that because they are single, they don’t need to worry about life insurance. 

But if you’ve got debts and other people have cosigned for them, low cost term insurance would be helpful to lock into. 

Disability insurance and life insurance are two things that most people don’t think about until time goes by, and these are relatively inexpensive early in life – but they become much more expensive later in life.  

And then the final point that you make in the introduction is how to think about debt. When I graduated from medical school, I didn’t have substantive debt, compared to what people have today. And because this debt is so great, how it is repaid, and the terms of repayment make a vast difference in terms of the effect it has on wealth creation. 

By the way, I do like the way you structure the book to focus on different aspects of the doctor’s career based on where he or she resides on that timeline. 

David Mandell, JD, MBA 

Yeah, that reflects how we work with clients, too. For example – let’s say somebody listening to this is a fellow or a doctor in the first year of practice. We have a consulting side where we typically charge a flat fee to take them through a process. And to borrow a medical analogy – we diagnose and treat a single area, like asset protection, for example. There’s a fee just for that piece, or we could complete that process for everything. 

Asset protection, taxes, investments, insurance, financial modeling, estate planning, etc. But when we work with young doctors, and fellows, and residents, we’re going to try to work with them without charging a fee. For example – maybe we can be the ones to provide that disability insurance. They need to get it from somebody, after all. We’re licensed in all 50 states. The same goes for life insurance. We might say, “Here’s something we can do for you already. This insurance doesn’t cost you more than the product we were going to recommend.”  

In this way, we get some revenue out of it, and the young doctor benefits from a built-in financial planner who can start educating him or her and help them make wise financial decisions. For example – if the doctor anticipates a bonus or an increased income, we can help the doctor determine how best to utilize that money. Should it be dedicated to paying down loans? Or should they put a down payment on a new house?  

Or should they start a SEP  / IRA? These are decisions they’re going to be making when they start generating income. And frankly, we try to provide services in the early years because we know, just like you were saying, that a fellow is a potential millionaire. They just don’t know it yet. It reflects the net present value of their future income, which they want to protect through disability insurance and other tools. 

But from our point of view, we see a young physician as a great long-term client. So, we’re willing to spend time with them and kindle a relationship with them, business-wise. 

And that is, in part, how our firm grew. The “O” in the OJM Group is Jason Odell, my partner. While I started as an attorney and moved into the financial field, he started building relationships with his future clients while they were residents and fellows – he’d bring them pizza in the hospital. And by the time we merged our practices, those residents and fellows (now doctors done with their training) moved all over the country from where he had met them in training. As a result, he built relationships that lasted 15 – 20 years. 

And that’s part of our firm ethos. We work with younger doctors – not just their older, wealthier colleagues.  

Jeff Segal, MD, JD 

There’s a tendency to try and wing this and go it alone. I guess the gestalt is that disability insurance products are probably all alike. Term insurance products are all alike, etc. I think that’s a blunder of the greatest order to make those assumptions because they are different. So, the young doctor can wing it and do it on their own, or they could work with someone that sells insurance from a single company, or they could work with someone who has access to a gazillion different policies and can right-size the product for the individual. 

I’m a fan of the latter, but let’s spend a couple of minutes talking about the distinctions. In particular, how the young doctor can get burned by buying a particular type of insurance policy or disability insurance policy, or even a life insurance policy that ultimately may not be a ghastly mistake, but could be expensive and may not even provide for their need when the crap hits the fan. 

David Mandell, JD, MBA 

You brought up two issues I want to address. I’ll talk about those sort of business models in the insurance world in just a second. First, you mentioned the “do-it-yourself” approach. We have clients who do pieces of their financial, and even pieces their investing, themselves. We manage, like I said, about half a billion dollars. And for a lot of our physician clients, we may not manage all their wealth. For many of them we do, but we work with many who want to do some of it themselves, or they have a relationship with an old or existing advisor who helped them when they were young. And they may not want to pull that piece of their wealth from that entity’s supervision. But we want to look at the whole pie, so there’s no overlap or poor allocations because we were kept in the dark. We want a view of everything. And with our software, we can organize all that information. Our clients can use our smartphone app to review that data. 

But doing it yourself? There are two issues. Issue one: do you have the expertise? I mean, we’re lawyers. We understand. There’s that old saying from Abraham Lincoln…  

“An attorney who represents himself has a fool as a client.” 

That’s been wisdom for 150 years – in fact, 170 years. And in our field, physicians generally should not be treating themselves. So, it’s during turbulent times like these, especially on the investment side, where access to an adviser is key. 

In fact, going back to my first point about the micro idea of what it means to have a long-term plan, if you’re working with an advisor, this is when they can look at your specific long-term plan. And if you have a rough time on the horizon, then you accept with confidence, in the micro sense, that these specific assets might come down for a bit. But historically, from a macro sense, we expect those assets to come back up in time. 

And if I don’t need those assets right now, it’s not such a big deal. For example, if I am one of our older clients, I may not need some of these assets for another 5 or 10 years. And if I am one of our younger clients, I may not need those assets for another 10, 15, 20, or even 30 years. So, let’s not panic.  

Doing it on your own, especially on the investment side, can be risky. The same can be said of insurance. Some more examples – I’ve had clients call me and tell me they set up their own LLC, or that they did their will online. 

Here’s the danger: The more significant the decision is, the more risk you take when you choose to go it alone. And that’s because the consequences of failure are steeper.  

Let’s say you want to do something yourself, like mow your lawn. The professional might be able to do it a little better, a little faster, etc. But if you do it yourself and don’t get things exactly right, what’s the risk? The risk is your lawn isn’t perfect.  

But if you get the wrong disability policy?  God forbid you have to use it, but if it’s not the right policy for what you need, and you don’t find out it’s a bad match until you have to rely on it, that’s a bad outcome. And then it becomes a poor financial decision that could define the rest of your life. 

Jeff Segal, MD, JD 

And when you are the most vulnerable – that’s the most difficult time to fight that fight. You’re hoping that you can just pick up the telephone and fill out some paperwork and march forward. Now, it’s rarely that easy, but by and large, the last thing you want to do when you’re vulnerable is to get into a cage fight.

David Mandell, JD, MBA 

Absolutely. And let’s return to the other thing you mentioned, just from the beginning. You specifically mentioned young physicians. But I think you could apply this across the board. The number one resource physicians don’t have (or that they need more of) is time. But you can learn these things in time. You can’t master everything, obviously, and law school is likely not a solution, but if you just study, study, study, you’ll make progress. 

You don’t have to draft documents or anything like that, but you should document ideas and organize a plan. That’s achievable.  

The same thing applies to other aspects of wealth management – you could learn everything you need to know about preparing your own tax return, for example. But it comes back to time. Is that really the best use of your time? After you’ve seen patients all day, would you rather spend time with your family, or pour over these materials? From an economic standpoint, it’s probably not the best use of your limited time. You’d be better off seeing patients, getting paid well for that, and then spending a little bit of money on someone who’s an expert in the field of wealth management. 

Jeff Segal, MD, JD 

And plus, the rules change all the time. Meaning what you’ve learned today may not be relevant a year from now. It may not even be the appropriate thing to do a year from now. So, if you’re going to do this yourself, you need to stay updated. You can’t just be one and done and forget about it.  

David Mandell, JD, MBA 

Absolutely. The other thing I want to address (and I’ll address this on the insurance side and on the investments side) is something that you brought up, which I think is crucial. You must understand the business models and the incentives motivating your adviser. And this is crucial in insurance because understanding the example I’m about to give may protect you from a poor decision. 

Let’s pretend I go to a doctor. I find out after speaking with the doctor (or examining their business card) that they can only prescribe medication manufactured by one drug company.  

So, no matter what my condition is, this doctor can only prescribe medication made by a single drug company. That would be ridiculous, right? Nobody would go to a physician like that because they might not have the right product for me, given my health issue. OK, we’ve made that clear.  

But what about a more subtle approach? And this is the space where a lot of insurance people operate. It’s not that they can’t “prescribe” a different product, it’s that they get paid a lot more if they “prescribe” only a certain company’s products.  

In fact, their rent may be paid by that provider, or their staff may be paid by that company. And the data shows that there are significant incentives (and perverse incentives) to direct clients to one company’s products.  

When you have those incentives, and those incentives are not clear to the client, it becomes difficult to create trust. Because they’ll suspect your decisions are motivated by your incentives, not their best interests. The same line of thought applies to the investment world. For example – if you work with an investment advisor, and he works for a firm offering proprietary products, you’ll want to understand the incentives that may drive his actions. Learn the difference between the suitability standard, a best interest standard, a fiduciary standard, etc. I can expand on these. 

Jeff Segal, MD, JD 

Please do, because these are terms that most people don’t use in everyday conversation. And I think they do matter quite a bit in terms of the relationship that the adviser has with the client, for sure. 

David Mandell, JD, MBA 

Just to put a tie up on the insurance – I think it’s critical to work with an expert. We have multiple chapters in our book about term, life, and cash value insurance. In one example, we identify five success factors and show four physicians, each getting similar policies, but under different levels of expertise. One properly advised, one doing it right. One not properly advised, one not doing it right. And then we compare results in a case study format and discuss their outcomes 

And it’s very interesting. We talk about success factors that you would consider when working with any agent. So, if you are looking at insurance on the investment side of things, this is a must-read. 

On the investment side, I think those incentives are even more perverse, and in some ways more dangerous. There’s a great slide we have in our books that depicts a grid. And it basically goes from the left bottom of the grid to the right top of the grid. 

It’s like a straight line. And on one side of the grid is trust. And on the other side of the grid is transparency. What the grid illustrates is that as transparency increases, trust increases. And that’s critical on the investment side. You need to be working with someone that you can understand. And you should understand exactly how this person makes their money so you can trust their recommendations. That just seems obvious, right?  

I wouldn’t trust my physician if I thought they were getting kickbacks from a drug company. 

So, it’s much easier to trust somebody if you know exactly how they make their money, what their incentives are, etc. And if they’re clear about those things, you can judge whether they are making the right recommendation for me.  

There are two ways that financial advisors and investment advisors are governed in this country. And something a lot of physicians don’t realize is there is the “suitability standard of governance.” And then there is the “fiduciary standard governance.” And they’re very different. And it’s absolutely not obvious when you talk to an adviser which standard they’re on.   

Jeff Segal, MD, JD 

And how would you know that when you establish a relationship with the financial adviser? If it says “Certified Financial Planner” behind their name, how do you know what the relationship is? Normally, when you see a doctor, you either do or do not have a doctor-patient relationship. It’s binary. There aren’t different “levels” of relationships when a patient sees a doctor. 

David Mandell, JD, MBA 

Yeah. It’s amazing. And so, this is a topic we covered not only in Wealth Planning for the Modern Physician, which is our new book for physicians, but also Wealth Management Made Simple, which is a book for anybody and all about investing – that book came out about 18 months ago. 

And we’ll talk about those books later, but there is a chapter dedicated to the five questions you should ask your financial adviser. And number one is: “Are you a fiduciary?” Very simple. And they must answer that question. And it’s difficult to figure that out without asking.  

A fiduciary must put the client’s best interests first. And in the book, we give examples. Let’s say, Jeff, you wanted to invest a thousand dollars into a large cap investment fund, and you had two advisors. You went to one that was on the suitability standard and one that was on the fiduciary standard. 

Addressing the suitability standard, they can find you any large cap fund, no matter what the commission is, no matter how much they get paid off the top. And they’ve satisfied that duty. There’s no liability.  

The adviser who must prioritize your best interests, the fiduciary, is different. They typically would be getting paid a fee – let’s say 1%, to keep things simple. 

So, on a thousand bucks, that’s $10. And then they have a go at it. The fiduciary has a duty to find you the lowest cost option that will satisfy your investment need. But the fee you pay the adviser on the suitability standard could be much higher than that. 

Jeff Segal, MD, JD 

I’ve got a dumb question. Is it possible for one adviser to treat clients differently? For example – the same adviser has a suitability standard relationship with one client, and with another client he has fiduciary relationship. Or is the adviser tied to a single type of relationship with all of their clients? 

David Mandell, JD, MBA 

Yeah, that’s a great question. I think it’s one or the other – because it’s a business model decision. For example, at the OJM Group, we are what’s called a registered investment advisor. That means we’re governed by the S.E.C. – the Security Exchange Commission. We must be compliant. 

And we are fiduciaries – we charge an asset under management fee and we take no commissions on any products. There’s nothing we make other than the fee. It’s very simple. It’s very straightforward. It’s very transparent. The broker model, which defines most of the big Wall Street firms – Merrill Lynch, Morgan Stanley, etc., is different. And we have good friends in those environments. They’re generally under the suitability model. Why? Because they have proprietary products. 

If you’re a Morgan Stanley representative, you’re going to talk a lot about the Morgan Stanley funds. And obviously, Morgan Stanley not only makes money on the advisor side, but they make money on the fund side – they are a product creator. And in fact, there’s been a big fight in the financial world for about five years. The argument: Should the fiduciary standard be mandated in the retirement world?  

Meaning, should every adviser working with a retiree’s retirement plan keep the fiduciary standard by law? The big Wall Street firms fought it tooth and nail – and they won. So, for now, you don’t have to abide the fiduciary standard. But there are firms that are fiduciary. And that’s their chosen business model. Likewise, there are firms that are under the suitability standard, and that’s their model. And there may be some that are hybrid, but you can imagine what kind of waking nightmare that would be from a compliance standpoint. 

Jeff Segal, MD, JD 

It seems like that’s an uncomfortable question to ask upfront, but a necessary one. 

Where are your primary interests? Am I your primary interest? Or am I one of your interests – but not your primary interest? It seems like a necessary question – if you don’t already know, you must ask. Otherwise, you won’t find out until it’s too late. 

David Mandell, JD, MBA 

We went with five questions. Here are the first three, which we’ve just addressed… 

Question one: Are you under the fiduciary standard?  

Question two: What are your proprietary products, if you have any?  

Question three: Are you or your firm paid in any way other than the fee that I’m paying?  

We’ve given examples you can reference in the book. And to be clear – you can work with somebody on the suitability standard and get good advice and have a good long-term relationship. 

We’re only saying that you must understand what incentives (if any) exist and what they are – because once those things are disclosed, you can start building trust. 

Jeff Segal, MD, JD 

And a word about transparency. I frequently get from various organizations what they call their “disclosures” – just so they can discharge their duty to let me know that, “Hey – we’re letting you know about X, Y and Z.” These are 14-page documents that are entirely unreadable. I have yet to meet a lay person that can understand them. I know I’m not alone. Have you found that one person, that one lay person, who can read and understand what is in those disclosures? 

David Mandell, JD, MBA 

It’s funny you ask, because that is where many of these entities put the answers to the questions we’ve just discussed – in those disclosures. 

Let me give you an example – one of the guys on our investment team spent eight years in one of the major Wall Street firms. And we have a bunch of clients who come to us who are at that firm, and I can tell you, many do not understand the disclosures. And these doctors are very smart and diligent.  But they can’t understand what they’re paying. They don’t understand all the ways the fees are being taken out of their account. 

And the only one on our team who can really understand those types of disclosures is somebody who worked there for eight years. So, the answer to that question is: No.  

I don’t think anyone really understands those disclosures. And that’s why it’s got to be simple and transparent. 

Jeff Segal, MD, JD 

Yeah, I mean, I think that’s the key thing. Language does matter. To give this color, I’m going to change gears briefly. We were working locally to bring additional personal protective equipment to physicians. Face masks, in particular. And we located a company overseas that until a few weeks ago was in the textile business. I don’t know what they were manufacturing, I think underwear, but they were able to gear up and change rapidly and create the N-95 face mask, which are in short supply. 

Our goal was to help our brothers and sisters in healthcare, in the E.R., in the ICU unit, urgent care centers, and so on. And this company said, “Yeah, we can make five million of them. And this is what the unit cost is, this is what the shipping cost is, and we can deliver them an X number of days.”   

All of this is amazing. A company that was making underwear can now save people’s lives. What’s not to like about that? 

So, how does that particular example tie back to our previous point about disclosures? Well, yesterday someone shot to me a document. I think it was an eight-page document put out by the Food and Drug Administration basically saying, “Yep, we’ve got an emergency out there, folks. And we have the ability to make things a lot easier, so what was previously forbidden is now allowable. And here’s how you do it.” 

A friend of mine who’s spearheading the effort sent me this document so I could review it. 

That document reminded me of those disclosures we were just discussing. 

I read it multiple times. And I’ve got experience in the regulatory world. So, it’s not as if I’m a stranger to the Food and Drug Administration. In a past life, I was the CEO of a small biotechnology company and we had compounds that went through pre-clinical, Phase 1, and Phase 2 trials. I’m no stranger to this world – but even with an emergency and the loosening of the standards, it was unreadable to me. 

I looked at it and I basically thought that if I can’t read it, how is an underwear company going to comply? And it’s amazingly unfortunate because the need is absolutely so great. Language does matter. And it’d be helpful if you can find the nuggets of wisdom in the background noise. 

David Mandell, JD, MBA 

Well, thankfully, in the insurance and the investment and the financial world, it doesn’t have to be obscured. If someone were to ask me: “Are you folks a fiduciary?” I’d answer: Yes.  

And if they asked, “Do you make any money other than the fee that you charge in investments?”, I’d answer, “No.” It’s pretty simple.  

If they asked, “Do you hold the assets ourselves and our firm?”, I’d answer, “No, we use Charles Schwab or one of the other custodians.” 

So, there’s no “Bernie Madoff” risk. If it’s not easy to understand how your advisor is making money, then it’s hard to generate trust. That’s a red flag. 

Jeff Segal, MD, JD 

The answer to the question should be a single word. It should be a binary answer. “Are you a fiduciary? Yes or no?” If the answer is “Yes – if…” or “No – but…” and there’s a long sentence to follow, that’s a red flag.  

Let’s move into the physician lifecycle a bit further. Let’s say the doctor has been out a bit more. We cut our teeth in the medico-legal world where people were struggling with frivolous lawsuits and all types of medical legal conflicts. 

But now that you’re starting to make wealth, you clearly want to keep your wealth. And one tool to do that is asset protection. And asset protection is a giant tent. It doesn’t just mean a document having a limited liability corporation combined with an overseas trust.  

In fact, that’s probably not the way to go for a number of people. But it’s a matter of thinking about it properly. What are things that allow you to get protection in five minutes? How do you segregate the things that are already protected? 

And then, of course, what’s your opinion of the “typical” insurance protection plan: “Hey, I put everything in my spouse’s name!”  

The mistake here is forgetting that the divorce rate amongst health care professionals is actually a bit higher than the national average, and if everything is in your spouse’s name, you may have just kissed it goodbye. Let’s start the discussion about asset protection in terms of what it means, the timing of it, and why asset protection should be different for people at different phases of their career. 

David Mandell, JD, MBA 

Sure. And keep me on point here, because this is a topic I can talk for a long time. We look at asset protection differently, and this is something I really wanted to do when I was practicing on Park Avenue, New York City, and that’s expand the scope of what we could provide at OJM Group. That’s one of the reasons why I went from just practicing law to doing something more comprehensive. 

We look at asset protection planning in three parts. One is risk management/insurance. From a liability point of view, at least in terms of medical malpractice, Medical Justice is helping clients manage risk up front. 

I get the question all the time: How many claims really go beyond insurance? And I’m not somebody who pushes the panic button. I think that if you spend 95 – 98 percent of your time building wealth, you should spend 2 – 5 percent of your time one day a year talking about how to protect it. So, insurance is part of what we do at the OJM Group.  

When we’re looking at asset protection diagnostic, we have a partner firm that is national and will look at the client’s insurance. 

They may look at this insurance at just the practice level, or they may look at the homeowner’s umbrella and conduct a deeper dive. 

Jeff Segal, MD, JD 

And another thing, David, let me just interject and emphasize the need for physicians to think about these things. It can feel overwhelming, but it’s important to have this conversation with someone who understands this world and why it is important.  

Let me provide an example – our business has the traditional business owner’s insurance dealing with the property of the building. And what happened to us a year ago? Believe it or not, lightning hit the building. And because of how the Internet was connected to the office, lightning surged through our phone systems and damaged several computers. And many policies have a cap of $10,000 on computer equipment. Now, we were right around that cap, but not beyond it, so we got paid. 

And then the phone system was considered different than the computers. So, we were close, but it was a wakeup call. We have a lot of sensitive equipment in our office. And actually, if you don’t pay attention to the limits and the details of your insurance policy, you could be caught with your pants down – which is not a good thing in this particular circumstance. Make sure that you have the right amount. You don’t need a ridiculous amount; you just need the right amount. 

David Mandell, JD, MBA 

I agree. That’s why we designed our service in this way. I used to practice law in New York and help doctors with asset protection planning. But I couldn’t look at their insurance, because at the time, I didn’t have the skill set. It just seemed like being a dermatologist, but not being able to talk about something like sunscreen. This is a basic, this is something that needs to be known. 

You don’t want to be over–insured, but I can’t say how many physicians have come to us on a personal level and revealed they don’t have an umbrella policy. Again, not expensive, but very important. 

Jeff Segal, MD, JD 

Let’s talk about how an umbrella fills in the gaps. Just as one example, one thing that likely will never happen to you, is getting sued for defamation. But, we’re physicians, and we often have strong opinions. And sometimes you’re on the receiving end of getting sued for your opinion. It doesn’t happen frequently, but I can tell you, I’ve seen it on more than one occasion. Typically, you would be on your own. 

You’d have to hire your own attorney and you’d probably win. But it doesn’t feel comfortable having to write those checks to a law firm to defend you. But many umbrella policies throw in coverage for libel and slander. I know mine does. Or at least I believe it does, last time I looked at it. But these are some of the gaps that are filled by virtue of having coverage that otherwise does not come with your personal insurance or your general business liability policy. 

David Mandell, JD, MBA 

I had a 2-million-dollar umbrella and improved it to a 5-million-dollar umbrella. It was a not much more expensive – the difference was hundreds of dollars. I think about the imaginary car accident that could upend your financial life – hitting the proverbial school bus. In that situation, judgments could easily go beyond your normal car insurance. And to have this layer on top, that covers your bases – because in the event there is a gap, you’ll be personally responsible. 

Jeff Segal, MD, JD 

And the cost to “widen” that umbrella is low. 

The umbrella is an extremely modest cost. You’re going from one million dollars of coverage to five million dollars of coverage for less than a thousand dollars. Just think about that. Plus, it fills in the gaps for all types of things that absolutely nobody is thinking about until they get that nasty letter from a lawyer. 

David Mandell, JD, MBA 

Insurance and risk management is a huge part of it. When people think of asset protection, they think of lawyers. And that’s important. And legal tools are also important. But even before that, every state in federal law has something called exempt assets. These are assets that are off the table. We reference them in our books and simplify them. We’ve been using this for 20 years. We use a (-5) to a (+5) sliding scale model. (−5) being an asset that’s totally exposed. No protection whatsoever.  

If someone has a judgment, a (−5) asset can be taken. On the end of the scale are the (+5) assets – and that asset is totally protected. If they get a judgment, the plaintiff can’t get a dime out of it. The only assets that are truly (+5) are those that are exempt. And typically, you don’t need a lawyer for those – that could be homestead, for example. I live in Florida. People have probably heard before that Florida has an unlimited homestead exemption. 

And that’s true in terms of value. There’s a limitation on how large the loss can be depending where you live. But it is complex. My brother is a cardiologist. He started his practice by joining somebody in Florida who went bare – no malpractice insurance. And you can bet he was calling me as he took that job and asked what he needed to do to protect himself. Well, because he lived in Florida, one of the things he could do was buy a home and make sure it qualified for homestead protection. 

And as he pays down that home and builds up that equity, that’s totally protected. Other states have limitations on their homesteads, and some states have great protections for qualified plans. Some have terrific unlimited protection for cash value life insurance and annuities. Some have kind of a quasi-exemption for something called “tenancy by the entirety”, which is an ownership form for married couples in certain states. After risk management and insurance are addressed, the next thing I’m going to look at are the exemptions in their state, and how our client could better be using those – because those exemptions are (+5) assets. You don’t have to pay any lawyers. There are no state fees. There are no legal fees. Then for the gaps beyond that, we address with legal tools – things like limited partnerships, limited liability companies, certain types of trusts. And there’s been a lot of changes in that space over the 22 years I’ve practiced. 

There’s a terrific new trust law being passed in in different states which allows for a whole new tool that didn’t exist before. And that new tool gives a really high level of protection, but still allows clients to get to their assets. When we do our consulting and asset protection diagnostic, which is typically $1000 – $1500, I’m going to do a 10 – 15 page write up on the exempt assets, the legal options, and rate everything between a (-5) and a (+5), and include cost / benefit and what it would take to get the client where they want to go. 

And we’re going to have the insurance reviewed. So, it’s going to be a complete diagnostic. Then the client can decide: What do I want for my treatment plan? Do I want to change my insurance? It’s up to them, depending on the recommendations. Do I want to add some legal tools? It depends on them, the recommendations and the cost / benefit. Do I want to leverage the more exempt assets? The answer depends on the client and how it fits into their financial plan. 

I tell clients that when it comes to asset protection, think multi-disciplinary. Think of diagnostic versus treatment. I have clients who read our books and then they come to me and they say, “I think I need a limited partnership.” And that’s like when a patient comes to a doctor and says, “Hey, I think I need this procedure.” What’s the doctor going to say? “OK, maybe – let me first diagnose you.”  

Maybe the procedure makes sense – maybe it doesn’t. 

There are a lot of other tools in the tool bag, so to speak. And that’s the way I look at it. That’s why we start with diagnostics.  

Jeff Segal, MD, JD 

I think the challenge is getting people to sit down and create this map in the first place. If we go to the other end, just accept that you will never have a plan where everything is (+5) and totally protected. Because that’s very difficult to achieve. 

David Mandell, JD, MBA 

I know I don’t have (+5) across the board.  

Jeff Segal, MD, JD 

Nobody does. The only way you could have (+5) across the board is by having no assets at all. But I think that if you understand what a reasonable asset protection plan is, you are already a step ahead. Think about it. If a lawyer is coming after you to try and take your money, they don’t want to work forever to get your money. They want to walk the path of least resistance. And insurance is probably the typical way to do it. 

If you have a reasonable amount of insurance, that’s typically the end of the story. Now, I have seen situations where a doctor was either underinsured, or he had the right amount of insurance, and for whatever reason, it didn’t cover his client’s particular problem, so they kept going. But, that’s an opportunity to potentially settle. I think in each of these cases, the attorney had to take it to court. He got a judgment which was above policy limits. 

And the lawyer says, “I’m going to keep going.” He’s going to keep going because the doctor was difficult and created a line in the sand. It took eight years for the lawyer to even get this judgment. Those are unique situations. And there are probably ways to manage it. But by and large, if you have an asset protection plan in place and that’s articulated to the other side, you will soon find out that the other side tends to become a lot more reasonable. 

Isn’t that your experience? 

David Mandell, JD, MBA 

Well, for sure. Because most of the cases we’re talking about, the doctors are concerned about medical malpractice, employee claims, car accidents, etc. These are contingency fee cases, typically. The lawyer on the other side is not billing his client $500 an hour with the intent of stretching this out like a corporate law case. They get a piece of the judgment, and they have a whole bunch of files on their desk concerning other cases. 

If there is some insurance, and there’s found to be liability and that insurance is a payout, what’s their incentive to pursue more money if it’s going to be difficult, time consuming, and deliver unclear results? 

They will eventually be forced to make a business decision. And I see this over and over again – they’ll take the insurance and move on to the next case or settle for pennies on the dollar. I have a client who is an orthopedic surgeon. I tell him I use his example all the time. He was in a business totally unrelated to his practice and it turns out there was some nefarious things going on. 

And he actually got a judgment against a former business partner for $200,000. He got the judgment and went to court and won. But it turned out that that person didn’t have many assets. He could pay him off, but they were not wealthy. But all the ex-partner’s assets were in some LLCs and things that were put in place – and the timing is critical here – long before they ever had this business. So, this orthopedic surgeon told me he spent about $10 – $12k with a lawyer poking around, getting the discovery, trying to figure out a way in. 

At this point he’s saying, “I’m just going to settle for that sum I paid the second lawyer to sniff around.” Forget about the original $200,000 judgement. Thankfully, he manages his money well. He’s doing well. Even in this downturn, he’s been better positioned. So, he hasn’t lost much. He’s in basically semi-retirement anyhow, so this is too much of a headache for him. He wants to move on.  

So, he’s going to settle for pennies on the dollar. And I empathize with him. But my point is this: Now I have a doctor on the other side who’s seen it for real. This stuff can work. It just needs to be put in place properly and it needs to be maintained properly. This is not something you can build and then forget about. Entities need annual meetings. They need to be updated, etc. And these things must be done in advance. 

Jeff Segal, MD, JD 

Let’s talk about timing – because timing is critical. The time to do it is not when the barbarians are at the gate. Because that could be considered a potentially fraudulent conveyance – an attempt to delay or deny payment to a creditor. The longer the tools have been in place, the more it passes the “sniff test” for having a legitimate business purpose and not a purpose to deny or delay payment to a creditor. 

Talk about that for just a minute. 

David Mandell, JD, MBA 

Yeah, it’s a crucial part of it. You can’t get fire insurance for your house when it is on fire. And physicians may think the “fire” is the date they’re being sued, or the date they’re going to court. But that is not true. The way the courts look at that “fire” is the date of the event. You saw the patient who turned out to have a malpractice issue on this date. So, you can’t wait until you have a problem. 

The language is reasonably foreseeable because every state has on the books fraudulent transfer, fraudulent conveyance, or what is sometimes called a voidable transaction. A voidable transaction is probably a better description, because that’s really what it is – they can void the transaction and move it back. So, you want to put this in place while the coast is clear. And then if you can do that and maintain it, you’re in great shape. One of the other methods you mentioned in the beginning, and I want to mention it too is this favorite asset protection strategy: “Hey, I just put everything in my spouse’s name.” 

And you mentioned before the risk of divorce. Well, there’s a risk way beyond that, which is that the method really doesn’t work in most states for most assets. Again, I can’t say for all 50 states. It’s not universal, but in most states and for most assets, just putting your assets in a spouse’s name is not going to be effective protection because many are community property states. 

So, that’s not going to work, as those assets are considered community property. So, that method is off the table. And then in the non-community property states, generally, you’re still not getting any consideration. If you’re putting assets in the spouse’s name, they can still determine what money earned that asset.  

Let’s say you put the house in the spouse’s name. Well, who’s paying the mortgage? Who’s paying the property tax? If you’re living in it, are you paying rent to the spouse?  

If you aren’t, it doesn’t look like a real gift, right? It looks like form over substance. You said you did a gift, but you didn’t act like you did a gift. And even if you did all those things, it still comes back to your risk.  

Meaning that if you did really move the home to her, and you are paying rent, and she is now paying the property taxes and all of that, and then you get divorced – well, now you’ve got big a problem. Because now the home really has become hers. 

You can’t have your cake and eat it, too. You can’t jump through all those hoops and then claim that half the house is really yours in the event you divorce. It doesn’t work that way, in most cases. I tell clients that putting assets in a spouse’s name is not good medicine. It’s the asset protection equivalent to medieval medicine – we have better tools. When you ask clients what they want when they want to protect their assets, they generally want to maintain two things: ownership and control. 

And when I say ownership, I mean access. There are different tools that allow that to certain extents. When we look at a client, we do the diagnostic. We’re going to lay out those options and clients are typically going to make choices. They may say: “OK, I can do a limited partnership or an LLC. I don’t have to trust anyone else. My spouse and I can be the managers. We’ll have control.”  

Or they may use this irrevocable trust in a state called a domestic asset protection trust. Ohio is an example of such a state. I know the lawyers who wrote the statute – it’s great. In that case, we’re going to use a trust company, but the only beneficiaries are you and your spouse and likely your family. So, the trustee must pay attention. But the asset stays in the family.   

So, ownership, access, control, those are the things clients are concerned about most. And if you can show them a pathway towards those protections while maintaining ownership, access, and control to the extent they want, they’re much more comfortable following your advice. They are less likely to just put things in their spouse’s name, because they now know that method is less effective.  

Jeff Segal, MD, JD 

Let’s migrate to the later phase of a career, which would be retirement, estate planning, etc. Where the doctor is ready to hang up his stethoscope or continue practicing on their own terms and participate in the medical world because they love it – but don’t really want the daily grind. How do things change in terms of the lifecycle? What does the OJM Group do to address that perspective? 

David Mandell, JD, MBA 

Our book lays it out in lessons. Lesson 1 is for the young physician. It covers the basics. Lessons 2 – 5 are geared towards those in practice. And Lesson 6 is about retirement. And we talk about the retirement red zone, which is a great topic, and a great phrase I think I got from one of the big insurance companies when I was watching sports – back when we had sports on TV. 

To a football fan, the retirement red-zone means you are within the 20-yard line. You’re getting close to retirement. In the book, we have three tactics for that red-zone and then six or seven for retirement. One of the most important tactics is to adjust the portfolio risk.  

OK – but why?  

Because of what’s been going on right now, as we speak. My parents are 77. We adjusted their portfolio risk years ago. 

As a result, despite this downturn, they’ve not been affected as much. They’ve taken a hit, but they’ve also gotten some decent ups over the last couple of years because the market’s been up. So, changing the numbers from – and I’m just making these up – from 70:30 stocks to bonds and alternatives, which are crucial. People don’t talk about alternatives, but they’re crucial. Changing from 70:30 to 30:70 or something like that over time without creating a lot of tax consequences is crucial. 

And that’s crucial because you don’t have the time to make it up when you are approaching retirement. A 50-year-old, a 40-year-old, a 35-year-old doctor can say, “I took my lumps this year, but I don’t need that money now, and I’ve got 20 – 30 years to make it up.” 

A doctor who is 60 – 75 years old doesn’t have that time.  

Jeff Segal, MD, JD 

Hey, David, I’m glad you talked about 65-year-old going from 70:30 to 30:70, as opposed to 100:0 -meaning entirely in cash or entirely in bonds. Because with people living longer and longer, one of the big concerns is outliving your money. If my money is not growing with a reasonable rate of return, will I outlive my money?  

That’s a great fear. And to some degree, you still need your money to work, even though it may be entirely safe. You may need some amount of it at modest risk. And even that is a moving target, correct? 

David Mandell, JD, MBA 

I think it’s the number one fear of retirees, period. Physicians and non-physicians fear outliving their money. The old model was: Get the gold watch at 65 and be dead by 70. That’s just totally inapplicable today. My brother’s a cardiologist in Delray Beach in Boca Raton, Florida. And a 75-year-old patient would be his youngest patient. 

Medicine is keeping people alive and productive (or at least healthy) and feeling good for a long time. So, we’ve got to adjust our modeling. This gets back to one of the things we talked about initially, which is the micro – you need to go back to the financial model. And that’s what we do with clients on a biannual basis. How did things pan out? What’s our plan? And a plan needs to stretch out typically from age 90 – 100, depending on the person. 

We work with almost all physicians, so they give us a realistic idea of life expectancy, based on their genetics. Nobody knows the day they’re going to die – if you did, we could build a great financial plan, but nobody does, so we must estimate. That’s crucial. You can’t go to zero. Look at what bonds have been returning. It’s not feasible. 

Interest rates are low, and probably will stay low, and money markets don’t pay 4 percent – it’s more like 0.4 percent. And that shift is important. Our books, Wealth Planning for the Modern Physician and Wealth Management Made Simple, are good resources.  

In Wealth Management Made Simple, we get into a good example of sequence of return risk. And that’s really what you should avoid when you start getting towards retirement.  

Jeff Segal, MD, JD 

What does that mean – sequence of return risk?  

David Mandell, JD, MBA 

You can imagine two portfolios, left and right – and this is in the book. You have 20 years of returns. And you average out to the mean return at the bottom. Let’s say they are the same – call it 7 percent. 

So, you have different years, but at the end, they both have the mean return of 7 percent. And let’s say they both have the standard deviation of the same number. So, the same amount of risk. But on the left side (Portfolio A), we have different rates of return over the 20 years. Portfolio A starts with positive years and ends with negative or flat years. 

Now, let’s look at the other side – Portfolio B. 

On the other side (Portfolio B), we have the exact same rates of return. But the negative or flat years are at the beginning, and the positive years are towards the end. But the portfolios have the same mean returns, and the same standard deviation. Portfolio A lasts until age 90 – I would say 20 years, so ages 70 – 90. A good run. 

But Portfolio B? They run out of money in twelve years. 

Jeff Segal, MD, JD 

That’s one of the challenges of using averages. It’s often been said that Bill Gates walks into a bar and the average patron in the bar is now a millionaire. 

David Mandell, JD, MBA 

That’s exactly right. And that’s why the micro is so important. Because the people who didn’t do the good work of managing the portfolio from a micro point of view and are in retirement and still in 70:30 on stocks are panicking now. And we don’t know where it’s going to go. 

We’ve had a couple of good days this week, but who knows how long that’ll last? We could be headed for another bottom. Nobody knows. We want to avoid that because we can’t let our clients come close to running out of money. We’ve got to make sure that they’re smart about sequence of return risk. 

Jeff Segal, MD, JD 

Are you using additional tools above and beyond an investment portfolio? Are you thinking about insurance, annuities, other types of tools to generate a check for people after they don’t have new income coming in, other than what’s generated from their portfolio? 

David Mandell, JD, MBA 

For sure. I didn’t become educated on life insurance until starting the firm 13 years ago. I knew about it as a lawyer, but I didn’t understand it as much at that time. But we address those tools in our new book. Certainly, I have term insurance. I have it personally and I have it at the business in two major policies. One is buy-sell and the other is key person insurance – just in case I get hit by the beer truck. 

But I also have a significant cash value policy, and a lot of our clients do. And why is that? Because it can grow tax free and the money can come out tax free. And guess what? It’s also totally asset protected, here in Florida. And it was in New York, where I used to live. It is in about 20 states. But what’s interesting about these policies (and we show some examples in the book) is how they expand your choices. 

I have a policy that’s called an equity index policy. It grows with an index, which for me is the S&P 500, but it has a floor and a cap. Let’s go to basic collar strategy. My policy is guaranteed at least a zero return and it has a cap of 11 percent. 

Let’s just look at the last two years. Last year, the S&P did 30 percent. I got capped at eleven. But this year, even if we end up down negative 20, I’ll have zero. 

Jeff Segal, MD, JD 

So, you are using that as a tool to mitigate risk, meaning that you’re okay giving up the average percentage over time that you typically would get with your investment portfolio. But the upside for you is that even in the worst of the worst years, your policy is not losing value. You sleep OK at night because you recognize you will not run out of money. 

David Mandell, JD, MBA 

Well, it’s actually a little better than that, because if you just look at the S&P 500, with or without dividends, and you do the collar strategy, the mean is actually higher. Because there are more years that you get hurt with the negative than there are over eleven, historically speaking. That’s not really been true in the last bull run, but I had this policy through 2008 – 2009, so I wasn’t down 40 percent that year and I won’t be down whatever the percentage is this year.  

But meanwhile, I’ve hit the eleven a bunch of times. My mean is like 8 or 9 percent, and that’s pretty good. Especially tax free while having the downside protection. Another type of policy, for example, is a whole life policy. A lot of people are more familiar with that policy. That’s more like a bond return, but a little higher – so like 5 or 6 percent. 

Typically, most of the mutual companies we like because they’re owned by the shareholders. I’m an owner, not just a policyholder. We’re not beholden to Wall Street earnings. Beginning at 5 or 6 percent tax free. It’s never going to be your highest performer, but as you get to retirement, if you’d funded that over the years (and we try to get our clients to jump in when they’re young because the cost of insurance is lower) by the time you are in your 70s and 80s you are pulling money out of that tax free. And that will not be my highest performer, but it’ll be case of winning by not losing. Or if you’re a baseball person, it means singles and doubles.  

Jeff Segal, MD, JD 

It’ll be there for you. And that’s the purpose of it. Every piece of the puzzle has a purpose. 

David Mandell, JD, MBA 

Exactly.  

Jeff Segal, MD, JD 

We are running out of time. Two things: One, I want to direct every one of our listeners to the books that the OJM Group has put together. For years, we used to distribute your book called For Doctors Only: A Guide to Working Less and Building More.  

And that’s a book that has been on the shelf. There are so many nuggets of wisdom in it. But you are about to release a new book. And I want to make sure that those who are listening get the benefit of having listened not only to this podcast, but also get the secondary benefit of downloading that book for free. 

So, talk a little bit about that book and how the listeners can download it – at no cost. 

David Mandell, JD, MBA 

Yeah, absolutely. The name of the book is Wealth Planning for the Modern Physician. We’re super excited about. It’s our first financial book for physicians in five years. There’s a lot of stuff in it that’s relevant to physicians in every age group and in every stage of their careers. If you’re young, maybe you just look at Lesson 1. Or if you have the time, you can look at any of the lessons. If you are approaching retirement, you can look at Lesson 6. But there’s something in there for everybody. 

We co-authored with one of our young doctors. And everybody on our team contributed. There are lessons on asset protection, taxes, retirement, investing, retirement, etc.  

And the way you can get that book, if you’re listening and you have your phone nearby, is to do this: Pull out your texting app and text to the number 555-888. That’s 555-888. 

And then in the body of the text put mjpod. It doesn’t have to be capitals; it can be capitals or lowercase. Again, text mjpod to 555-888. 

Jeff Segal, MD, JD 

MJ stands for Medical Justice, by the way, for those who are guessing.  

David Mandell, JD, MBA 

Yes, that’s it. Text mjpod to the number 555-888. And you’ll get a link back. And that link will take you to our bookstore. And you can get this book along with other resources that deliver a financial deep dive. 

You can get Wealth Management Made Simple. You can get them both for free.  

And if you want any of our other books, we’ve got some others on there as well. And you’ll see the price point for those. 

But when you get to the checkout, you’re going to get them all for free. And we have them as hard copies, if you are an old school reader. If you’re a PDF person, we have PDFs. We have Kindle versions and iPad versions. So, any form you want to use, you can get it.  

So, one option is texting. Text 555-888 and put mjpod in the body of the message. 

The other way, if you’re got your computer up and you’d rather not use your phone, you can go to our online bookstore and use the same code. Choose the books you want, when you get to check out. That code is: mjpod.  

You’ll get the same ability to get any of our books for free. And while you are there, take advantage of the other free resources we have on our site. These resources are linked below. 

We have a newsletter that comes out every month, which is free. We do podcasts often, especially when there are big market changes. We do webexes every month, for sure, and we discuss a whole host of topics. We’ve many videos online as well – there’s a lot you can learn.  

Jeff Segal, MD, JD 

It’s a no brainer. Everyone is listening to this should pull out their phones right now. Don’t wait. Don’t think. Just do – just act. It’s going to be mjpod. That’s mjpod to 555-888. Make it happen.  

David, you’ve been a wealth of information. I know that we could talk for about 20 hours, or even a month, but I hope you’ll come back and join us again soon. Thanks so much for delivering this amount of information to our listeners. 

David Mandell, JD, MBA 

I appreciate it. And thanks for having me. I’d love to come back. 

Listeners can get the books referenced throughout the podcast (Wealth Planning for the Modern Physician – Residency to Retirement and Wealth Management Made Simple – and many others) for free by following the instructions below.

Phone: Text code mjpod to 555-888. You’ll receive a link and instructions.

Computer: Visit the OJM Group’s online bookstore and use the code mjpod at checkout.

Subscribe to our podcast feed below to enjoy fast access to our most recent publications.

Meet Your Hosts

Jeff Segal, MD, JD

David Mandell, JD, MBA

Partner at the OJM Group

OJM Group

David Mandell is an author and renowned authority in the fields of asset protection and general wealth management.

He is a co-author of more than a dozen financial resources, including Wealth Management Made Simple, For Doctors Only and Risk Management for the Practicing Physician, a Category 1 CME-certified monograph. His previous titles include Wealth Protection: Build and Preserve Your Financial Fortress and Wealth Secrets of the Affluent, published by John Wiley & Sons.

Read our most popular publications…