Poor Medical Financial Planning Advice

The cases below highlight cases with Medical Doctors who had suffered from poor advice. It is rather dis-heartening and unfortunate to encounter the extent of unsuitable recommendations plus the negative impact of a lifetime of financial distress. We briefly discuss some real life scenarios below.

Case Study 1

A 40 year old, OTD General Practitioner through the 5th year of his moratorium – this gentleman had been advised to invest by purchasing interest into a regional house and land development. Due of the nature of the agreement, near completion of the project, client was offered to purchase a house and land at a lower price which still came in substantially undervalued. Client lost around $180,000 on a non-sellable or leasable ‘walls and bricks’.

Case Study 2

A 29 year old GP, practicing out of a clinic and a house of a prime real estate in Melbourne metropolitan. As a result of a highly negligent recommendation labeled “wealth creation” strategy by a firm advertising “reducing tax burden for doctors”. This doctor purchases three off the plan properties in three different locations in Melbourne with consecutive settlements in one transaction.

As a young doctor with a small patient base, this general practitioner (specialist) was working Saturday and Sunday afternoon shifts to maintain approximately $200,000 per annum of income.

He obtains finance with assistance of “proposed rental income” for two of the apartments with each of $50,000 shortfall in value. The equity in his property pays for the shortfall. The property development group goes bankrupt half way through the construction of the third apartment.

This doctor is left with debt on a half built apartment and only one of his investment properties rented for 8 out of 12 months.

Case Study 3

A Pediatrician contemplates retiring at age 65. He has a portfolio of five properties accumulated over the last 10 years. He was consulting only 4 days a week due to age. Some of these properties were purchased based on emotional factors and some via another financial adviser aligned with a property ‘buyer’s advocate’ (real estate agent). Upon analysis, 4 of the 6 the investment properties actually lost value as they were purchased off the plan (apartments) or in locations that had a population drain – people were moving out as opposed to a population increase as is the case for most of Australia’s capital cities.

This particular Doctor was told to sell 4 of his investment properties at a loss as part of “adjusting his portfolio” – whilst constructing his own $1M house – and purchase 3 newly constructed properties from a buyer’s advocate at an excessive cost of 3.3% of the value of the property. It was found out later that these properties were once again overvalued and fell short of the bank valuation which led to significant issues with the bank. The Doctor had to extend his retirement plans to at least age 70.

The above cases highlight the pitfalls of costly and poor advice. Not obtaining advice prior to a major financial commitment can be just as devastating.

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