For most doctors, the costliest financial advisor red flags are fees and conflicts the pitch never prices in dollars, so Annex Wealth Management suggests getting every cost as a yearly figure first. Rule of thumb: multiply every percentage by your balance. A 1% annual cost on $600,000 is $6,000 a year. If the person pitching you can't say what the whole arrangement costs per year in dollars, treat that as the first red flag. The trade-off is convenience versus control, and busy physicians often underrate what convenience costs after taxes, fund expenses and surrender charges. These are questions Annex Wealth Management hears in first meetings, especially when a resident-friendly pitch follows a benefits lunch or a cold call. Red flags catch bad incentives, not bad advice; a low-cost advisor can still recommend poorly, and a doctor with one employer plan, no taxable account and steady savings may not need an advisor yet.
Step 1: How does the person calling you get paid?
Before the first meeting, gather Form CRS and Form ADV Part 2A if the person represents a registered adviser. A broker or salesperson should provide a FINRA BrokerCheck page. Read the compensation section before the investment story. The words “fee-based” do not mean “fee-only”; a fee-based adviser can also earn commissions on products.
A commission salesperson is paid when a product sells, and leaving can trigger surrender charges. A percentage-of-assets advisor is paid on your balance; 1% on $900,000 is $9,000 each year, and selling holdings into in-house funds can create a tax bill when you leave. A flat-fee or hourly planner is paid for advice and usually costs little to leave, but you handle the implementation.
A commission can be reasonable for one transaction, such as a single term or disability policy. A percentage fee is not automatically a red flag when the work covers taxes and cash flow. A doctor with one employer plan, no taxable account and a target-date fund may not need help yet.
| Option | How they are paid | Cost to leave |
|---|---|---|
| Commission salesperson | Per product sold | Surrender charges possible |
| Percentage-of-assets advisor | Percentage of balance | Tax bill possible |
| Flat-fee or hourly planner | Advice fee | Usually little; self-implement |
- Form CRS and Form ADV Part 2A
- FINRA BrokerCheck page
- Compensation section first
Step 2: Turn every percentage into dollars a year
Add every layer of cost before deciding. A 1% advisory fee on $600,000 is $6,000 each year. In-house funds charging 0.70% add $4,200, so the two charges total $10,200 a year before trading costs or taxes.
Checking a disciplinary record and stopping there is the slip careful doctors make. A clean BrokerCheck page says nothing about in-house funds at 0.70%, which on $600,000 costs $4,200 each year, or $42,000 over ten years before growth. The record matters, but it is not a cost schedule.
If an advisor cannot put the proposal's total yearly cost on one page in dollars, do not move a single account until they do. Include advisory fees, fund expenses, commissions and surrender charges.
- Advisory fee in dollars
- Fund expense ratios
- Commissions and surrender charges
Step 3: Map each account before anyone moves money
Jun and Patrice, hypothetical, are 44 and 43. Jun is a pediatrician on salary. Patrice is an emergency physician with W-2 pay plus $80,000 of locums income each year. They have $900,000 saved, their loans are paid off, and they are weighing a physician mortgage on a $1.6 million house against a solo 401(k) and taxable account.
Their $300,000 taxable account contains $100,000 of long-term gains and is partly earmarked for the house. Jun and Patrice transfer the account to a new firm in kind, meaning the holdings move without being sold. A twin couple, identical except for that choice, accepts a pitch to “reposition” and sells everything first. The twins realize $100,000 of gains.
At an assumed 15% rate, the federal tax is $100,000 × 15% = $15,000. The 3.8% net investment income tax is $100,000 × 3.8% = $3,800. Their April bill is $15,000 + $3,800 = $18,800, or $100,000 × 18.8%. Their account falls from $300,000 to $300,000 - $18,800 = $281,200. Jun and Patrice's account remains $300,000 after the in-kind transfer.
Jun and Patrice still owe tax when they eventually sell. They choose the year, which matters when a house closing is nearby. A 20% rate or state tax would widen the gap. Modified adjusted gross income, or MAGI, includes both W-2 salaries and Patrice's $80,000 of locums income. On a joint return, MAGI above $250,000 triggers the 3.8% net investment income tax. The realized gain stacks on their wages and can push part of it into the 20% rate. The tax comes from money set aside for the down payment.
| Account | How it is taxed | What to do with it |
|---|---|---|
| Jun's hospital 403(b) | Pre-tax; income tax on draws | Compare funds before any rollover |
| Patrice's employer 401(k) | Pre-tax; income tax on draws | Keep; rollover can spoil backdoor Roth |
| Solo 401(k), if opened | Pre-tax or Roth deferrals | Shares her $24,500 deferral limit |
| Taxable account, $300,000 | Gains taxed when sold, plus 3.8% | Transfer in kind; don't sell first |
| House down payment cash | Interest taxed each year | Keep out of surrender-charge products |
- Year-end 403(b) statement
- 401(k) statement
- Cost-basis page
- Last year's 1099-B
- Solo 401(k) statement
Step 4: Which dates should set the pace on an advisor's pitch?
Let the tax calendar set the pace. A salesperson's Friday deadline shouldn't. January 15 is the due date for the last estimated payment on the prior year's locums income. January 31 is when W-2s and 1099-NECs from locums agencies arrive. By mid-February, the brokerage 1099-B shows gains.
April 15 brings the tax return, the close of the prior-year IRA contribution window and the first estimated payment. June 15 and September 15 bring the next estimates. December 31 is the last payroll-deferral date and the last day to realize gains or losses for the year.
Signing at the first meeting because “enrollment closes Friday” is a timing error. Selling taxable holdings in December after a heavy locums year can add a tax bill when cash is needed for a house. Putting house money into a product with a long surrender schedule within two years of closing is another. So is moving a 401(k) before reading its rollover rules. Insurance products also have a free-look window and a surrender schedule that often runs seven years or longer; state rules vary, so check yours.
Buy nothing until the monthly spending plan and the house payment are written down. For Jun and Patrice, that means knowing the monthly mortgage figure and the closing date before anyone touches the $300,000 taxable account. The portfolio's job is to fund those payments.
- January 15: fourth-quarter estimate
- January 31: W-2s and 1099-NECs
- Mid-February: brokerage 1099-B
- April 15: return and first estimate
- June 15 and September 15: estimates
- December 31: deferrals and gains
Step 5: Put these questions to the advisor, the CPA and the plan administrator
Ask the advisor for the total yearly cost in dollars, whether the advisor earns more from any recommended product and what happens to your holdings if you leave. Ask the CPA how much tax selling the taxable account creates this year, whether a rollover affects a backdoor Roth, and how locums income changes estimated payments.
Ask the plan administrator whether rollovers in or out are allowed while you remain employed, what each fund's expense ratio is, and whether the plan offers a Roth option. The IRS limit for 2026 is $24,500 for employee deferrals across a 401(k), 403(b), governmental 457 or TSP. Patrice's solo 401(k) and W-2 plan share that limit, so anyone promising $24,500 in each is wrong.
Rolling Patrice's 401(k) into an IRA creates a pre-tax IRA balance that can make backdoor Roth contributions partly taxable. A variable annuity inside an IRA adds tax deferral the IRA already has. Before Annex Wealth Management suggests moving any taxable holding, it works out the April capital-gains bill and how that bill changes the house timeline.
- For the advisor: total yearly cost in dollars
- For the advisor: product compensation
- For the advisor: holdings after leaving
- For the CPA: tax from selling
- For the CPA: backdoor Roth effect
- For the CPA: locums estimates
- For the plan administrator: rollover rules
- For the plan administrator: fund expense ratios
- For the plan administrator: Roth option
Step 6: Hand Annex Wealth Management the proposal and your spending plan
Annex Wealth Management would first set the proposal's total yearly cost in dollars against the couple's monthly spending and the date the house payment starts. Then it would look at the taxable account's unrealized gains and whether a proposed rollover touches the backdoor Roth. Investments can lose value, and you may receive less than you invested; no outcome is promised.
- Total yearly cost
- Monthly spending plan
- House payment start date
- Unrealized gains
- Backdoor Roth effect
Questions about financial advisor red flags for doctors
A rep at our group's benefits lunch wants me to roll my residency 403(b) into a variable annuity. Should I?
How soon can I cancel an annuity or insurance policy after signing if I spot a red flag?
Isn't every advisor conflicted somehow, so why do red flags matter?
Primary sources
This material is general information only and does not constitute investment, tax or legal advice tailored to your circumstances. Investing involves risk, including possible loss of principal. Before acting on any information here, speak with a financial advisor, tax professional or attorney about your specific situation.