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Is a Recession Coming? 4 Personal Financial Lessons From 2020

Dermatology TimesDermatology Times, March 2023 (Vol. 44. No. 03)
Volume 44
Issue 03

This article reviews financial lessons from 2020 and offers reflective advice for dermatologists to be in control of their finances.

If one follows the financial media these days, the words “recession,” “soft landing,” and “layoffs” are ubiquitous. This is not surprising for good reasons. We very well may enter, or already be in, a recession—and a bad one (pandering to fear always gets the ratings).

Although other articles may focus on how to best insulate a dermatology practice from an oncoming slowdown, especially in cosmetic procedures, we will focus on personal finances. Specifically, we will look back just 3 years to the last abrupt economic disruption—the COVID-19 outbreak in the spring of 2020—to better understand what might happen.

Here are 4 key important lessons learned that are applicable to the next potential economic situation.

Lesson No. 1: Be in contact with your financial quarterback.

This lesson can also be worded in the negative: Do not go it alone. Making important financial decisions is always challenging, even more so if one does not have a professional adviser to partner with for the decision-making process. These challenges are even more heightened during economic downturns.

First, the professional adviser should provide a sounding board—someone to run ideas by and put a pause on some of the more emotional elements of investing and wealth planning that overwhelmed many physicians in 2020. Ideally, a physician’s selected adviser is also attentive, disciplined, data driven, and guided by longer-term planning.

For many investors making decisions on their own, spring 2020 was a time for selling assets and converting to cash out of fear. This often turned out to be a double whammy against them: (1) They incurred capital gains tax on the sales because even during the March 2020 market lows, many securities were still up relative to their basis if they had been held for a year or more, and (2) many never felt right about “getting back in” and thus missed the snap back to new highs later in the year. Unfortunately, for dermatologists who recognize this as their story, it may take many years to make up for the losses and lost gains incurred in 2020.

On the other hand, the data now show that a significant number of investors who worked with a professional adviser (and certainly many who did not) did not panic in the spring of 2020. In fact, they either held still and did not sell, or they actually bought into the downturn and came out with even larger gains in 2020 and beyond.

Lesson No. 2: Use the occasion to step back and review your long-term financial plan.

In the first lesson, we discussed macroeconomics—what happened with the financial markets. Here, we look to microeconomics—a dermatologist’s specific financial plan.

One of the most powerful ways a dermatologist can avoid poor short-term financial decisions during stressful times is to keep their long-term planning goals top of mind. Most importantly, this should involve a review of a long-term financial/retirement model, including annual saving goals, assumed rates of return, and personal spending and retirement benchmarks.

By reviewing and understanding what goes into their financial plan, a physician can truly buy into a long-term time horizon. By doing so, they can look at short-term financial downturns with perspective and not let the situation create stress or lead to poor decisions, even during a chaotic time such as the beginning of the pandemic.

Lesson No. 3: Always be proactive about taxes.

Because everyone wants to reduce taxes to the extent they can, it is not surprising that most dermatologists consider this lesson to always be important, not just in times of crisis. Moreover, this lesson may be especially important in the next few years if proposed tax increases become law.

A detailed dive into all types of tax reduction tactics is beyond the scope of this article. However, one tactic that stood out in 2020 was timely capital gains and loss harvesting. Many advisers, including our firm, helped clients benefit from the sharp market downturn in March 2020, and enjoy the run-up the rest of the year. This was achieved by selling preidentified holdings into the market downturn to realize significant tax losses and then reinvesting proceeds in preidentified similar investments to fit the client’s overall allocation.

Prior to the pandemic, many dermatologists, especially those who managed their own investments, may have thought that loss and gain harvesting should be executed in the fourth quarter, when one has a clearer picture of portfolio performance, income, and the overall tax picture for the year. This is a mistake. One of the lessons made evident in 2020 was that an investor who waited until the fourth quarter to harvest gains and losses would have missed a tremendous opportunity to enjoy a lower tax liability while investments increased significantly. The opportunity to enjoy this win-win came and went in March 2020.

Lesson No. 4: Find a fiduciary adviser if you don’t have one.

In addition to dealing with extreme market volatility in the spring of 2020, most dermatologists had more time on their hands due to mandated cessation of nonemergency procedures. Many dermatology practices closed completely for the first time ever. Some used that time to examine their investment portfolios, reevaluate their existing adviser relationships, or even look for a new financial adviser. Thanks to these endeavors, physicians had a significant opportunity to understand the different ways financial advisers make money and to realize the value of a fiduciary financial adviser.

In short, there are 2 regulatory models for investment advisers: the fiduciary standard and the suitability standard. Fiduciary advisers must put their clients’ interests before their own, whereas an adviser operating under a suitability standard needs only to provide clients with suitable investment options. The fiduciary adviser owes a duty of loyalty to their client, and the suitability adviser owes a duty of loyalty to their broker-dealer.

For many dermatologists evaluating options for financial advice, the business model of the fiduciary standard made the most sense. This is not surprising, as physicians also operate under a professional duty to put their patients’ best interests first. As dermatologists have returned to their busy prepandemic schedules, the importance of working with a fiduciary adviser should remain top of mind when evaluating current or prospective advisers.


We may be heading for a recession that impacts every dermatologist negatively in some way—perhaps similarly to the economic impact of the onset of the COVID-19 pandemic in 2020. From our viewpoint in 2023, these 4 time-tested financial lessons learned from 2020 can continue to guide us today.

David Mandell, JD, MBA, is an attorney and author of more than a dozen books for doctors, including Wealth Planning for the Modern Physician. He is a partner in the wealth management firm OJM Group (www.ojmgroup.com) and can be reached at 877-656-4362 or mandell@ojmgroup.com.


OJM Group, LLC (“OJM”) is a US Securities and Exchange Commission (SEC)–registered investment adviser with its principal place of practice in the state of Ohio. SEC registration does not constitute an endorsement of OJM by the SEC nor does it indicate that OJM has attained a particular level of skill or ability. OJM and its representatives are in compliance with the current notice filing and registration requirements imposed upon registered investment advisers by those states in which OJM maintains clients. OJM may only transact practice in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. For information pertaining to the registration status of OJM, please contact OJM or refer to the Investment Adviser Public Disclosure website www.adviserinfo.sec.gov.

For additional information about OJM, including fees and services, send for our disclosure brochure as set forth on Form ADV using the contact information herein. Please read the disclosure statement carefully before you invest or send money.

This article contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized legal or tax advice or as a recommendation of any particular security or strategy. There is no guarantee that the views and opinions expressed in this article will be appropriate for your particular circumstances. Tax law changes frequently; accordingly, information presented herein is subject to change without notice. You should seek professional tax and legal advice before implementing any strategy discussed herein.

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