Tuesday, July 23, 2024

The Little-Known Syndrome That Ravages Smart Professionals’ Retirement Funds

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Medical education requires thousands upon thousands of hours spent studying topics like anatomy, physiology, genetics, kinesiology, and pathology. Taking a detailed history, ordering the right lab work, and requesting the appropriate imaging studies all have one common goal: establishing a diagnosis.

While pursuing my medical degree, I got an excellent education regarding the diagnosis and treatment of patients. However, there was one area that was not covered well at all. It was the business of healthcare. You know—starting a practice, running an office, negotiating leases, billing insurance, and hopefully preparing for retirement. While looking back over my own medical career, I wish I had known about one specific diagnosis that would have prevented a lot of heartache and saved me thousands: Professional’s White Coat Syndrome.

Traditional “White Coat Syndrome,” which is sometimes called “White Coat Hypertension,” is a condition affecting 15-30% of the population who present with high blood pressure in a physician’s office. These patients get really anxious just being in a doctor’s office, and their anxiety causes their blood pressure to spike to abnormally high levels. When they walk out the door and head home, however, their blood pressure returns to normal.  

I coined the term Professional’s White Coat Syndrome (PWCS) while doing research for my book on multifamily property investing. I was reading an article by Fidelity Investments written in Winter 2014 titled “Physician’s Savings Behaviors and Retirement Readiness.” That article discussed how physicians enter the retirement funding/planning stage of life later than most. Because of their late start, they experience unusually high levels of retirement funding pressure.

Amplified retirement funding pressure creates unusually high levels of anxiety (which reminds me of White Coat Syndrome). This anxiety causes many otherwise successful physicians to try and make up for lost time by jumping into uncharacteristically risky investments. If affected, they could be found rolling the dice on any number of risky investments that promised massive returns (you know, “swinging for the fences” type stuff). And most of the time, they were doing so with virtually no due diligence.

Unfortunately, many of these ill-advised investments led to poor outcomes and delayed or altogether aborted retirements.


Who is at Risk?

Not long after my discovery of Professional’s White Coat Syndrome, I began to notice a trend. I noticed that anyone in a profession that involves extended educational requirements or lengthy business development timelines was at risk for developing PWCS. This includes dentistry, law, chiropractic, physical therapy, engineering, MBAs, PHDs, and business owners of all types.  

Related: 3 Lessons I Learned Surveying 851 Current & Aspiring Early Retirees

A Few Contributing Factors

Extended Business Development Timelines

As I looked around at some of my small business owner friends, I noticed they were also susceptible to increased levels of retirement funding pressure. Lengthy ramp-up to profitability, excessive time commitments, and regular re-investment of capital into their businesses seemed to contribute to their angst.

Hindered Savings Rate

Many professionals don’t reach their full earning potential until completing 10-15 years of education. Afterwards, they have difficulty saving enough to make up for lost time. The IRS is not much help either, as they only allow limited tax advantaged retirement savings per year. And worse yet, there is little in the way of catch up provisions for people who are delayed entering the workforce.

Massive School Debt

Most professionals amass large school debt, which hinders their ability to save/invest for many years.

Lifestyle Choices

This is what I like to call the “keeping up with the Joneses” effect. Many professionals feel they are “expected” to maintain a certain lifestyle. This list includes big houses, high-priced cars, and other expensive toys. They easily fall prey to massive consumer spending/debt, preventing responsible investing.

The Peter Principle

A theory promoted by Canadian researcher Dr. Lawrence Peter, this principle suggests that just because people are successful in one job does not mean they will enjoy the same level of success in others. Many high achievers that fall prey to PWCS assume that just because they have had a high level of success in their chosen profession that they will enjoy the same level of success with their investment choices. They are characterized by overconfidence and a “don’t worry, I’ve got this” attitude, which leads to poor investment choices.

Do You Suffer From Professional’s White Coat Syndrome?

You may already be infected if you think any of these are can’t-miss, low-risk investments:

  • West Texas lodgepole oil plays
  • Penny stocks
  • Timeshares as investments
  • Hotels in third world countries
  • Off-shore anything
  • Expensive vacation homes as investments

We have all heard the stories about how someone’s “Uncle Bob” invested $100 dollars on a penny stock in 1969 and just sold his shares for $800K. Unfortunately, that is the exception and not the rule. For every “Uncle Bob” story, there are thousands of stories about hard working folks who have lost their life savings investing in one of the above (and any other number of high-risk, can’t-miss investments). If you are muttering under your breath right now, “Yeah, but this one is different…” then you have most likely already been infected.



It was not long after I really focused on Physicians White Coat Syndrome that I came across a publication from one of the high-profile investment houses. After reading a few paragraphs, it became clear that they were very aware of professionals’ tendencies to want to make up for lost ground. This particular company (which shall remain nameless) laid out their strategy for preying on professionals that were willing to roll the dice for a big score. At first I was incredulous that a firm would try to capitalize on the situation. I quickly realized, due to the language in the article, that it might be an industry wide attitude and they were probably not alone in their pursuit of “easy prey.”


So, what is the treatment for this retirement-wrecking malady?  

First and foremost, never invest in an asset class that you do not understand. Don’t be in a rush! Take the time to learn what you intend to invest in. If at all possible, become an expert. If you feel like you are behind in the retirement-investing race, a loss of equity at this stage will only put you further behind. Remember, no one will ever take as good of care of your money as you do!

Secondly, never just take someone else’s word on an investment. Not your CPA, not your attorney, and not your broker. Always do your own due diligence. Never invest your hard-earned money with anyone or in anything you have not fully vetted.

Related: The World’s Least-Followed Investment Advice (& How it can Make You a Millionaire)

Thirdly, learn to say no. If you are feeling pressure to invest, be willing to walk away. If there is not enough time for you to get up-to-speed, then take a pass. One thing is for sure: There is always another “can’t-miss” opportunity right around the corner.

Lastly, remember the motto from the children’s story of the Tortoise and the Hare—slow and steady wins the race! Even if you start investing later in life, choosing to invest in low-risk, high-return commercial real estate will help you make up for lost time.

Do you have a plan to make up for lost investing years? You may want to find a mentor or syndicator with plenty of experience you can trust. They should be able to help you avoid Professional’s White Coat Syndrome.

Have you seen Professional’s White Coat Syndrome at play?

Let us know with a comment!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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