Several state medical societies and the Drug Enforcement Administration have issued warnings about schemes specifically targeting physicians and pharmacists. According to the report, physicians are prime targets for financial scams in part due to public awareness of physicians’ relatively high salaries and other assets that they may be looking to invest.
“A lot of docs have maxed out their workplace retirement accounts. They’ve got an IRA. They’ve probably started some sort of a brokerage account, and maybe they still have some money to invest,” Dr. Dahle said. “So they are starting to think about private investments, and for the most part that’s where the scammers and fraudsters hang out.”
According to the report, physicians are often “accredited investors,” a class of investors recognized by the Securities and Exchange Commission that has professional financial credentials, has earned at least $200,000 in the last two years or has a net worth of more than $1 million, excluding their private residence.
This means physicians are allowed to invest in things such as private equity, hedge funds and venture capital, which are exempt from the same regulations as publicly traded companies. These investments may promise higher returns but also present more risk.
Because physicians are often “altruistic” in nature and are highly educated, according to the report, they may be overconfident and overly trusting when entering deals of this nature.
“The vast majority of physicians, that’s just now how our brains work,” Brett Mollard, MD, a diagnostic radiologist who provides financial advice to younger physicians, told Medscape. “So it’s foreign to us to think that people take advantage of other people. It’s hard for me to wrap my head around why somebody would do that, so it’s harder to expect that or to think it’s happening to you.”
Physicians also typically have busy schedules and often cannot dedicate the time to thoroughly vet an investment opportunity. Many physicians spend time with other high-net worth individuals, resulting in social pressure to invest their assets.
“The biggest thing is probably just our inability to take a step back and be able to think about it because we frequently have a sense of urgency and want to get stuff taken care of to move on to the next pressing matter,” Dr. Mollard said.