Can you recession-proof your career?

Seven resolutions that can help you build and protect your wealth no matter what the future has in store.

By Steven Abernathy and Brian Luster | Financial Fitness | Winter 2014


You’ve finished medical school, gone through the rigors of a tough residency, landed a plum job in your specialty. Now what?
Aside from working long hours, the demands of your office or hospital group, malpractice insurance, the EMR, Obamacare, business or school debt—and whatever future surprises will be thrown at the medical profession—your career is a stable one. But is it recession-proof?

Though joining the medical profession as a physician has long been considered a responsible and effective way to make a contribution to the greater good while earning a comfortable living, physicians today must plan ahead. Impulsive, risky financial choices are not an option.

Unfortunately, many physicians who will eventually become or are already members of the mass affluent all too often are investing like members of the middle class. This means not only mistaking salespeople for experts and failing to integrate advisors, but also not having a savvy eye to the future.

Though no one holds a crystal ball, there are known certainties ahead:

• Physicians are working more and retiring later. Do you have a set time to retire, or will you delay retirement and continue working? Remember, if you own your medical practice, like any business, many factors affect its value. A retiring physician cannot transfer managed care contracts, so this may depress the sale price, giving potential purchasers little incentive to buy. And because hospitals are choosing to pay through performance incentives rather than an upfront premium, this too lessens a practice’s salability.

• Despite a high monthly income, doctors seldom create and preserve generational wealth.  Medical doctors, as well as other professionals, fail to employ fiduciary stewards and instead rely on those bound by “suitability.” Only a fiduciary represents an investor’s interests 100 percent of the time and adheres to a coordinated plan designed exclusively for their family enterprise. An M.D. with a specialty or subspecialty averages $350,000 annually. If, over time, just 25 percent of that is saved, given the power of compounding, there should be, by age 60, $7 million available for retirement income. However, this is rarely the case! When wealth is properly looked after, its growth is prioritized over a “hot” fad. Professional investors, such as Warren Buffett, are praised for their temperance and patience. Not every horse is a winner—nor is every stock.  Professional investors are not incented to sell or promote products; their work constitutes making fiduciary decisions for clients.

More than $1.5 trillion in taxable money is invested at family offices, yet they’re still not something that successful physicians, businesspeople, and entrepreneurs learn about as a matter of course. According to Penta, published by Barron’s, the greatest wealth enterprise most people have never heard of continues to grow and thrive. Multi-family offices continue to spring up across the country and around the world. Yet their profile remains astonishingly low.

It’s not only about earning wealth; it’s about preserving wealth. And knowing the mechanisms to do this are what demarcate a successful family enterprise from the others.  Though there are no ways to determine exactly what will be ahead for medical doctors in the 21st century, it is possible to implement a thoughtful, strategic plan focusing on the goals of every doctor and his or her family.

We recommend committing to the following 7 fundamental rules:
1. Purchase products and services from established providers of wealth management services and advice rather than working with commissioned salespeople.

2. Employ up-to-date, accurate reporting that tracks progress and progression over time and offers a clear picture of the here and now.

3. Focus on sound decision-making, oversight and preparation for a strategic and clear succession plan.

4. Understand each individual’s role in managing both the family’s affairs and the roles of support staff.

5. Clarify and connect how all activities required to manage the affluence are connected, and identify effective providers to effectively achieve each action.

6. Decide to employ strategic, purposeful management of all assets and wealth.

7. Adhere to and honor a cohesive plan.

Former SEC Chief Arthur Levitt wrote: “65 million American households will probably fail to realize one or more of their major life goals because they have not developed a basic financial plan.” Avoid being one of those households. Make a plan with a professional money manager, adhere to it, and review it periodically.

Though the basic financial blueprint for every family will be different, honoring the ideas above will create awareness and lay the foundation for making intelligent decisions around your family’s wealth plan.

Steven Abernathy ( is founder, principal and chairman of The Abernathy Group II where

Brian Luster ( is a principal. They can be reached at (888) 422-2947.
The Abernathy Group II Family Office sells no products, and receives no commissions. It is independent, employee-owned, and governed by its Advisory Board comprised entirely of thought-leading physicians and professionals.



Fatal financial planning flaws

Are you making one (or both) of these mistakes physicians make?

By By David B. Mandell, JD, MBA and Jason M. O’Dell, MS, CWM | Fall 2013 | Financial Fitness



As authors of 11 books for physicians, including For Doctors Only: A Guide to Working Less & Building More, we have consulted with thousands of doctors of all specialties during the last decade.

From this experience, we have become intimately familiar with the mistakes physicians make when working with their CPAs, attorneys and other financial advisors. Whether it is in the area of tax, asset protection, retirement planning or other areas, the result is almost always the same. We leave the meetings or conference calls asking ourselves, “How could this doctor get such poor, uncreative, or just plain wrong advice?” It would be laughable if it weren’t so troubling.

It is not surprising that physicians do not get the value they should out of their professional advisors. While the typical specialty physician has nearly 25,000 hours of training in his or her profession, there is a grand total of zero hours of training in business or financial issues related to the business of being a doctor.

After learning how to use specialists in other areas of medicine, doctors receive no training in how to choose or evaluate the advisors whose advice and experience will be the backbone of the their financial plans for their entire careers.

Doctors lack the spare time and training to do their own planning and have virtually no training on how to find and evaluate the right specialists to assist them, so it is no wonder that most are ill-served by their professional advisors. In our experience, fewer than 5 percent of physicians are properly advised by a professional team.

In this article, we will point out the common flaws we see in physician-advisor relationships.


FLAW #1: Staying with an advisor you’ve outgrown
The first mistake the overwhelming majority of physicians make in the financial, legal or tax aspect of their careers is how they initially choose their professional advisor. Whether it is their CPA, investment professional or attorney, many physicians make a poor choice because their method of choosing an advisor is flawed.

When you consider the typical pattern, this is not surprising. Most doctors choose their advisors when they are in residency or fellowship, as this is the time when most doctors begin to make money or start a family. The doctors may need some life or disability insurance, a will, and someone to prepare and file tax returns. Working long hours without financial training or the means by which to evaluate an advisor, doctors typically do what other busy people do and take the path of least resistance (and minimum time commitment). They use the advisor the older residents use, find someone the local medical society recommends, or hire a friend or family member.

Though this unscientific approach is obviously flawed, it serves its purpose when there are bigger challenges at hand (like 20-hour workdays and finding a job). Your life is so hectic, you just need to “get it done fast.” The advisor you choose at this point simply has to be decent and cheap—and that is good enough. Like a triage nurse in an emergency room, a top-trained specialist is unnecessary when all you need are a few basic stitches.

What is alarming to us is not this initial choice of advisor, but rather the fact that most physicians actually stay with these same advisors who handled their triage planning in residency for the rest of their careers. The typical justification for this is, in our opinion, rarely anything concrete or acceptable. Doctors give us explanations like, “we have been together so long, I’d hate to change now,” or “if it ain’t broke, don’t fix it.” This begs the question: How do you know “it ain’t broke” if you don’t get a second opinion?

Most alarming to us (and something we see every day) is when a physician stays with an advisor when the doctor has clearly outgrown the expertise of the advisor. Consider the following real-life example:


Case Study: Oscar the Orthopedic Surgeon
Oscar, an orthopedic surgeon living in Nevada, contacted us after reading one of our books. Though his income was over $1 million per year and he was part of an extremely successful practice, he used the same New York-based lawyer he retained to create his wills 10 years before, when he was a resident.

Not only was this attorney not licensed in Nevada, but he continued to advise Oscar in areas that were clearly beyond his expertise. While he was certainly a nice gentleman, and perhaps was competent for doing basic planning for someone with minimal tax or estate planning concerns, he had no concept of advanced techniques that a physician making over $1 million per year should be considering. He had no knowledge of fringe benefit plans, asset protection planning or other fairly routine planning that we routinely implement for high-income physicians. While this gentleman may have been an acceptable choice for Oscar when he was a resident, it was a total disservice to the surgeon at this point to continue to use this attorney as his primary advisor.


Doctors advise patients to get a second opinion before opting for surgery or chemotherapy, but they don’t get their own second opinion before agreeing to pay hundreds of thousands of dollars each year in taxes. Oscar’s desire to not hurt his attorney’s feelings had potentially cost him more than $1 million so far.

The idea that you can outgrow an advisor may seem obvious to you in the medical arena—you would no longer send your child to a pediatrician when the child becomes an adult. Yet for some inexplicable reason, this surgeon continued to use his attorney as his lead advisor, despite our numerous recommendations that someone else (not necessarily us) may be more appropriate.

•    How did you choose the professional advisors you work with today?
•    How many other professionals did you interview prior to choosing one?
•    Have you periodically interviewed others as your needs have changed?


Flaw #2: Failing to understand sub-specialties in tax, law and finance
If you needed a stent put into your aortic valve, you would not go to a general practitioner. Moreover, you would not consult with any specialists outside of cardiology. In fact, you wouldn’t even settle with seeing the standard cardiologist. You would only seek the help of an interventional cardiologist to handle this procedure. The point is that medicine is a highly specialized discipline. If you have a specific issue, you will seek out a physician properly trained and experienced with that particular issue.

Utilizing a specialist to assist you with your heath concerns seems obvious. However, our experience has shown that, in the areas of law, taxation and finance, doctors completely fail to apply this same concept. To illustrate this, let’s consider the area of taxation.

The ever-changing United States tax law is the most complex set of rules ever created by one society. The lengthy and confusing Internal Revenue Code is only the beginning. IRS revenue rulings, private letter rulings, tax memoranda, announcements, and circulars—as well as tax court and federal court cases—only serve to make the field that much more difficult to understand. The quantity of information is so vast that many law libraries devote an entire floor to tax materials. No single person can possibly be an expert in all areas of tax law.

Nevertheless, each physician typically relies on one CPA to serve as their “tax advisor” in all areas of tax. The taxation issues that require guidance typically include retirement planning, income structuring (salary vs. bonus), payroll tax, corporate structure (whether to be an “S” or “C” corporation), compensation (whether to implement a deferred compensation plan), estate tax planning, taxation on sales of real estate, individual tax returns, corporate tax returns, and buying or selling a practice. While these issues all fall within the scope of “tax,” each exists as a discrete sub-specialty with its own unique knowledge base. As if the generic “tax advisor” weren’t yet over-extended, we have seen many physicians ask their tax advisor to provide guidance in areas far outside of tax altogether, such as asset protection or investing.

One method to overcome this problem is to bring in a firm that will bring new “value-added” subspecialty knowledge.

However, the key success factor here is to make sure that your local CPA and the outside firm can work together for your benefit. If additional expertise can be brought to bear for your planning, and your current CPA understands that this outside firm is not trying to take you as an accounting client, you can benefit significantly.

Physicians need to take their own advice.  You encourage your patients to seek second opinions and rely on specialists to address their complex medical needs. Your financial needs are similarly complex, and getting a second opinion and utilizing specialized advisors is critical to your long-term financial well-being.


David B. Mandell, JD, MBA, is an attorney and author of five national books for doctors, including FOR DOCTORS Only: A Guide to Working Less & Building More, as well a number of state books. He is a principal of the financial consulting firm OJM Group ( along with Jason M. O’Dell, MS, CWM, who is also a principal and author. They can be reached at (877) 656-4362 or



What does it take to grow rich?

Three strategies to build the lifestyle you deserve.

By Brian Luster and Steven Abernathy | Financial Fitness | Spring 2013


Did you work your way through medical school, pay off debt, make tremendous sacrifices to end up in a successful medical practice, and believe that wealth would just “happen” once you started earning the salary you envisioned?

It seems like common sense: save more, have more. But the way most people handle their finances is broken.
Take note: If you don’t plan to accumulate wealth, you may not. With the monumental changes ahead in the practice of medicine, lack of planning can saddle doctors and their families with unseen burdens.

There is a good reason why families like the Rockefellers have built and maintained wealth over several generations while, according to The Family Business Institute, 60 percent of affluent families have historically lost their wealth in the second generation, and 90 percent have lost their wealth by the third.

Today, you can protect and grow your wealth the way the Rockefellers did and today’s billionaires do. How? Make savvy wealth management choices—and know what’s out there.

There are three distinct strategies every high net worth individual and family must adopt to ensure their business and financial lives are being handled effectively.

Strategy 1:
Focus on protecting your assets from litigation and other claims, and actively work on succession planning.
Asset protection is a vital piece of the wealth creation puzzle. Remember: If you have money, there is always someone who wants to take it from you! Through proper planning and the use of trusts, limited partnerships and various corporate structures, you can often protect the vast majority of your hard-earned assets from creditors, litigators, malpractice claims, the government (taxes, Medicaid, etc…) and even former spouses or business partners.

The better you learn to protect your assets, the more assets you’ll have to ensure that you can live the lifestyle you want today and also have generational wealth to pass on to your children and grandchildren.

As crazy as it may sound, more than one in three people with a net worth of $10 million or more do not currently have a will or a trust and have not named a trustee or administrator for their estate. According to Beating the Midas Curse from Rodney Zeeb and Perry L. Cochell, 37 percent of the people who have the most to lose have done little or nothing to protect their wealth for future generations.

Cornelius Vanderbilt was the world’s richest man of his generation with a fortune of over $100 million (equal to $4.8 billion today). Wanting to keep his fortune intact, he left $95 million to just one of his sons, William, who, when he died, divided what had become a vast fortune at the time, $200 million, among all of his children.

The next two generations spent lavishly, very quickly squandering the entire fortune, destroying what Cornelius and William had built. It’s a prime example of the old adage “Shirt sleeves to shirt sleeves in three generations.”

Strategy 2:
Hire a team of independent financial experts whose goals are aligned with your own.
Before there was any real regulation, people like the Rockefellers took steps to ensure that, when they invested their money, they did it with expert research and guidance.

Instead of just trusting the advice of a broker, banker or commissioned salesperson, they hired independent financial advisors to work directly for the family. These advisors studied and weighed the merits and risks of each investment opportunity to understand how it would fit into the bigger picture before making any decision. This is similar to how a Family Office Model operates today.

Today’s multi-family office model lowers the costs of hiring an expert team, all of whom serve as fiduciaries—meaning they are legally obligated to act in your best interests. Why is this so important?
Less than 3,000 of the 1 million-plus registered securities representatives and insurance agents in the United States are fiduciaries. We recommend our clients only engage people who have audited track records and proven experience working with high net worth individuals and families.

Strategy 3:
Achieve optimal financial outcomes through teamwork.
Expert advice must be well coordinated, and all aspects of every decision must be taken into consideration to ensure your investments work together for your benefit. If a professional does not oversee and integrate your team, chances are your business and personal investments are not optimized. Every piece of the puzzle needs to be evaluated and understood. When you make a decision, know how it will affect the other parts of your financial life.

Coordination not only saves hours, but also in many cases is far less expensive than a brokerage relationship. When the effects of each possibility are thoroughly evaluated and your representative brings results to you, this is the Family Office at work. There are specialized Family Offices with a focus on various professional arenas.

The legal and financial decisions and plans you make today should include a component that will maximize the amount of wealth to be passed along to the next generation. Enjoying your lifestyle starts with the right mindset; dedicate yourself fully to your medical practice and delegate wealth management matters.

Steven Abernathy ( and Brian Luster ( are from The Abernathy Group II Family Office (, which sells no products and receives no commissions. It is independent, employee-owned, and governed by an Advisory Board comprised of thought-leading physicians and professionals.

The information contained in this article is provided solely for convenience purposes only and all users thereof should be guided accordingly. The Abernathy Group II does not hold itself out as a legal or tax adviser. If you wish to receive a legal opinion or tax advice on the matter(s) in this report please contact our offices and we will refer you to an appropriate legal practitioner.



The financial mistakes new physicians make

Your compensation package is only part of your wealth plan. How you manage that income is crucial.

By Brian Luster and Steven Abernathy | Fall 2012 | Financial Fitness


In the past, it was simple: Get through the rigors of a medical school education, training, interning, residencies. Become a physician. Earn a great living. Right? Not so these days. Being a physician just isn’t as “easy” as it used to be.

The Physician Family Office recently completed an extensive study that confirmed what we all know to be true: Reimbursement is falling while the costs of operating a practice are rising.

And the latest Medical Malpractice Insurance Survey conducted by Medical Liability Mutual of New York shows dramatic increases in malpractice insurance rates across the board: they rose 54 percent for OB/GYNs, 54 percent for internal medicine, and an astounding 70 percent for general surgeons. Meanwhile, the National Practitioner Data Bank shows litigation rising significantly over the past two decades. The cost of resolving this litigation has risen 66 percent, with the average cost of resolving malpractice suits approximating $330,000.

Physicians must now see more patients and perform more procedures just to maintain their current income level.

“A lot can happen, and no one attains mastery of business management and wealth management skills–including portfolio management, legal asset protection and estate planning in medical school.” says Physician Family Office Advisory Board Member Steven Almany, M.D., an interventional cardiologist and partner of the Michigan Heart Group.

So with all of these challenges, and the added possible burdens of debt, how can a new physician avoid common financial pitfalls? It turns out that for many physicians, it’s the choices made outside of the practice of medicine that are responsible for their failure to realize their full wealth potential.

Today the average M.D. with a specialty or subspecialty makes approximately $350,000. If they can save just 25 percent of their annual income, by the time they are 60, there should be over $7 million saved for retirement. Sounds easy enough, but this is an outcome that few are able to realize.

Here are what we found to be the six most common wealth preservation mistakes made universally by medical doctors–and how to successfully avoid them.

1. Successful physicians are failing to integrate their advisors.
Typically, a physician surrounds himself with financial advisors, brokers, an accountant, an estate planning attorney, an insurance agent, a tax planning attorney and many others. If each one isn’t communicating with the other before dispensing advice, chances are their advice will either negate the effects of the others, or they will give you counsel that will actually destroy wealth.

Solution: In order to be effective, your advisors must be integrated, in communication and working toward common and clearly defined objectives.

2. Less than 1 percent of all financial advisors are acting as a fiduciary.
This alarming fact comes directly from the National Association of Personal Financial Advisors.

In most instances, advisors are your adversaries, legally obligated to hold their employer’s financial interests ahead of their client’s. Perhaps this is why there were more than 3,200 investor complaints and nearly
5,000 new arbitration cases against brokerage firms in 2011, according to CEG Worldwide LLC. That means that there are 23 new complaints and arbitration cases reported every day. If that’s not disturbing enough, often buried in the fine print of legal jargon on standard non-fiduciary agreements, people are advised: “Our interests may not always be the same as yours.”

So unless a doctor has reviewed literally all of the lines with an attorney or other fiduciary who will act in his best interest, it is highly likely that he will be wasting money.

Solution: Have your advisors sign a Fiduciary Oath that assures, in writing, their actions will be aligned with yours and they will prioritize your wealth interests and goals ahead of their own.

3. Seeking counsel from salesmen.
Even if you found one of the 2,500 U.S. advisors upheld to the fiduciary standard, what are the chances that their advice is of any value? It’s actually quite low. The problem is that most of the advisors out there are not experts; they are salesmen or relationship managers.

Solution: Seek out professionals who have been managing funds (in addition to individual client accounts) with audited track records for at least a decade, with proven results. These advisors should have a client base similar to you so your needs are best served.

4. Taking on too much portfolio risk.
The concept of “keeping up” with the stock market is a Wall Street myth. The stock market has averaged 7 percent per year for the past 140 years, and the median investor expected to earn between 10 and 33 percent during the past decade. Yet the median stock fund investor only earned 1.9 percent, according to Securities Industry and Financial Markets Association (SIFMA) Annual SIA Investor
Survey: Attitudes Toward the Securities Industry.

Solution: Investors should take on only as much risk as they need to meet their goals. Unfortunately for your advisor, this means fewer commissions and fewer fees.

5. Lack of education among your heirs about preserving wealth.
In two generations, 60 percent of wealth is destroyed; 90 percent of all family wealth is destroyed in three generations, according to The Family Business Institute. William Vanderbilt left his heirs the equivalent of
$4.8 billion (in current dollars), yet not one ranks among America’s most affluent today.

Solution: Begin educating your children about money management, wealth, taxes and financial responsibility early. As soon as your child has a grasp of basic arithmetic and can follow an adult conversation, it’s time to start. Take time to explain the role of your advisors, their strategies, and the lessons of capital budgeting, saving and investing. Your heirs will receive the best lessons in responsibility and preserving an inheritance directly from you.

6. Not creating and living by a written budget and comprehensive financial plan.
Articulate your family’s goals and objectives, project cash flows out into the future, and manage spending and your investments accordingly. Monitor progress against goals, and as circumstances change, adapt your behaviors accordingly–even if this means sacrificing in the short term or postponing retirement.

Solution: Have a clear, written budget. Review it and update it as needed.
This is a step that many highly educated people avoid because they do not like the idea of “budgeting.” Planning creates clarity; do not skip this vital practice. Just as with little or no planning, bad advice, or working with non-fiduciary entities, physicians can easily erode their wealth. With the right planning, young physicians can grow their practices, increase their wealth and enjoy their lives more fully.




The Slow and Steady Path to Wealth

Before taking an expensive trip or splurging on a car, make sure your financial future is clear

By Steve Abernathy and Brian Luster | Fall 2011 | Financial Fitness


One of my employees recently told me a story about how her now-deceased parents got married in the 1950s and lived in a one-bedroom rental in the suburbs as newlyweds while her father worked full time in a modest-paying management training program and went to NYU part time for his MBA at night. His tuition was paid for by the GI Bill, as he had served in the Army during the Korean War. The three nights per week he went to school, his young wife offered to work overtime at her job as a bank secretary. They met at Grand Central Terminal late those nights, tired and hungry.

The newlywed couple referred to their late-night commuter train rides home as the “gravy train,” and so did many of their friends and acquaintances. They called it this because they knew that they were laying the foundation for a future that would not only include eating potatoes for dinner, but meat and gravy as well. They were happy with the journey of struggling to build a life together and not just the final destination, like so many people are.

We realize we all live in a world of instant gratification. However, our first word of financial advice to you is to delay this impulse now so that you can sleep better later on in life.


The path to financial security

Too many young doctors (as well as other professionals) are enduring a sleepless marathon of rigorous education, hands-on training, low-paying residencies and other jobs. In turn, they have a tendency to reward themselves with expensive evenings out or vacations they really can’t afford.

Eventually, they find out the hard way that credit card debt can escalate very quickly. And often, it is too late at that point.

We have served many in the medical community over the last 20 years, so we know how grueling a doctor’s training and career can be. But we think that some small part of you must have chosen this career so that, later in life, you could sleep better at night, knowing that what you endured would result in financial security for you and your family.

Providing eventual financial security for your family means that you will need the willpower to say no to the trappings of a “doctor’s lifestyle” (fancy cars, dinners out, expensive homes, etc.) early on in your career when you are still paying off your student loans and are only making a modest salary or starting a practice.

In addition, “riding the gravy train” may mean that you and your spouse or significant other try to avoid being in medical/graduate school, or having a low-paying residency or entry-level job, at the same time.

We know that sometimes this is impossible, but if you can develop a long-term perspective in terms of financial planning, perhaps one of you is willing to delay further schooling or a low-paying “apprenticeship” until the other partner is able to start working a decent-paying, full-time job.

This will help you minimize the burden of the student loans you will have to pay off. If one of you is always working, there is less of a need to borrow money for living expenses in addition to tuition. Fewer student loans translate into less interest paid over time and therefore more wealth accumulation in the long term.

Planning ahead and making these additional sacrifices means you and your partner will be that much closer to having the discretionary income you desire as well as true financial security.


Rethink home owner ship

While we are discussing loans, we are not just referring to student loans. For instance, who said you have to purchase your first home by 30 or 35 years of age? If anything, we now believe that home ownership, as an icon of the American Dream, should be reconsidered.

Today’s unprecedented economy means it is much more difficult to bet on real estate as an asset. The real estate “bubble” has burst across much of the country—in part because properties had become artificially overinflated as well as the fact that young doctors, as well as many other people, were able to obtain mortgages for little money down.

For many young doctors and other professionals, the smart choice now may be to rent for a longer period of time before purchasing a home. When you are tempted to do otherwise, just think about my employee’s newlywed parents who grew up in the Depression and were willing to live in a one-bedroom rental for a decade—with a dog, two children and a third on the way—before purchasing their first home.


Consult the experts

Another challenge doctors have is that they are often reluctant to ask for help. Perhaps trying to prepare your own taxes, fix a plumbing problem or write your own will may not be truly in your own best interest. Instead, seek out the experts. It is also important to consult the appropriate people when it is finally time to buy a home or when it is time to start up your own medical practice. Doing so may not only spare you angst, but also save you money in the long term.


Keep focused on the future

A long-term vision regarding taxes, finances, legal advice, etc. is also important because addressing the “big picture” is more likely to optimize your wealth over time.

Not all service providers are able to provide the same quality of service to a particular person or family over the course of a lifetime with so many variables potentially changing.

Young physicians may only hire an attorney if they need something right away (like a will) and don’t think through the attorney’s qualifications and whether or not he or she is a good fit for the long term. Other common scenarios include young physicians only buying a financial product or service when a salesperson calls and coerces them into doing so. The end result of this, over time, could be a hackneyed collection of investments lacking any kind of long-term vision or strategy. This approach does not result in true wealth optimization.

Another common mistake that many young doctors make is to think that they are immortal. Instead of spending money taking your spouse and children on expensive vacations, you need to make sure that you have adequate life and long-term disability insurance.

The consequences to your family, should you prematurely die or become disabled and are ill-prepared, would be devastating, both financially and psychologically. Ensure that your spouse does not lose sleep thinking “what if?” and does not needlessly suffer financially if the unexpected does happen.

Riding on the “gravy train” means having a longer-term vision that includes discipline, teamwork, planning for the future, asking the right expert for help at the right time, and having the courage to address the “what ifs” before they actually happen. Doing so will keep you on a steady course and help you avoid many of these common financial problems.


Steven Abernathy is the founder, principal and chairman of The Abernathy Group II. Brian Luster is a principal and co-portfolio manager of the Abernathy Group II. The Abernathy Group II ( is a Registered Investment Advisor (RIA) and is one of the oldest investment firms in the nation devoted to the medical profession. The Abernathy Group II runs a Growth Fund and a Physician Family Office.



Protect the value of your future earnings

Protect your most valuable asset—the earning power that your training has provided you—with insurance.

By Michael Lewellen, CFP | Financial Fitness | Spring 2011


As advisors to young physicians across the country, we are often asked, “What is the most important thing I should be doing financially in the first years of practice?” Our answer is simple: “You need to build a solid foundation.” The application of the concept of a foundation is different for each physician. However, as with patients, we often see very common symptoms and can make some generalizations about what is involved in creating a financial foundation for many young doctors.

Foundation building for young physicians depends on where they are in their personal lives (single, married, kids, etc.). Also, it can and needs to begin before the physician even leaves training because, like most things, establishing the right habits are key to building a financial foundation.

Most young physicians will see a significant increase in their incomes when they begin their practice. Up to this point, they have typically been living paycheck to paycheck, and a jump in income by five-fold or more can be a bit euphoric. With a “spend now and plan later” attitude, many young physicians will indulge a bit and make large purchases. Often taken too far, they find themselves once again living paycheck to paycheck. The attitude then becomes: “Once I make partner in a few years, I’ll address my financial plan…”

At the outset of their medical career, physicians in training are told “first, do no harm.” As advisors to young physicians at the outset of their financial careers, we give similar advice: “First, build your foundation.” That foundation includes protecting your future income and earning potential with disability and life insurance. more »


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Recession-proof your investments after healthcare reform

With proper diversification and alternative investments (think gold, oil and foreign currencies), a physician's portfolio can weather any storm.

By Jason M. O'Dell, CWM and Kim Renners, CPA, MBA | Financial Fitness | Summer 2010


UNDOUBTEDLY, MANY AMERICANS HAVE BEEN suffering through one of the worst economic crises in recent memory.

Though many economists claim that the recession is over, the most recent legislative changes (and those to come) are sure to impact most doctors in the form of  reduced reimbursements, increased employee benefit costs, and increased taxes on income and investments.

But although the economy may get better for most Americans while getting worse for most doctors, you can fight back by investing wisely. Doctors who take the time to understand today’s risks—and who are willing to address those risks—do not have to be afraid of investing.

Know the hurdles

In today’s market, there are no “free lunches” like there were with the dot-com and real estate markets of the mid-1990’s and early 2000’s.

You and your advisory team need to be prepared to navigate your way through the new tax minefields that have been laid for wealthy investors. Some tax increases have already been adopted, others will be phased in over time, and still more will be discussed this year and in years to come.

After all, healthcare reform is going to cost money, and the current administration has made no apologies for its plan to tax higher earners to pay for it.

Other hurdles include the United States’ dependence on foreign oil, debt service obligations from behemoth deficits, and a weak dollar—all fundamental threats to our nation’s fiscal health.

Savvy investors recognize that the marketplace will not change any time soon. They must focus their investment strategies on dealing with these challenges and mitigating the risks associated with these threats.

Diversify properly

Most investors understand that portfolio diversification is a key consideration to reducing some of the risk of loss in a portfolio. In historically volatile markets, mitigation of loss is not a luxury—it is a necessity.

Most investors who thought they were adequately diversified have looked at their statements at some point over the last two years and noticed very significant dips in their account values. That’s because they made the mistake of diversifying within the stock market. What these investors suffer from is called market risk. When economic factors cause a precipitous drop in the entire stock market, practically all stock investors suffer at some level.

What many experienced investors don’t understand is that diversification needs to go far beyond the diversification of securities like publicly traded stocks and bonds or bank deposits.

Proper diversification, especially in a highly volatile market like the one we are experiencing today, must also be across investment classes. A balance of domestic and foreignsecurities, real estate, small businesses, commodities, and other alternative investments, for instance, would prove less risky than holding the majority of your investments in real estate and securities.

Consider alternative investments

For doctors who can’t build or participate in surgery centers or other profitable healthcare investments that they can help make more successful, another popular investment strategy is to take advantage of different investment programs that are not publicly traded (i.e., not on the New York Stock Exchange or other exchange).

The term “alternative investment” covers a broad range of investment strategies that fall outside the realm of traditional asset classes:
• Gold and other precious metals
• Commodities, including but not limited to oil, natural gas,
wheat, corn and copper
• Foreign currencies
• Non-traded Real Estate Investment Trusts (REITs)
• Leasing funds
• Oil and gas drilling programs



Improve Your Revenue Cycle

Increase profits by managing the billing and revenue cycle of your practice.

By Deborah Walker Keegan, PHD and Elizabeth W. Woodcock, MBA, CPA | Financial Fitness | Spring 2010


THE CLINICAL PRACTICE AND BUSINESS OF MEDICINE intersect in the revenue cycle of a medical practice. In the revenue cycle, the patient’s diagnosis and the services you provide to the patient are translated into codes that permit you to be paid. It is this payment that allows your medical practice to keep its doors open to treat patients today, tomorrow, and in the future.

Changes occurring in today’s healthcare environment present a challenge to optimal revenue performance. With the increasing prevalence of high deductible health plans, patients are more financially responsible for their health care. In turn, this means that a greater portion of a medical practice’s revenue is derived from its patients. The change in financial responsibility— from the insurance company to the patient—means that your medical practice will have to adjust its revenue cycle to capture patient payments earlier in the billing process.

If you are seeking a new practice opportunity, ask questions regarding the practice’s revenue cycle and its financial health. If you are continuing in your current position, routinely evaluate the performance of your practice’s revenue cycle. In any situation, it is important to determine if the revenue cycle is functioning at its optimal level. Throughout this article, we’ll describe actions to help you take your revenue cycle to the next level of performance. more »



Giving it Back to Uncle Sam

Make up for declining reimbursements with financial efficiency and tax savings.

By Carole c. Foos, CPA and David B. Mandell, JD, MBA | Financial Fitness | Winter 2010


The proposed medicare cuts in reimbursements for most physicians go from frustrating to downright scary. Many of our clients were annoyed by the cuts in the past few years, and the proposed reductions are just more of the same. Layer on top of this the proposed healthcare overhaul which at the time of press is still unclear (yet all rhetoric out of Washington seems to expect physicians to sacrifice yet again), and it starts to feel like the federal government is determined to make it difficult for you to prosper. more »



Five Tips to Help Your Practice Flourish

Keeping your practice healthy in rocky economic times requires more than simple money management.

By Judy Capko | Financial Fitness | January/February 2009


Growing a healthy patient base that flourishes year after year is second nature to some physicians. They just have the touch. Just as the saying goes, when the going gets tough, economically, it becomes harder to keep the practice growing.

Patients often leave a practice because of their insurance plan or now—with patients paying more of the cost for their medical care with high deductibles—they may be going to the doctor less, contributing to a sinking bottom line for some physicians.

A healthy practice depends on a steady stream of patients, but it also requires physicians to be more efficient with their resources: improving productivity and making wise investments in the practice. Lets look at some of the things you can do to keep your practice in tip-top shape. more »


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