Family Office Specifically for Physicians

A money management entity of the ultra wealthy is now available to the masses to act as the quarterback for a physician's financial life.

A traditional family office is only for the ultra high-net-worth elite. Families like Rockefeller and Vanderbilt were members of these exclusive groups. However, The Abernathy Group II realized that not everyone has the $500 million capital necessary for those family offices, so it wanted to bring the model to the masses for those with accounts around $5 million and larger.

According to Brian Luster, principal of The Abernathy Group II, many physicians mismanage their assets. The creation of the Physician Family Office, which officially launched at the end of June, would help doctors become better stewards of their capital.

Founder Steven Abernathy likes to consider the PFO to be the quarterback of a physician’s financial life. The office’s purpose is to coordinate all the various aspects of the physician’s finances: asset management, estate planning, financial planning, practice management, lifestyle management, etc.

“You would be horrified to see how many docs have many different brokerage accounts and they own the same stocks and the same funds in these accounts,” he says.

Sometimes investments made by multiple experts using different strategies aren’t just duplicated, but they actually cancel other investments out.

At The Abernathy Group II’s PFO, the model has components of the traditional family office, plus some services geared specifically to physicians. To determine what was necessary for physicians looking to join the family office, Luster and Steven Abernathy, company founder, relied on their board, made up entirely of physicians.

“Things like practice management and practice marketing, we learned from our board, are really important to our clients but aren’t part of the traditional family office,” Luster says.

According to Luster, physicians typically don’t market themselves, and in fact it is even considered slightly taboo since they’re trying to help people, not create a profit center. But The Abernathy Group II believes this is something physicians will have to think about more.

“The next 20 years are not going to be as lucrative as the last 20 years,”’ Luster says. So he and Abernathy strongly suggest physician's begin to market their practices, even if that's something they've never done before.

Another thing physicians need help with is valuing their practices. This might be necessary during multiple times in a physician’s life, whether he or she is going through a divorce, has a partner retiring or is looking to merge the practice with another.

Once a physician is a part of the PFO, he or she can use the services offered as much or as little as desired, regardless of how much money is being held. According to Luster, they had $80 million under management when they launched the office.

The PFO is a fee-based model under the assets under advisement and it charges less than 1% annually. As fiduciaries, The Abernathy Group II PFO is legally responsible for the clients it advises. And any profits the PFO makes are returned to the physicians based on their pro rata share in the office.

According to Abernathy, the office wants to help physicians better manage their assets because they are a physician’s most valuable asset. Correct management allows them to retire “in a style they are highly deserving of.” If set up correctly, a physician’s assets can even continue to work for the family after he or she has passed away.

“They must manage their assets more thoughtfully and be protective of their assets because they really give [physicians] freedom to do what they want to do,” Abernathy says.