Steven Abernathy

When a physician has worked hard and invested well over the course of a lifetime, it is no surprise for a sizable nest egg to be the fruits of this intelligent labor. However, insidious financial abuses can all too easily put large cracks in the egg. Often silent and unreported - or widely underreported with no easy or immediate solutions - elder financial abuse can affect even the savviest physicians.  

So how can it be prevented in our fast-paced, digital, 24/7 world where our personal information can be used to commit highly exploitative crimes? Here are five steps to get you started.

Step 1: Be vigilant. Know who is opening the mail, paying the bills, and who has daily access to both personal and professional financial information.

 Each year, according to a MetLife study, Americans lose an estimated $2.9 billion in financial fraud. The study also revealed: 34 percent of the culprits are family, friends, and neighbors; 12 percent is by the business sector; and 4 percent is related to Medicare and Medicaid fraud. It is estimated that only 1 out of 44 incidents is officially documented. In many cases the perpetrators of financial crimes are close to their victims -so know who is doing what when it comes to management of your personal finances.

Can everyone have a personal chief financial officer (CFO)? This is a key aspect of the Physician Family Office structure.  All parties involved in a client's personal wealth plan (CPA, attorney, professional investment adviser) work together and the CFO oversees clients’ assets collectively.  This allows personal net worth to be managed like a business.  Coordinated management also means all financial information has a go-to person; a metaphorical "bodyguard" to assure the facets of the wealth plan are and remain protected - and are always executed according to the client's wishes and not someone else's whims, legal or not. It also renders some of the most commonly committed financial crimes virtually impossible to execute.  If the Physician Family Office format is not for you, hire a fiduciary financial adviser who may assume components of the CFO role.  No matter who your CFO is, do your homework and know what tasks s/he is going to assume, and, find out if there are costs associated with these services.

Step 3: Delegate tasks to reduce risk of theft and bolster security. 

Routine financial affairs can be burdensome or time-consuming for any investor. Optimally, in retirement a physician is robust and healthy in mind and body. However, if deterioration in physical health or a decline in cognitive ability occurs, over time the most basic tasks may be considerably harder to do. Routine activities such as bill-paying, balancing a checkbook, review of financial statements, and other tasks can be managed within the secure structure overseen by the CFO or financial adviser. This "velvet rope" approach provides the oversight sheltering physician investors from direct solicitations or offers which can range from illegal scams to the 

predatory salesperson one grandmother describes

. Of course, not all offers will be illegal; some produce offerings may actually be beneficial. However, given the complexity of today's financial offerings, it is recommended to have a "financial bouncer" to eliminate the all-too-common abuses which routinely occur.

 Typically used as a means to limit liabilities and title assets correctly, this protects assets from creditors. However, appropriate structures also protect assets from getting into the wrong hands. LLCs, trusts, and proper titling of assets are the necessary underpinnings of thoughtful estate planning. Yet, they have the added benefit of acting as a metaphorical private security team for your assets; a one stop shop for asset protection.

  It is astonishing how many people don't have a formal plan, or, they have not maximized the tax advantages available to them. In 

, Rodney Zeeb and Perry L. Cochell write that 37 percent of people with net attributable income of $10 million and more do not have a will, healthcare proxy, or trust, and they have not named a trustee or administrator for their estate. Those without a formal, written plan are not likely to have their wishes met no matter what their estate is worth. And the more it is worth, the more the tax man is likely to take - if there aren't the right structures in place from the get go. Proper estate planning reduces uncertainties around the probate process and maximizes the real value of the estate through reduced taxes and expenses. This is something to put in place immediately if you're without one.

Given the stigma surrounding financial abuse, it is vital to change the cultural dialogue around this problem. It starts with a conversation between the physician and his fiduciary financial adviser or CFO to review what plans are in place now as well as the game plan for future events, positive and negative. Then it extends to family members as well as those involved with any investments and family business. Here, 

The Abernathy Group II Family Office and the country's first Physician Family Office (PFO).  The PFO is independent, employee-owned, and governed by an advisory board comprised entirely of thought-leading professionals. Abernathy and Luster were ranked No. 1 by Nelsons World's Best Money Managers 16 times and are regular contributors to several publications and blogs including 

The information contained in this blog 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

Articles

Physicians work hard for their income and in their preparation for retirement. Here are five steps to take to ensure you don't lose those investments to fraud.

Five Steps for Physicians to Avoid Being Victims of Investment Fraud

All of the data we have seen, and the intelligence we are hearing from our advisors in Washington, leads us to believe that the next 20 years are going to be a lot tougher than the past 20 years for physicians.

Medical doctors will still continue to make a comfortable living. According to the 

, the median specialist in this country earned just over $350,000 in 2011. What will differentiate the successful physician of the next 20 years will not be their prowess in medicine, as was historically the case, but rather decisions made outside the practice of medicine.

We all know that today’s physicians and specialists can expect to work longer and earn less doing it. How will it be possible to retire “on time” when trying to with keep up with the pace of information, medical innovations and advances, and the daily responsibilities of running a medical practice?

Planning, time management, preparation, and the right team are essential. Today, that does not mean doing everything oneself. Strategizing and executing this objective vision takes time - and years of experience as a professional wealth manager along with a competent team of advisors. The successful physician can no longer afford to be surrounded by advisors who lack true expertise and who are incentivized to give advice that is not necessarily in their best interest. Instead, the physician must actively surround himself or herself with a team of experts who work directly as advocates, helping to identify opportunities and solutions that will enable the achievement of financial goals and objectives as quickly and cost effectively as possible, and with as little risk as necessary.

Dr. Bernard Morrey, emeritus chair of the Department of Orthopedics at Mayo Clinic and a professor at the University of Texas Health Science Center in San Antonio says, “It’s tough to be an expert in more than one profession when time is the currency of value.”

Given the Integration of the EHR, increasing malpractice insurance rates, HIPPA compliance, and the costs of IT coupled with falling reimbursement, being an physician today is an increasingly complex undertaking. Where physicians can save time during their day makes a tremendous difference.

“To be able, in an instant, to observe the entire status of your assets in their entirety with summary data creates the best chance for making intelligent, well-informed decisions. Physicians work and make decisions all day from such data and that’s valuable,” says Morrey. He adds, “Seek expert consultation. That doesn’t necessarily exist in the [general] realm of investing today.”

Here are three tips to prepare for success in the 21

• Consult with a professional to ensure that your assets are legally structured so that no one, other than you, has access to them. When no assets are available for creditors, a physician can purchase the least expensive malpractice insurance. This not only saves money, but, it repels frivolous malpractice suits. Structured correctly this pays dividends for decades.

• Have clear procedures in place within your office to minimize fraud. Reduce your risk by delineating larger tasks into smaller stages handled separately by different people. Do not have any single employee who manages or owns every stage of the revenue cycle; divide the process among employees. For example, the person who opens the mail, including bills, statements, and insurance information, should not be involved in the final steps of the payment cycle. If your office is small, consider working with an outside bookkeeper to oversee part of the cycle. Or, rotate the duties among the office staff.

• Know who is a true money manager versus who is a vendor. Salespeople of financial products have become harder to spot over the years as their titles have evolved to salesman, vice president, financial advisor, and even wealth manager. Unfortunately, this naming progression has endured to fool the public; it is merely Wall Street’s way of putting different lipstick on the same pig. Work with individuals who have audited track records of at least a decade’s performance (20 years is better) and whose clientele is similar to you. Seventy percent of folks who call themselves financial advisors generate their primary source of income from commissions, sales charges, and fees, according to the College for Financial Planning 

2011 Survey of Trends in the Financial Planning Industry.

Most often physicians erode their wealth with decisions made outside of the practice of medicine. With advance planning, putting appropriate structures in place, and being clear about who is working to grow and preserve your wealth versus who is working to grow their own, intelligent 21

 century physicians will not only achieve success, but, see the fruits of their labors and their legacy for years.

are physicians’ advocates and founders of the first Physician Family Office in the country. The Physician Family Office sells no products, receives no commissions, and is independent, employee-owned, and governed by its advisory board comprised entirely of thought-leading physicians. Steven Abernathy can be reached 

Here are three tips to prepare your medical practice for success in the 21st century.