Are Your Finances Living on a Deserted Island?

By: Steven Abernathy, Brian Luster, and Michael Gallagher, MD

Physicians trained in the practice of medicine inherently understand the need for multidisciplinary expertise in their professional lives; yet, they often fail to realize this principle holds true in their personal and financial lives as well.

Envision a plane, full of passengers, forced to make an emergency landing on a deserted island with no hope of rescue for months. You’re the only doctor on board. It won’t be long before the injured and sick begin to seek help, regardless of your specialty back home.

While you’re competent, you are by no means well suited to treat all the ailments and injuries your survivors will present. You may not have delivered a child, performed an emergency appendectomy, treated a cardiovascular emergency or cared for a trauma patient since completing your residency decades ago. Now, you would give anything to have a trauma surgeon, ER doctor, pediatrician, neurologist, immunologist or a family physician on the island to help.

And as soon as a rescue team arrives, and air lifts everyone to the mainland, you will certainly refer each patient to the appropriate specialist.

Physicians trained in the practice of medicine inherently understand the need for multidisciplinary expertise in their professional lives; yet, they often fail to realize this principle holds true in their personal lives as well.

The Abernathy Group II often see clients who pride themselves on being do-it-yourself-ers (DIY-ers). Rather than hire a professional, they will try their hand at plumbing, carpentry or, perhaps, electrical work. Fortunately, with small home repairs, the cost of being a DIY-er and getting something wrong is relatively low — if it all goes awry a professional can be called in to competently clean up the mistakes.

However, all too often, we see physicians applying this same DIY-er thought process to their legal and financial affairs. Hiring the wrong kind of financial advisor to manage your wealth can be the difference between retiring early and never retiring at all.

Unfortunately, the perception of most medical doctors we encounter is similar to that of the sick and injured on the deserted island: You are a doctor, so you can fix me, right? Wrong. Just because you are a doctor, doesn’t mean you know enough to perform a balloon angioplasty. You might be able to give it the good old college try, but, if you have spent the last 20 years in clinical neurology, you may do more harm than good in attempting interventional cardiology or orthopedic surgery.

While misguided home repair attempts are easily remedied, entrusting wealth to those who aren’t truly qualified to invest your hard-earned dollars can set you back dramatically — and no handyman will be there to clean up the potential mess of incorrect tax structures, exorbitant or hidden fees, and lost earnings over time.

Have you entrusted your wealth management to people who are not professionals? Do you know how to determine a professional versus someone who simply wants to sell you something?

Today’s financial landscape does not make things easy since salesmen go by many other titles including vice president, financial advisor, and even wealth manager. Unfortunately, this naming progression has endured to fool the unsuspecting public, including highly educated, intelligent and accomplished professionals.

According to the College for Financial Planning 2011 Survey of Trends in the Financial Planning Industry, over 70% of those who call themselves financial advisors generate their primary source of income from commissions, sales charges and fees. And few have the experience or incentive to advise you about estate and tax planning needs. They are also unlikely to be concerned with offering you the lowest prices available.

How do intelligent investors find investment professionals to assure their wealth and assets aren’t being managed as if they’re on a desert island? What does the intelligent investor do today to sleep better at night?

FInd out “the 4 C’s” to keep in mind on the next page.


Hire only professional investors; every professional investor who has managed funds of their own can supply you with an audited track record. Competent advisors either invest your assets directly for you, or, allocate them to other managers who invest the proceeds on your behalf.


When someone receives compensation for selling you something there’s a conflict, period. Advisors collecting management fees from their clients should not be receiving commissions and fees from products they are selling to you, especially when similar, and often superior, lower cost alternatives are available. Double dipping may cost as much as .05% per year in excess fees for a typical mutual fund.

There are two kinds of advisors: a) those paid only by their clients; and b) those paid by their clients and by products sold to their clients. It’s our assertion that investors should only engage in relationships where there are no inherent conflicts of interest between advisor and client.

Only work with those who are fiduciaries 100% of the time.

Competitive fees

Once you have found a competent advisor whose goals are directly aligned with yours, the last step is negotiating a fair fee. Remember, that a 0.25% difference in annual fees on a $5 million dollar account adds up fast. Over a 20-year period, invested at only 3% per year, adds up to over $350,000 in savings!

Core competencies

Stick to what you know best — your core competencies. Warren Buffett famously referred to this as the “circle of competence.” Each person’s brilliance, magnified by their ability to stick to their knitting is only surpassed by their ability to realize that once they step outside this circle of competence, they often become significantly below average as most of their life has been dedicated to their area of expertise.


Just because someone is wealthy does not make them a financial genius! In the desert island scenario (or on any given day in your normal practice), you’re providing care by offering the best possible solutions for the health and well-being of patients. It’s nearly impossible to fathom that you would present information to a patient in a false light — favorable or unfavorable. The code of medical ethics, including your obligation to caring for your patients, is crystal clear.

Steven Abernathy and Brian Luster co-founded The Abernathy Group II Family Office and the country’s first Physician Family Office (PFO). The Abernathy Group Family Office sells no products, receives no commissions, and is independent, employee-owned, and governed by its Advisory Board comprised entirely of thought-leading professionals. Find them online at

Dr. Michael Gallagher, M.D., F.A.C.C. is board-certified in cardiovascular medicine. He is the Director of Advanced Cardiac Imaging at William Beaumont Hospital and a member of the Michigan Heart Group.

Click here to view this article in the original magazine publication