Was Juliet Right? The Family Office Reveals The Top Three Tips to Debunk Enduring Financial Myths

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William Shakespeare famously asked, "What's in a name?", and, no matter what name they go by, the sellers of financial products have managed to fool the public for ages with enduring myths. Abernathy Group II Family Office co-founders Steven Abernathy and Brian Luster aim to bring transparency to their clients—and to Wall Street.

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No matter what they’re called, new titles do not protect the general public from the swarms of individuals motivated by commissions.

One investment professional at the Family Office congratulated his former colleague about what sounded like a promotion and was told: “I’m doing the same thing I’ve been doing since we last spoke—but we are using new titles here.”

The cavalcade of titles on Wall Street can be confusing to the public; it’s meant to be. Salesmen have gone from salesmen, to calling themselves vice presidents, then financial advisors. Now Wealth Managers, or, at one international firm, Fundamental Choice Portfolio Managers.

“This naming progression has endured to fool the public for too long,” said Brian Luster, co-founder and CEO of the Abernathy Group II Family Office. “No matter what they’re called, new titles do not protect investors from those motivated by commissions.”

How do clients know when they’re receiving objective advice, or, if it's a sales pitch? A vast majority of wealth management firms compensate their salespeople based upon the fees and commissions that are generated; so it can be hard to tell which is which.

“No professional money manager would knowingly agree to have a salesperson acting as the steward of their wealth. They would reasonably require that any person managing their assets do so in good faith and legally act in their best interest—100% of the time, as a fiduciary,” says Luster.

The College for Financial Planning 2011 Survey of Trends in the Financial Planning Industry found 70% of folks who call themselves financial advisers generate their primary source of income from commissions, sales charges, and fees.

Shakespeare would not be amused. So what’s the alternative? The Family Office. Popularized by J.P. Morgan, it is structured to serve people who run their businesses and do what they excel at (or enjoy their retirement) while professionals act as stewards of their assets.

No salespeople, period.

So how can the wealth management system for trillions of dollars around the globe be virtually unknown in the aftermath of the greatest recession of our lifetime? Abernathy and Luster aim to change that. According to the National Association of Personal Financial Advisors (NAPFA), in the U.S., with over 1 million financial representatives, surprisingly, less than 2,500 are registered fiduciaries, professionals legally bound to act in the investor’s best interest.

Abernathy and Luster are two of the less than 2,500. Today’s informed individuals seek out and employ experienced professionals for advice to preserve and protect their hard-earned fortunes. Employing a Family Office takes commissioned salespeople (or whatever they’re calling themselves today) out of the equation.

Here are the top questions to ask to create instant transparency in your financial affairs:

  •     How can I tell if I’m working with professional investors? They have a decade-plus of experience and an audited track record--not just a lofty title. Seeing the record of an investor’s work over time allows one to assess the work objectively and make an informed decision.
  •     Do all of my advisors work together and communicate regularly? This collaborative working format is called integration and is key in assuring clearly defined written goals and objectives are met by all parties. When advisors don’t coordinate their work, it may mean a much higher price tag for the investor with duplicative investments, excessive fees, and high taxes due to incorrect structures. Integration avoids these issues.
  •     Are the clients served similar to me? Hire professionals with a client base similar to yourself. If the net worth, income, and goals of the other clients in a financial adviser’s network vary a great deal from your own, it is probably time to find someone who can serve you better.

About The Abernathy Group II Family Office:
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. They are regular contributors to several publications and blogs including The Huffington Post.

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.

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