Tuesday, May 23, 2006

Not really news—financial advisors plan to go after the trust market

The business of managing trusts has been coveted by brokers and financial planners since, oh well, long before I arrived on the marketing scene a quarter century ago. Investment News has another "news" item on the subject this week. But I wonder just how much the advisors really want to be trustees. Note these key paragraphs from the article:

Although some trusts call for relatives to serve as trustees, others are much more complex and require an institution to serve as a corporate trustee. This requires the trustee, or the institution serving as the trustee, to assume fiduciary responsibility.

The issue is dicey for some advisers who are eager for this business but who may not be prepared to take on the responsibility of trustee. In fact, some advisers will oversee trusts only if the client agrees to be the trustee.

Yes, that term "fiduciary responsiblity" has long been scary to those outside the trust industry.


Anonymous said...

As A COO of a Trust Co. I can tell you that many larger broker-dealers will neither let a financial advisor act as trustee nor manage the money. That said, independents certainly can and often take on this task. The liability exposure is huge and there are many "gray" areas in trust administration where you better know what you're doing lest you be sued by a beneficiary or some other interesed party.

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