The Value of Independence

Independence can mean different things to different people but when it comes to trust services, the definition becomes even more unclear.  Most people depend upon their centers of influence when it comes to managing a trust.  Estate planners, attorneys, and accountants help identify the right trust company for their clients.  Many times these professionals do not have sufficient expertise with the management of trusts so they frequently recommend a name-brand trust company or the trust department of a well known bank.

The unfortunate reality is that most trust companies oversee both the administration and the investment advisory for trusts.  This scenario can represent a clear potential conflict of interest.  Too often, these companies expect or actively encourage clients to use their in-house or affiliated investment advisory services and financial products.  Many times the clients unknowingly accept these conditions because they do not understand the distinction between providing investment advisory services and trust services.

The optimum model for trust management is when an independent trustee, an independent investment advisor and an independent custodian all partner together.  Everybody benefits in this scenario because each party has a primary responsibility and can oversee each other without conflict.  Surprisingly, only a handful of firms across the country appear to be committed to doing business in such a manner and indentifying trust companies who are truly independent can be challenging.

Independence is what brings objectivity and unbiased advice to the management of a trust.  Estate planners, attorneys, accountants and investment advisors should familiarize themselves with independent trust models and how they benefit their clients.  In today’s world, avoidance of a conflict of interest should be an advisor’s top concern when protecting their clients’ interests.

The following was a guest post from Sterling Trustees. For more information, please see their white paper The Value of Independent Corportate Trustee Services.

Although Sterling Trustees is a known expert on the subject matter discussed, the Adviser has not independently verified the accuracy of the responses provided.

 

About Mark Rioboli

Mark A. Rioboli, CFP®, CFS is Director of Wealth Management for Independence Advisors, bringing over 25 years of experience in the wealth management industry. Have a question for Mark? CLICK HERE TO ASK MARK

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