Archive for February 2023
Investment Governance Overview: Is my investment advisor doing a good job?
It’s difficult to answer the question, “Is my investment advisor doing a good job?” Predictably, all investment advisors report…
Read MoreHow much is too much for a trustee to be paid? (Part 1 of 3)
Duty: Section 7 of the Uniform Prudent Investor Act directs that “… a trustee may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trustee.” This duty to only incur reasonable costs includes the trustee’s duty to pay themselves only reasonable…
Read MoreHow Much Should A Trustee Be Paid?
Few trust documents provide any guidance about trustee compensation other than to say it shall be “a reasonable amount”. Predictably, few trustees, beneficiaries or professional advisors agree on what a “reasonable amount” is. Attached is a short video that presents the factors that should be considered when a trustee establishes the level of compensation that…
Read MoreBank v RIA as Investment Advisor: A Cost-Benefit Analysis
Many investors ask, “Is it better to have a big bank (Goldman Sachs, for example) as my investment advisor or a Registered Investment Advisor (Bel Air, for example) to manage my money?” Following is a summary of the costs and benefits of each. The best investment platform should be determined by each investor’s unique preferences and…
Read MoreQuestions to Ask an Investment Advisor Before They are Hired aka ”The Interview”
At times it becomes necessary to end a relationship with one investment manager and begin a relationship with a new firm. When such a change has been decided upon, it is best practice to not rush to the next investment manager that promises good returns, low fees, and excellent client service. Instead, a thoughtful investor…
Read MoreWhy the “Passive vs. Active” Investment Debate is the Wrong Issue
The investment industry is embroiled in a “great debate” concerning which investment philosophy is best: active vs. passive management. The debate concerns how the building blocks (asset classes) that make up the portfolio are constructed. The raging question is whether investment advisors should use passive index funds and ETFs as the building blocks or whether…
Read MoreERISA §1104(a)(1)(A)(ii) re Duty to Incur Reasonable Fees
It is fundamental to a trustee’s duties to ensure that expenses incurred by the plan are fair and reasonable. However, when a plan is using one vendor to provide a bundled solution representing various services, determining whether the plan is paying “fair fees” is difficult. But just because it is hard does not mean it…
Read MoreUPIA §7 re Duty to Pay Only Fair Fees
“Wasting beneficiaries’ money is imprudent. In devising and implementing strategies for the investment and management of trust assets, trustees are obligated to minimize costs” (National Conference of Commissioners on Uniform State Laws). Duty to Pay Only Fair Fees Section 7 of the Uniform Prudent Investor Act states, “In investing and managing trust assets, a trustee…
Read MoreThe trustee’s duty to diversify or “Too much of a good thing?”
There is no simple rule for identifying how much diversification is enough. A prudent trustee will develop a record that demonstrates they have reviewed the liquid assets held within the portfolio to confirm that there is a reasonable level of diversification at the (1) security level, (2) sector level, and (3) asset class level.
Read MoreHow much is too much for a trustee to be paid? (Part 3 of 3)
This article is the last in a three-part series addressing the factors to consider when establishing trustee compensation. In this article we consider the reporting requirement AFTER the trustee has determined what they are going to pay themselves. Following are several policies, procedures and practices we suggest the trustee adopt related to the ongoing administration of their…
Read More