Fiduciary Governance Blog
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Seven Risk Mitigation Strategies for the Successor Trustee or War Stories from a Trust Governance Expert Witness
Since 2013 I have been engaged to testify as an expert witness in the California Courts to opine upon the Trustee’s Standard of Care. Through these engagements I have compiled a list of the “governance practices” that a successor trustee is encouraged to adopt. Following is a summary of these practices as well as a…
Don’t let 2023 bring about a trustee breach lawsuit
Don’t let 2023 bring about a trustee breach lawsuit. The performance of liquid assets in many trusts was dismal in 2022 and likely fell short of expectations projected by the trusts’ investment advisors. If so, some trustees are going to get sued.
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…
How 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…
How 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…
Bank 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…
Questions 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…
Why 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…
ERISA §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…