Posts Tagged ‘Fiduciary’
A Trustee’s duty to monitor the risk within the trust portfolio
Duty to Establish Risk Expectations: Section 2(b) of the Uniform Prudent Investor Act directs that “A trustee’s investment and management decisions respecting individual assets must be evaluated not in isolation but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk [expectations] reasonably suited to the…
Read MoreA trustee’s duty to establish return objectives or “Don’t be a lemming”
Duty to Establish a Target Return: Section 2(b) of the Uniform Prudent Investor Act directs, “A trustee’s investment and management decisions… must be evaluated… as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.” A prudent trustee would not hire an employee without describing at some level…
Read MoreTrustee’s duty to develop an administrative plan or “If you don’t know where you are going you might end up somewhere else.”
Duty to Develop a Plan: Section 2(a) of the UPIA directs, “A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust.” In response to this duty, a prudent trustee will develop an administrative plan that projects the income and…
Read MoreDuty to Prudently Administer or “Check, check, double check, recheck” (1 of 12)
Duty of Prudence: Section 2(a) of the Uniform Prudent Investor Act directs, “A trustee shall administer the trust as a prudent person would…” But how is one to know how a prudent trustee would act?
Read MoreIt’s harder to be a trustee than to go down steps on a pogo stick
The Problem: You are a trustee. You said “Yes” when a family member, close friend, or client asked you if you would serve as their successor trustee. Now, the settlor is dead, and you occupy the fiduciary office. And for that you will receive treasures in heaven… and consternation here on earth, because the beneficiaries…
Read MoreA Transitive Property of Fiduciary Duties?
If A = B and B = C, then A = C. This is the “transitive property of equality” that we learned in our remedial algebra classes so long ago. Is there a transitive property of fiduciary duties? We know that the trustee owes duties of care to the trust beneficiaries. We also know that…
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 MoreInvestment Governance Best Practices for Business Managers (How to Watch the Hen House)
The Problem: You are a business manager(1), and it is either explicitly or implicitly the case that you are responsible for monitoring the activities of the investment managers that have been entrusted with your clients’ capital. (If you are not a business manager or disagree with this statement, stop reading. This paper does not apply…
Read MoreTrust But Verify: Do Private Equity and Hedge Funds Deliver Superior Risk-adjusted Returns?
For several decades, the investment industry has promoted the virtues of hedge funds and private equity funds for large instructional investors and ultra high net worth individuals. But over the last few years these products have come under increased scrutiny because the hoped-for benefits have, for the most part, not materialized. A report in April…
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