An executor can be almost anyone: a trusted friend or family member, an accountant, a financial planner, or even a bank. When an advisor acts as the executor or trustee of clients, conflicts of interest easily arise. Very often, advisors establish close relationships of trust with their clients. Always remember that your duty is to the customer first.
It is not up to you, as an advisor, to decide, but it is the trader's responsibility to be the judge of whether there is a conflict. The most important quality your executor should have is responsibility. You don't need to be a lawyer, accountant or financial planner to be an executor. You just need to be responsible enough to hire the right people to help you, address estate issues quickly, communicate effectively with beneficiaries, and make difficult decisions when needed.
Remember that an executor is paid a commission for doing their job, so you should expect them to fulfill their responsibilities as you would any other job. Liability ConcernsIf a customer asks you to act as executor, how should you respond? Harold Geller of Doucet McBride LLP in Ottawa spoke on this topic at the Institute for Advanced Financial Planners (IAFP) conference last October in Toronto. Geller noted that while clients often want someone neutral in the role of executor, liability concerns have made it less attractive for professionals to take on this role. When a suitable friend or family member is not available, a trust company is usually the best option.
Here, those dealing with inheritance will be less emotionally involved with death and may be more objective in dealing with diverse family interests. In addition, trained and experienced staff will always be available to address issues as they arise and to work on wealth management in a timely manner. Although trust companies charge for their services, the charges are set at the provincial rate, and any executor would be entitled to charge according to the same scale. Geller points out that, in his office, property disputes represent the fastest growing area of litigation, for a variety of reasons.
Not only is there more money to fight for, not only are there more people (baby boomers and the older generation) with money, larger accounts and larger numbers, but we also have a more sophisticated or partially sophisticated audience, by which I mean that everyone who has a grudge will find something on the Internet to support their grudge. And a little information is a dangerous thing. So, with all that in mind, is it surprising that there are expectations of an increase in litigation in this area? According to Mr. Carter, the Alberta Bar Society doesn't tell its members not to act as executors, but they advise caution.
Do you do it for people you don't really know where you could get involved in arguments with people you don't really know? I would think not. And, if a lawyer is reluctant to act as executor, why would a financial planner intervene in the breach? Mr. Geller points out that the advantage of acting as the executor of a client is very limited. If, for example, the products were appropriate and generated fees, can an executor instruct himself, in his role as financial advisor, to take action without the emergence of a conflict of interest? As an executor, you never want to be close to the appearance of a conflict of interest, whether it's a real conflict of interest or just an appearance, because this is an area where there are sincere emotions and the chances of people becoming enraged in one way or another are unpredictable but frequent.
So don't stick your neck out. In exchange for the compensation you receive, which is limited by provincial laws, you will have to live with the risk of being sued or shelling out extra money for errors and omissions insurance, since acting as executor is probably not covered by your standard professional liability insurance plans. You'll likely end up spending a lot of time on things you don't get paid for, such as mediating between family members. Geller points out that you limit your opportunity to market your financial planning services to survivors, which could cost you much more in the long run than the executor's fees you'll charge.
This could be accompanied by an additional sweetener of inheriting a donation in the client's will, thus making the advisor both an executor and a beneficiary. Advisors should ensure that they are familiar with the rules governing these issues and the serious implications of violating them to protect themselves from harsh regulatory sanctions. Alternatively, your documents can be changed to eliminate the Financial Advisor and appoint a trustee who does not have an inherent conflict. Most licensed and regulated financial advisors do not have permissions from the Financial Conduct Authority to “manage clients' money”.
While it is possible to buy shares directly from some companies through direct purchase programs, most shares are purchased through a financial advisor or broker of some kind, so they can be key to finding assets. By trading this way, financial advisors do not complain about any conflicts of interest or money management issues from FCA clients. And, remember, while the drafter of the will probably have valid reasons for choosing the financial advisor that he or she considered best at the time, you have no obligation to work with that advisor. In addition, some firms prohibit their financial advisors from performing these functions, so I tell clients to consult with their financial advisor to determine if it is permissible.
You should use the advisor that you think will best help you manage wealth, financial assets, and related tax consequences for wealth. If a financial planner helped you develop a strategy, that person will have a good idea of the potential assets the deceased had (will writer). It's easy to imagine clients who want their advisors who are in a position of trust with their clients to manage their assets after their death. In other cases, they may want to establish lengthy or complicated trusts and feel that an attorney or financial planner is better prepared to deal with these issues.
This general rule requires mutual fund advisors to identify potential conflicts of interest and raise such concerns if they arise with the customer and dealer, and to follow instructions from the dealer to ensure that the client's best interests prevail. . .