How to Find an Estate or Trust Attorney
How to Fund a Trust after a Grantor’s Death
Funding Trusts with Stocks, Promissory Notes, and Limited Partnership Interests

How to Use Investment Advisors Wisely for a Trust

Investment advisors can make your life as trustee easier. They spend all their professional time researching companies and reading balance sheets and annual reports. Their job is to be on top of whatever type of investment they specialize in so that you don’t have to. When hiring an advisor, you should set boundaries, make sure you get the right kind of advisor for your trust, don’t limit yourself to one advisor, and remain in close communication with the advisor.

Your job is to be very specific as to what your expectations are when hiring an investment advisor. When hiring an advisor, keep the following points in mind:

  • Set boundaries. If you don’t give an advisor parameters, you are giving the advisor too much responsibility. You can reasonably assume that the advisor probably doesn’t want to lose your business, but unless you show them otherwise, they’ll probably assume you have no idea what they’re doing, won’t be able to read their reports, and won’t bother to ask questions.

  • Make sure that you get the right kind of advisor for your trust. Not all advisors specialize in all types of investments. You can find advisors for every type of investment and combination of types. If you’re looking for income production but aren’t too bothered if you don’t see huge capital gains in the account, you want an advisor who specializes in bonds.

    Perhaps the trust doesn’t yet have an active income beneficiary, and all the income is accumulating in the trust. In that case, you may be more likely to want an advisor who specializes in growth companies, which usually pay a very small dividend and concentrate on increasing the size and value of the company.

  • Don’t limit yourself to one advisor. You may need only one advisor, or you may want more than one. If the trust is large, you may not want to put all your eggs in one basket with one advisor. If you sense you’re not getting the service or results you require from any particular advisor, don’t hesitate to take the trust away from him or her.

    It’s not his or her money, so he or she has very little at stake. You, on the other hand, have to answer to the income beneficiaries and the remaindermen who receive whatever’s left in the trust after the income beneficiary’s interest ends.

  • Remain in close communication with the advisor. Any investment advisor worth his or her salt sends monthly or quarterly reports. Read them carefully. Although he or she works for you, money often leads people to behave badly, and these advisors have access to lots of it.

    If something doesn’t look quite right to you, such as fees that seem high or huge numbers of purchases and/or sales, often for very small numbers of shares of stock in the same companies, ask questions. If you’re not absolutely satisfied with the answers, ask for an opinion from a professional you trust.

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