Another carrot from trust companies: a commitment that the advisor will retain the investment management side of the business. This comes as more competitors, including financial advisor custodians, are marketing trust and investment management services directly to consumers. Advisors who fail to handle this issue in advance risk losing a client's business after he dies.
Lorenz Fiduciary Services Inc., a La Jolla, Calif., private fiduciary company, cites this very reason in seeking the successor trustee business of financial advisor clients. "Private fiduciaries don't sell financial products," notes Marguerite Lorenz, a private fiduciary and partner at the family-owned business. A professional fiduciary license-unique to California-permits oversight of non-family member conservators, guardians, trustees and agents under durable power of attorney. "It's in our interest and the client's interest to use the same financial advisor."
National Advisors Trust, Overland Park, Kan., a trust company founded by financial advisors, also offers this service. CEO Ron Ferguson says some firms are more helpful with administration than others.
Unlike many normal brokerage-style custody accounts, for example, his company offers income-principal cash accounting that can be useful if a client wishes the asset income stream and principal to go to different people. "We are not the trustee," Ferguson stresses. "The spouse or family member is the trustee. They have an advisor."
-Gail Liberman