资讯
Dec-07-2009 The Benefits of Choosing an Independent Trustee
There are many factors to consider when choosing a trustee. One of the key considerations is whether to go with a large institutionally owned trustee or an independent firm. A bank-owned trustee, for example, offers the advantage of being able to access the bank’s “in-house” facilities, whereas with an independent trustee, the question is: Who will manage the investments if the trustee is not part of the bank? For many reasons, this independence should not be considered a disadvantage.
The role of the trustee is unique to the financial services industry. Commonly, but perhaps incorrectly, clients in this modern era often expect a trustee to act not only as a trustee but also as an investment adviser and banker, even if the trustee is not properly qualified in those fields. This may not be in the best interests of the client. Traditionally, the role of a trustee was quite separate from that of investment advisor or banker. An independent trustee successfully separates all of these roles, and only operates in roles for which he/she is fully qualified.
Trust companies owned by large financial institutions or banks are not always successful at separating these roles, because they may be pressured to provide the institutions’ own “in-house” products. Using an in-house product might not always be the best choice for the client, but unfortunately some institutional trustees don’t always have the freedom to recommend independent, external solutions.
When independent trustees are at the stage of selecting a banker or investment manager, for example, they have the ability to look at a wide range of institutions and financial products/services, and are not unduly influenced to select one over the other. Being independent allows the trustee to consider financial institutions that may not always be available to a bank-owned trustee. Also, if a financial institution fails to act in accordance with the agreed investment parameters, the independent trustee is able to terminate the relationship immediately, whereas if a large financial institution has a vested interest in a Trust company, the trustee is not always able to terminate the relationship easily, even though this could be the right thing to do for the client.
Independent trustees have the necessary expertise to administer a highly complex vehicle whilst retaining complete flexibility, and are able to use a wide range of carefully selected financial institutions for specific services.
To summarise, an independent trustee offers a number of benefits over an institutional trustee:
• Neutrality – the trustee is not biased towards one service over another
• Avoidance of any conflict of interest – the trustee does not have all financial services with one institution
• Specialisation – the trustee is able to tailor the trust in a unique way and is not unduly influenced when choosing where the assets should be placed
• The trustee is driven not by the amount of assets under management, but rather by the needs of the end customer and the beneficiaries
• The client’s financial information is held by only one company, so privacy is guaranteed
• The trustee is able to diversify the client’s assets and spread the risk by using multiple financial institutions
• The trustee has the freedom to “cherry-pick” which financial institutions to use