Who Is A Fiduciary?

Fiduciary Best Practices for Guardians and other Legal Professionals as Stewards.


I have the privilege of being the president of the New Rochelle Bar Association. We are happy to welcome you here to our first CLE of the new Season. It is our intention to continue to have these CLEs on Zoom, at least until such time as the state tells us we can’t do that anymore. But so far, we’re going to keep doing what we’re doing. I want to get right to the program today Fiduciary best practices for guardians and other legal professionals as stewards. And I am very pleased to introduce our two speakers. First, Artem is our current vice president of our bar. He’s known to all of us, I think, as our member and vice president. Artem focuses his practice on elder law, estate planning, estate administration, guardianship proceedings under Article 81 and 17 and planning for elderly and disabled clients in estates and trust litigation items. Practice also includes Medicaid and asset protection planning and trust and estate planning, and special needs planning. Joe Soricelli is an independent consultant who has successfully helped his clients, friends, and family improve their life through better planning for their finances, health care and real estate concerns.

His experience and help is to plan for stages of retirement enables clients to live more comfortably with less stress. How many of us can claim that? Nobody else I know here. In any event, we’re happy to have you, Joe.

Joe Soricelli

Thank you.

Artem. Thank you. And I’m going to get out of the way and let’s use our maximum time. We are scheduled for an hour. This is one credit, but as usual, if people can and want to, we stay a few minutes later to accept questions. The only thing I’m going to ask both of you presenters, would you like to have the questions that occur as you are presenting put into the chat and then we’ll cover them? Do you want people to interrupt and however you want to do it, that’s how we’ll do it.

I’m okay with handling questions as they come up, but the chat is always good because I do have roughly 50 minutes of material between myself and audit. So, we try to meet it, but if there’s somebody that needs to say it, put it in the chat, and if we can answer it right away, we’ll answer it right away. Good. Okay, go for it. Basic agenda, if nothing else needs to be explained, who’s a fiduciary. Yes. I am a financial planner by trade. I do a lot of continuing ed. I work with a lot of organizations. Artem knows me from the Senior Law Day committee, I’ll be presenting in Yonkers. I presented for the last 20 years on elder issues. And one of the things that always comes up is, are you dealing with an expert? Are you dealing with a person that recognizes that they’re responsible for someone else. And it always comes around to fiduciary responsibilities. And that’s the second part. I talk about processes and procedures because we are talking about best practices, how to meet your fiduciary responsibilities. That’s what this presentation is about. Most people in the room are doing something now you look at what are some other best practices.

Maybe I’ll give you an idea or two that you can add to the best practice, but you really have to accept that you are a fiduciary frequently in many different ways. And then it comes back to why implement? We all know why implement. I keep it relatively simple, it’s CYA. Let’s make sure that we have the backup to why we made recommendations. And then keep the proper documentation, keep the deliverables where necessary. And if you do share fiduciary responsibility with someone, a financial professional, an accountant, potentially someone that’s paying bills or whatever else, if you share that responsibility, what was your due diligence in finding that person? You need to have a policy and hopefully a procedure on how you go about. And that’s what this is all going to be about. Let’s get on to the next piece. Identify the reasons legal professionals have fiduciary roles and then how to meet them with best practices, policies, and procedures. Where do we come from? It’s basic course 101. You’ll hear me use that phrase, 101. If you go to college and you take a 101 course, it’s giving you the introduction, the basics.

The word fiduciary just comes from trust. Does somebody give you total trust in what you are recommending? That’s the key. And there’s so many people that you instill trust into that take on a fiduciary role. The issue usually is they don’t acknowledge it. A lot of times people do, but many times they don’t. And everything of business advisor, guardians, attorneys, administrators of the states, lots of the stuff item that you deal with.


Again, you’ve covered it. I think the primary thing, at least in my practice, is a fiduciary standard of care, right? So, we’re going to go into that. But the roles you will see it most often is where I deal with it most often is people who are trustees, people who are appointed as administrators of the state. Now here’s where your client is the fiduciary, but you are the attorney representing them. So, you are hired by them and you’re responsible for advising them as to the duties of care and how to properly manage the assets and keep track of everything. So, this is where it’s important to follow those best practices and procedures. Guardians, obviously that goes without saying that they have a Fiduciary responsibility and also power of attorneys. From an estate planning perspective, I do a lot of planning where family members will appoint agents to be authorized under their power of attorney to transact business on their behalf and that also falls within that Fiduciary responsibility.

Joe Soricelli

This is what a lot of individuals just don’t understand. You take on that Fiduciary role in so many different circumstances that you really have to understand that you are a Fiduciary. And then what must you do? As it says, you must be their advocate, right? In all financial matters, power attorneys, trust, so forth, investment portfolios. And again, you are supposed to be acting solely for and with undivided loyalty. The advice you give must be aligned with the client specific objectives. A lot of times those objectives or goals are not known early on. And then when you are talking about client’s assets or an estate or something like that, how do you strive for an optimal balance of risk and return? Because a lot of people I want to earn X, I want to get the highest return on the assets, or I just want to make sure that they’re 100% principal guarantee. And this is probably the most important part which Artem was explaining. You have to exercise skill, diligence and objectivity when you are meeting these responsibilities. That’s a key because and the people that you appoint, how did you appoint them? Do they have the skills?

It’s so important. The IRS has a form. I always felt the IRS has a form for everything. But the IRS has a form that if you are corresponding with them, what is that relationship? Are you the attorney advisor? What is that relationship? All right, let’s even talk about some basic questions. you should if you are talk with a client, you should be able to answer these questions and especially to your Fiduciary responsibilities, you should be able to answer them pretty clear and concise. Will you act as a Fiduciary in all scenarios? I was at the golf outing and was talking to somebody about this presentation and they said, no, I backed out of some fiduciary responsibilities. I like to share or be a co-Fiduciary or share some of my Fiduciary responsibilities because I may have gotten burnt by somebody in the past, did something wrong. And then you should be able to say do I have Fiduciary training? Well, we’re going to have some basic Fiduciary training today. Do you hold any designations focused on Fiduciary best practices? There are associations, there are programs out there that will show you or give a designation that you have additional training, what services you are going to provide

Are those services going to be something where you are a Fiduciary and then again act solely in the best interest of the client? If there are any potential conflicts of interest, talk about it. Just because there’s a conflict of interest doesn’t mean that we can’t act as a fiduciary for somebody, but it has to be fully, fully disclosed. And the final piece, which is always the funny part, especially with, sometimes with financial advisors, what’s the total compensation for the services and how are they billed?


Just one more piece on the co-trustees. Just keep in mind that even as a co-trustees, the courts have held that co trustees can be held jointly and severally liable for all actions, right? So just because the other trustee is doing something and you as a co-trustee don’t have your hand in that cookie jar does not mean that you’re not going to be held liable for not stopping the other trustee, right? So, if you think that just having a co trustee avoids any kind of liability on your end, you’ll be mistaken on that end because the courts can hold you liable even for not taking action that you should have taken, not just for taking this action.

Joe Soricelli

Ironically, it is a slide going forward. But yes, you can share the responsibility. You can not separate yourself from that responsibility. We talked about, there were designations. I have actually been doing this for, with this designation for, I think, 20 years. And it actually spins off of working with pension plans more than anything else. Because as we all know, when you’re a trustee whether it be a personal trust or a pension trust, you have fiduciary responsibilities. That’s the real key. And then there are accountants who don’t like to acknowledge it, but they’re doing record keeping. And the record keeping has some fiduciary responsibilities and they just should be aware of it.

Here’s some of the problems that you run into when you talk about attorneys in the legal profession. Let’s face facts, it’s largely a self-governing body. Whether it be New York State or any other. It’s a self-governing body in most cases unless you have problems. And that’s what we’re trying to avoid here. So, you are the representative of clients and an officer of the legal system with special responsibilities towards the quality of justice. You may assume many different roles,

But more importantly, you have a smart duty to uphold the legal process and to demonstrate respect for the legal system. Sometimes conflicts arise just from that. Just from that. Well, you need to uphold the legal system. As we all know, sometimes clients ask you to do things you don’t necessarily want to do and you have to maybe separate from them. This is the piece that I liked when I was going through the research. In addition, a lawyer should further the public’s understanding of incompetence in the rule of law and the justice system, right? Legal institutions depend on participation in support to maintain their authority. This is very important because this is when you explain your fiduciary responsibilities that you’re acting in their best interest. They begin to build a better support and then the occasion for government regulation. To the extent that lawyers do the right thing, there’s less chance that we’re going to see more government regulation.


In that scope of the self-governing portion of my experiences, and primarily it’s in the guardianship. I know several people on here guardians or have assisted with clients and being appointed as guardians. That’s where annually those people are required to account. Right. And then the court has a system in place nowadays where the guardians are monitored. Annual accounting have to be filed. The court reviews them and approves them in order to try to mitigate some of these self-dealings and breaches of fiduciary duty.

Joe Soricelli

It’s so important. I work with a number of individuals on some trusts. It goes back to the reporting and then how are these reports generated and there are some best practices on how the reports are generated. We will cover a little bit on that going forward also. But the primary reason that a fiduciary standard has survived for so long, and I’m saying it’s been around for a long time, is its principle based. It focuses on that trust that a person gives to you. And there’s loyalties, there’s care, there’s prudence and, due diligence. And I’m not going to tell you especially when you’re dealing with, the last six months, most people lost money. Not going to say everybody, most people lost money. So, performance in and of itself is not necessarily fulfilling your fiduciary responsibility, but how you choose these investments. Or did I keep a piece of real estate I shouldn’t have kept in a trust? Did I sell a piece of realty real estate that I should not have sold? Lots of different questions come up, but you always have to be able to explain why you did it.

Not necessarily that it was the right outcome, but just have the backup information that allows you to explain your actions and have a policy and a procedure in place that sort of like is plug and play. Just have it in place that this is the reason we did this. And document and document.


And the courts have held that they do not demand investment infallibility right. Nobody has a crystal ball. The stock market is going to change, go up and down, but you got to be able to back up as to why you were doing what you were doing. And I think one of the prime examples that always stands out in my mind is the Chase Manhattan Bank versus Hunter case when it dealt with a trustee, where Chase was the trustee and was designated in the trust document to hold a significant amount of Kodak stock. Right. And the Kodak company started turning worse and there was a huge loss which the beneficiaries then sued upon and said, well, you shouldn’t have held it. You should have diversified. And even though the trust document provided that I forget to get the exact language, but something to extend unless there’s extenuating circumstances definitely not divest of this stock. I think it was a family-owned part if I remember correctly and there was some back and forth. Initially, the sugar court found Chase Manhattan bank liable. Then it went up to appellate the appellate court reversed and found that there was extenuating circumstances.

So, the court will look at the extenuating circumstances and what happened and how the decisions for investments were made. It will not just look at did you make money or did you lose money, but if you’re losing money you better have good reasons for why you’re losing money

Joe Soricelli

I was just going to say frequently for the ultra-conservative I have helped with trusts that simply say government backed securities, nothing else. So, you don’t have the opportunity to create a diversified portfolio because the trust in and of itself, it’s principal protection more than anything else. But its government backed securities and unfortunately, as we all have just come through, even if you had government backed securities over the last six months, you lost some principle so even though it’s done, you couldn’t diversify.


Keep in mind that the courts will honor the trust provision. So, a trust document can lessen the standard of care which a trustee must adhere to, but it won’t allow the trust document to completely eliminate it. Right. The course will honor the wishes of the grantor, but they won’t allow grantors to completely forego any protection and allow the trustees just and I’m going to.

Joe Soricelli

Say Artem, the way I’ve gotten around it is you document the recommendation that you need to diversify. Right. And the trustees can sometimes override some provisions within the trust. And again, I don’t want to focus only on investments or anything of that nature, but sometimes you have to just document that my recommendation is X. If you go against it, you just acknowledge that I made this recommendation, and this comes into policies and procedures. Not going to go through it all. But I just highlighted a couple of things. Maintain complete records for everything. Maintain complete records and I hate I have my cell phone, my office phone and then the house phone and the house phone is the one that’s gone off. That’s why I put it next to me. But you have to complete and maintain full records. The other thing which we just were talking about is if the client requests something, even if it’s not in direct, it may have a conflict in some way document it. And usually as myself, if a person says I need you to send $100,000 or $10,000 to XYZ person I just have to honor it, but I need to document it.

And that goes back to make accurate entries of all financial transactions. This goes back to year ends guardians and trustees without a doubt. And then I love copies. I participated in a meeting the other day and you were all attorneys. So, you know that you get sometimes when you’re reviewing a case, you get a document that has ten-point font, you have documents that have 20-point fonts, you have all sorts of different things. And one person said, I wish there was a piece of software that could just make it all easily readable in PDF form. And I said, Great, but didn’t you just change all the documents? So, none of the documents that you’re reading are still valid for the court? Might help you on the first screen, but it’s definitely not going to be admitted because the documents are different. So, we’ve got that. All right, here’s what Artem was talking about earlier. We all share some sort of responsibilities for you moving, but you don’t lose the oversight and you don’t lose the oversight if you’re a partner and it’s identified, then maybe something should have been done differently. And I’m going to always say should have been done differently.

But if a partner knows of the conduct at the time, they need to take remedial action quickly, not wait on it. So, while you may have delegated some responsibilities to a Jose, and I’m not the attorney, but if Joe Sorcelli does something that is easily identifiable that was not in the best interest of the client, I’ll am going to get fired and somebody else is going to get put in place. You must express that there was some sort of reasonable management of me or of another part, another person within the firm. If you can do that, you lessen the potential legal liability that you could incur if it was a major issue. Does this fit into exactly what you were talking about?


I think it just goes more towards lawyers and law firm practices versus what I was referring to more in the sense of if you are trustees, right. So, it relates to it. You don’t have to be a lawyer to be a trustee, but if you have two trustees acting, or if you’re a co-trustee, you with another trustee, you’re leaving yourself open to liability. You can’t stick your head in the sand and say, well, I didn’t know what was going on so I shouldn’t be liable. You have a fiduciary duty to keep monitoring and to keep track of it. If your co-trustee, co-executor, co-administration, whatever the case may be, is doing something nefarious, you have a responsibility to stop it. Or you could be comparable as well.

Joe Soricelli



And I think that goes without saying for partners and law firms. Right. That’s a whole different topic of conversation from an ethics perspective of managing the escrow accounts and the trust accounts and who has authority that you’re the only person who has authority to sign it, I should say we’ll leave that topic of discussion to our local experts, Richard Grayson and Joe Ruel at the next CLE presentation.

Joe Soricelli

All right, again, conflicts of interest. There are some simple ways of avoiding a conflict of interest, right? And it’s standard the transaction is fair and reasonable to the client. And the terms that this also comes into place, I’ll assume it happens no matter where it is. Sometimes people do business with their clients. A local country club has the attorney for the local country club now is an investor in the country club. And I was like surprised and I really was. But he’s an investor and the transaction was all transmitted. The client is advised in writing why it’s desirable is given a reasonable opportunity and this is important to seek advice from somebody else. That’s always a very important piece. Second opinions are great and sometimes we end up paying for that second opinion because we want to make sure that it meets all the criteria. And then last piece which I said earlier, the client has given is the informed consent in writing signed by the client. These are conflicts. This is how you avoid them or if they do arise, how do you overcome it? Here’s the part that this is part of the training right now

There are a few regulatory requirements for minimum competency standards in providing oversight.

Does anybody know where is it written down? I can’t find it or anything on that side. So, there’s not a lot. There are certain laws that were recently passed. We’re going to cover one of them in a few minutes. But there’s no requirement for education, training or experience. It’s subjective there’s simply put, it’s a lack of unified guidance from the courts and legislators on what constitutes, and I use the word stewards because if you’re responsible for somebody else, you are a Stewart for the fiduciary standard of care. That’s what this is all about. We talk about simple teams. The investment Stewart could be a guardian trustee, there’s an advisor and then there’s actually an investment manager that should be there’s due diligence to appoint investment managers. There should be due diligence to appoint an investment advisor and they all should acknowledge their fiduciary responsibilities. Let’s talk about process. This is somewhat of what Artem was saying before. There are some global quality management standards that are written out there that organizations have put together and it really always goes around the decision-making process, and it’s not complicated. And as I said, policies, process. This is what you need to do.

The first thing is, as I say, we break it down into four stages. It’s organized and then we’re going to go through best practices for each of these. If you’re going to make a recommendation, make a recommendation and do it based upon the organized info. During the organization state, you’re going to also identify goals. What are we trying to accomplish like creating an income trust? Am I creating a growth trust? Two different objectives and two different ways of putting it together. Now that we’ve got the template, we know what we have. We have a game plan that we’re going to do. Unfortunately, everybody knows an estate planner. How many people deliver wills that never get signed? They don’t get implemented? You do pursue it, but you can have the best laid plans, but if you don’t implement them, it’s a waste of time. And you do potentially have some responsibilities or liability if they don’t get implemented. If you went through step one and two and then don’t implement, there could be potential liability. And then. You’re not done. You need to monitor what’s going on, whether it be with an investment advisor or anyone else you need to monitor.


The key thing there, or examples I can think of is one, as attorneys, you’re not just liable to the test either. The courts have held that the beneficiaries have a way of suing you for malpractice. So, if the test cases haven’t signed or signed something that has negatively impacted where you had the opportunity to implement tax savings and you didn’t, or you dropped the ball and didn’t follow through, then you’re not off the hook if the person dies. Right. There is a potential that those beneficiaries could have a claim against you even though you never represented them for malpractice. Also, the trust, right. A key thing for estate planners. I struggle with it myself with having clients follow through with the funding of the trust documents. We create the trust for purposes of avoiding probate and for purposes of avoiding potential creditors, and then the clients don’t follow through. And the expression is you can lead the horse to water. Right. But you got to show the evidence of having led them there. Funding notices, reminders, CYA letters, closing letters, hey, we’re done. Don’t forget, you need to fund the trust, otherwise it’s not worth the paper it’s written on, right?

All those things are best practices, right?

Joe Soricelli

I call it boots on the ground. A lot of times you must delegate that, and sometimes you delegate it to an individual that you have trust in that will acknowledge and then they pay a fee to physically help that family complete the documents that are required to transfer the assets to the trust. It’s boots on the ground and it’s hard. It’s really hard. Oh, this is the piece that we were talking about, remember, for Artem. This is the head up. This was an ad on Slide, right? It is summarized. It is summarized. But in 2000, I believe it was 15 roughly, they adopted the New York Prudent Investor Act that talks about the fiduciary responsibility. The trustee has a duty to invest and manage property held in a fiduciary in accordance with the Prudent Investors standard. This is what I was asking you when I was making a statement that when the trust said, only invest in government backed securities. That’s not a diversified portfolio. And that really doesn’t meet the prudent investor standard because you should be diversified, and it often states it’s not. The outcome or performance is determined in the light of the facts and circumstances prevailing at the time the decision or action of trustee was made.

A trustee is not liable to a beneficiary to the extent that the trustee acted in substantial compliance with the prudent investor standard, were in reasonable reliance on the express terms and provisions of the governing instrument, the trust. If I can only invest in government backed securities, that’s it. And then the delegation of an investment or management function requires skill, care and caution in selecting a delegate suitable to exercise the delegated function. somebody must do some due diligence on who you’re passing this responsibility off to.


Adam, I think this goes also to one of the questions I see in the chat from David about liquidating portfolios and converting them to cash in a state matters. Right. So, by default there’s the Investor Act rules. I know that there’s more for trustees, but I think that the answer, David, is, in my opinion, always it depends, right. I think the safe act is to, yes, liquidate and avoid any kind of downturns in the market, but even more so if you have a significant stock portfolio, is to reach out to the beneficiaries who are going to be getting this and get their consent, right? A letter saying, hey, I have all of these, do you want them in kind or liquidated? Gives you a CYA, gives the executor and the trustee a CYA. Because at the end of the day, in all these scenarios, it’s going to be a thankless position, right. If you are doing the best thing possible and the stock skyrocket and you make a huge gain for everyone, at most you’ll get a thanks, if that. But if you hold it and the stock goes down, people will come with the pitchforks and the torches, right?

Because they don’t care that you did a great job, they just care if you did a terrible job. And likewise, if you held, I failed to, let’s say, Tesla stock, right, and it was before it exploded in value and you liquidated it because you were worried about the potential downturn and now the beneficiaries have missed out on a potential $100,000 game, they’re going to blame you. Right. There is no single best answer, in my opinion.

Joe Soricelli

There is no single best answer except document, document, document, because it’s real simple. Do you want to hold the stock or not? If they don’t get back to you, you don’t necessarily have the permission to sell it. I as a broker, right, unfortunately, a lot of times and this has happened and all of you have experienced it, when there’s no clear decision maker you could see I’ll use an. Example right now, Ford stock went from in the 30s back down to 1314 right now in a very quick period of time. If nobody can authorize the trade and even if I hold an advisory account and I know that if somebody passed away, I can’t trade that account, it’s prohibited. It’s important to get things done. As we go back to getting everything into even a revocable living trust, there’s a trustee that’s involved that should be able to decide. It’s just so hard because you’re damned if you do and you’re damned if you don’t. But just document, document, document. Best practice. All right. Prudent practices process. Provide a system of best practices that contain questions about the operations and corresponding practices.

There are guidelines, but not guarantees. Excuse me. I can’t guarantee that people are going to respond quickly. I can’t guarantee that I’m going to be giving you x number of dollars of revenue income. There are best practices but that still does not provide complete immunity from lawsuits, legal review or regulatory investigations. Their best practices, it’s documentation if you did the things right. Fiduciary are required to support with evidence he or she is complying with the necessary requirements. It’s document, document and document. I can’t say it enough. Anybody that wants I have multiple publications that give you multiple best practices. This breaks it out. I’m going to go through just a couple to give you an idea of what’s going on. It goes back to number one. If you’re using an outside investment Stewart or even if you are managing a trust, do they know what their Fiduciary responsibilities are, and their duties are? Maybe they’re a decision maker, maybe they’re not. What’s going on? The conflict of interest is conflict of interest.

I ran into a situation that I didn’t even know my broker dealer was getting a year-end bonus from a trust company.

Basically, Principal Life, I’m not going to say it directly principal Life that there was some sort of extra compensation and every one of my disclosure documents that I delivered to the client didn’t have this extra compensation except one. Theoretically I may have been steering to this company. There was a lot of due diligence on where the investments were so forth and so on and the reasons for it. But I didn’t know about this little extra compensation that LPL, which is my broker dealer, was getting. You’ve got to try to avoid them or at least understand them and fully disclose them. That’s the best way to comes back to investments. Our selected asset class is consistent with the implementation monitoring constraints. What we’re talking about I’m going to show you some documents at the end is when you put a portfolio together,

It starts with what do you have? What sort of risk profile do you want and what the objective is. Because the risk profile will reflect the goals and the objectives of the trust of the guardianship. And in most cases, people in this room. We’re looking for income. We’re not trying to grow the asset.

We’re trying to create income so that we could pay expenses and make the money last longer. But does the actual portfolio reflect that or is it riskier with the ups and downs of the market, our statutory or regulatory investments, safe harbors that are implemented in compliance with the actual provisions, it could be something that’s in the trust, or it could be something that you shouldn’t invest. In most cases, the trust is drafted. If you’re going to invest, they have to be Article 40 funds so that they’re fully registered and all of the information. Very seldom can you use alternatives, even though alternatives right now are the best places to put your money. You have structured investments right now that can pay income or above anything else and have significant downside protection. And then the reviews. And the reviews go from performance to fees to compensation. Are they reasonable for the services provided? It doesn’t say that you can only charge 20 basis points. It doesn’t say that you can’t charge 1%. If you’re doing the work that requires compensation of X, was it reasonable for the services provided? We come back, the basics, the procedures, organize, formalize, implement and monitor whatever it is, this is what you need to do.

All right, we’re pretty good on time. Now My pitch, but it doesn’t have to be me. There are designations and acknowledgement of individuals that they are fiduciaries. If you have an advisory agreement, whether it be with Merrill Lynch, although Merrill is a little bit harder on this, they only allow certain people to be fiduciary. Not every broker is a fiduciary. But when you’re choosing someone, do they have some sort of acknowledge, practice and procedure to address risk areas that help ensure compliance with applicable I don’t know, a lot of trust and a lot of times you don’t want to do it. But how many times do people talk about investment policy statements? If it’s a big enough trust, you should have one. It should be agreed to and signed off by the trustees. Pension plans have them. They may be broad, but it should give you direction of what you’re trying to accomplish, what the goals of that trust are. And then it’s the professional that is going to analyze and optimize the investments. This is across the board. Whoever. They don’t have to have specific designations, but they do have to acknowledge this is the way they do business.

There are things monitor and report serve as a resource for education and assistance. A fiduciary should be able to tell other people what they’re doing and why they’re doing it and give guidance to trustees, anybody that has a decent size trust. Have you ever brought a provider in to educate the trustees on their fiduciary responsibilities. Anyone that deals with pensions, you know, that’s like item number one. Teach a trustee what their responsibilities are and why you can do it with trustees of small estates. It might be a conversation, it might be a phone call, it may be a zoom call now. But people have to recognize what their responsibilities are as a trustee or as a guardian and what their fiduciary responsibilities are, and then how do you meet them? A good co-fiduciary will start to do some of that training. Often banks have it. All right, this is where we are. Where are we on time? We’re right there. Four minutes. All right. It talks about some basic documentation. This is simply a summary document. What this comes out of is a financial planning software. But it puts everything together. Remember, we talked about gather, get the information, consolidate.

This is step one. Get it all together, understand what it is. Take a snapshot There are certain programs in here,that show the probability of success, because you’re going to be keen goals and so forth. But it’s going to give you an idea, and then it will give you an idea of the cash flow of what’s going on, so that if a trust is going to run out of money, you have an idea that it’s going to run out of money, especially if there’s an automatic distribution. Sometimes you can’t meet the distributions based upon the trust, based upon the investment portfolio. The second thing which then comes into is risk profile. This is a growth with income risk profile scored from 100 from zero to 100. If you’re in the 20s, you’re a capital preservation. If you’re in the 90s, you’re in equities 100%. But this profile starts with questions that are asked of the trustees. And then we sit back and say, does your actual portfolio meet your risk score? It’s something that somebody should be talking about. This is that second stage when you start to make recommendations. Because if you have a risk score, if you have a expectation that your risks were as capital preservation and you have a risk score of 58, you have way too many equities in it.

And when you look at current returns, you’re down 13%, 14%. That wasn’t the objective. What’s the background? Where do you invest? When you make investments, there should be a reason for it. We use some software that uses Morningstar data, but ultimately it tests 14 different criteria and it gives you, that a fund is meeting the standards, or hey, it’s not meeting your standards, and simply color code it. And if these ones that aren’t meeting the standards, there’s only 20,000 alternatives to invest in. It’s something that you have to.


Do just to keep us also in compliance with the CLE requirements, we’re going to give out the code. The code today will be prudent P-R-U-D-E-N-T as in Prudent person standard of care, which is what fiduciaries need to have. And I think this is again where having all of that information is what’s going to help you make the decision, because each case is going to be different, right? Are you protecting the assets for somebody who is in their twenty s and needs these assets until they reach the age of 65, as with people with supplemental needs, trust or guardians? Or do you have a 65-year-old who just needs income to live off? Right. Pay the monthly expenses, because those are going to differ as to how you’re doing it and what the proper investment strategy is. And you can’t put it all in a capital preservation if the person is starving and doesn’t have income to pay for their food. Again, it’s very case by case specific, and it’s what a Prudent person in that situation would do. As Joe and I have said throughout, the sensation of a Prudent person keeps great records.

Document, document, and keep the records, do the research and commit the time. That’s what it is.

Joe Soricelli

As we said, I will add, which is so important, and it doesn’t have to if you’re dealing with somebody that you’re trying to give some of that fiduciary responsibility to. A lot of people go right to the big houses. You use the trust department at Chase because they’re deep pockets. They’re going to be a code defendant on any issues, and it’s there. Other times you use individual planners. Sometimes you’re forced to do things because of family members. And when you have to use an IDA’s son to become your financial adviser, and he’s been in the business two years, sometimes you have to do your due diligence and you have to document that while supporting him, I have to monitor him more closely, and potentially, where is he going with his investment portfolio. And the other part, as I said, as Artem said, is what are those initial goals? What are those goals? And let’s forget about all of the investment portion. While money is always a focus period under sentence, the trust assets are there. There are so many other parts of fiduciary responsibilities that people that you assume or assume just naturally in your role as an advisor, I try to make people just aware of that, and that’s really what this was all about.

Best practices, principles. We can protect ourselves. Document, document, document. But if you’re doing what’s in the best interest of your client, who has given you total trust in your advice, then you shouldn’t have to worry about a lot.

Joe Soricelli

We didn’t lose anybody. We started with 50. We still have 50. That’s always a good thing. Everybody adjusted the CLE? But I’m hoping that I gave at least one item that you could take back and use in your practices. That’s really what the objectives are if you’re going to be educated. Did we deliver something that maybe you never saw? I will tell you the piece that very few people see or have seen are structured investments. I am not going to discuss them because it’s a product but talk to your advisors. They’re one of the more popular investors, more popular vehicles to use to generate income.


Is bordering legal services for services provided by a client doing business with the client?

Joe Soricelli

Is there a conflict of interest there? And is a printer providing you print material and you’re providing him legal advice? Is there a written agreement? Has it been reviewed, and is it fair? Is it fair? If it is, it’s been documented, and you shouldn’t have an issue. But bartering is unfortunately, bartering is usually not fully documented just for yourself. I cannot barter. I cannot offer any responsibilities as a registered rep. I cannot use a barter system at all. I’m not going to tell you aren’t. Maybe you know, for attorneys, if you can.


I don’t know. I think the question needs further clarification, what the services provided are. I wouldn’t think that’s doing business with a client, you’re making some kind of exchange. Whether it’s that you’re charging them $1,000 and then giving them $1,000 back for a service they’re providing, I don’t consider that doing business with a client. I think that’s utilizing your clients for services, again, as an attorney, you have a responsibility in the best interests of your client. If somehow, you’re taking advantage of the client, then you have some other form of liability out there. But if it’s in the client’s best interest and it doesn’t hurt the client, and I would say it’s not an issue.

Joe Soricelli

Sometimes you have to just look at what was the value received, what was the value of the battery? Was it an evening exchange? Sometimes you have to look at a little bit more in detail, but there are a lot of professions that can’t bother their services.

Really a wonderful program, a wonderful start to our new season and Happy New Year to those who observe, and everybody should enjoy peace and health.

Very nice. Take care, everyone. And thank you, presenters. All right, I got one more minute, and then we’ll have our hour, and then we’re good. All right, thank you so much, guys, and it was a pleasure.

A fiduciary is any investment professional or financial advisor who is required by law and practice to act solely in their interests of and with undivided loyalty to their clients.

A fiduciary’s advice and recommendations must align with your specific objectives, timeframe and risk tolerance. When managing your assets, a fiduciary must strive for an optimal balance of risk and return.

That person must exercise care, skill, diligence, and objectivity in evaluating, recommending, and reviewing investment options.

Retirement Planning


Many investment stewards do not realize they are fiduciaries—and fewer still are truly aware of the full scope of their responsibilities—to act solely in the best interests of and with undivided loyalty to the plan or fund and its beneficiaries.


While the Practices are available to all advisors, only those who have earned the AIFA® Designation are formally recognized by the Center for demonstrating a full understanding of how to implement those processes to help institutional clients fulfill all their fiduciary obligations.

AIFA® Designees are able to use the knowledge and resources they have gained through their training to:

  • Evaluate your organization’s current fiduciary practices and recommend actions that address risk areas and help ensure compliance with applicable state and federal statutes and regulations
  • Create and maintain a comprehensive investment policy statement that documents all of the processes and procedures that will be used to manage your portfolio
  • Analyze and optimize your portfolio’s asset allocation strategy to better align with the plan or fund’s specific investment objective or the demographic needs to apply objective standards for evaluating and recommending appropriate investment options for your portfolio
  • Monitor and report the performance of your portfolio and its underlying investments on an ongoing basis and recommend changes, when necessary
  • Serve as a resource for education and assistance to help you understand and fulfill all your fiduciary obligations with greater confidence

In addition to providing fiduciary guidance and assistance, many AIFA® Designees also take on the fiduciary responsibility for managing assets in a retirement plan or endowment. That removes the burden of the day-to-day management of those assets from your shoulders.