Individual or corporate trustee: Five things to consider before committing

John_SolomonJohn SolomonExecutive Vice President, Wealth Advisory

When establishing a trust, many people name a family member or friend to serve as trustee instead of appointing a corporate trustee to save the trust money. While it is an honor to be so named, this is a leadership position that plays a powerful role in managing a family’s wealth. Understanding that saving money is significant, it is important to fully explore both corporate and individual trustees to determine the most appropriate option for the trust.


Individual trustees often have broad powers, a good deal of responsibility, and, in turn, accountability. Trustees must interpret and follow the terms of the trust agreement, oversee the asset management of the funds held in trust, make distributions from the assets, keep records, and do the necessary tax reporting. Here are five things the job description might not tell you, but are important to know:

  1. Fiduciary first. Trustees have what is called a fiduciary responsibility. What that means is that as trustee, you are legally bound to fulfill your duty of putting the benefactor’s welfare first when carrying out the settlor’s (the person who created the trust) wishes. In carrying out your duties, individuals must work to remain impartial and not let emotions cloud any judgment. In instances where this becomes too difficult a task, a corporate trustee may be the right choice.
  2. Managing the bottom line. One of a trustee’s key responsibilities is to manage the assets in the trust. This duty requires ongoing portfolio monitoring and responding to market conditions to ensure that the trust assets are managed in accordance with its investment objectives. Investment allocation decisions must be made in light of the changing needs of the beneficiaries, and the asset managers require ongoing oversight. A corporate trustee can assist by representing the collective interests of investors and ensure the company offering the investment complies with the trust deed.
  3. Mistakes can be costly. A beneficiary could challenge any and all of a trustee’s decisions, from the allocation decisions made, to the investment losses the trust incurs. Many trust agreements have language that attempts to protect the trustee from liability except for cases of gross negligence or willful misconduct. A corporate trustee administers trusts under the supervision of bank regulators. While individual trustees are expected to fulfill the same duties, they are not generally subject to regulatory scrutiny or accountable to regulators to the same degree.
  4. You may need help. Due to the complexities and requirements of trusts, often individuals must hire outside professionals, such as Trust Companies, to assist in carrying out the trust terms. Professional trustees can be added at any time to serve as co-trustee along with you. Combining the services of a corporate trustee with the personal connection of an individual trustee can help to provide peace of mind. In this situation, the responsibilities of each of the co-trustees should be clearly outlined in the trust document.
  5. It’s not entirely thankless. You are entitled to compensation. Typically, trustees are given a trustee fee in connection with the performance of their duties. The fee arrangement varies depending upon the state fee schedules for trustees and the terms of the trust. Professional corporate trustees typically charge approximately one percent of the total net worth of the estate. While this expense initially may appear greater than those of an individual trustee, the individual trustee may need to utilize the services of an investment manager, tax accountant and other professionals to fulfill trustee duties, which could add to overall expenses.

By enlisting the services of a corporate trustee, the trust would benefit from the continuity, prudence and expertise that a professional organization can provide. A corporate trustee brings experience in trusts and investments, accounting, record keeping and trust laws that an individual may not possess. In addition, a corporate trustee offers unbiased decision making that may be difficult for an individual trustee that has been appointed by the family.

To help decide which corporate trustee is appropriate, you may consider engaging in some of the services that are offered through investment management firms that have relationships with a wide array of organizations. Brinker Capital Wealth Advisory works with business owners, individual investors and institutions with assets of at least $2 million and has partnerships with firms that can assist with corporate trusts.

To learn more about Brinker Capital, a 30 year old firm following a disciplined, multi-asset class approach to building portfolios, and an overview of the services available through Wealth Advisory, click here.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

Avoiding retirement regrets

cook_headshotPaul Cook, AIF®, Vice President and Regional Director, Retirement Plan Services

Owning up to mistakes and admitting to missed opportunities may be cathartic, but it sure isn’t pleasant. Unfortunately, most older Americans have financial regrets. Per a recent survey, not saving for retirement early enough was the biggest regret of retirees. Not saving enough for emergency expenses (13%), taking on too much debt (student loan and credit card debt each at 9%), and buying a bigger house than was affordable (3%) were among the other regrets expressed in the survey.[1] While not uncommon, investment regrets pose unique challenges because the ability to recover can be limited by both time and opportunity.

Investor regret typically takes two forms:

Regret of action is the sinking feeling you get when you did something you shouldn’t have like investing in a stock tip you overheard while waiting in line at Starbucks.

Regret of inaction refers to something you wish you had done, like buying long-term care insurance for your mother a decade ago.

In a landmark study[2], Thomas Gilovich and Victoria Husted Medvec discovered that misguided actions generate more regret in the short term; but failure to act produces more remorse in the long run. You can, however, make bold financial moves today to avoid both short and long-term regrets in the future.

No matter where you fall on the financial spectrum, consider these regret-management moves:

  • Invest for the future today, again tomorrow, and again the next day. While two-thirds of U.S. employees are saving for retirement, according to the 2015 Retirement Confidence Survey conducted by the Employee Benefit Research Institute, their efforts fall short. You’ll never get this time back, so if you haven’t started saving for the future, then delay no more. The longer you invest money, the more time it has to grow.
  • Don’t confuse risk and volatility. Risk is the likelihood that you will not have the money you need when you need it to live the life you want. Paper losses are not “risk,” and neither are the fluctuations of a volatile market.
  • Measure progress against your goals, not industry benchmarks. As Chuck Widger and Dr. Daniel Crosby point out in The New York Times best-selling book, Personal Benchmark: Integrating Behavior Finance and Investment Management, by measuring performance relative to the specifics of our lives and the goals we have set, rather than vague generalities, we can become an expert in the “Economy of One.”
  • Infuse discipline into your investment strategy. There are several steps you can take to help make saving more of a habit, such as establishing automatic transfers from your bank account to your brokerage account.
  • Become a savvy investor. Even if you have a skilled advisor or your partner handles the family’s investments, you should have a baseline understanding of how investments work and the different characteristics and performance expectations for each asset class in your portfolio.
  • Get in touch with your emotional side. Most investors think that the strongest links to performance are timing and returns, but an investor’s behavior also plays a significant role. Over the last 20 years, the market has returned roughly 8.25% a year, but poor investment behavior has caused the average retail investor to gain only 4%.[3]
  • Control the controllable, not the markets. Do not try to predict or master the markets. Instead, focus on controlling the behaviors that negatively impact results, like impatient or impulsive investment decisions and overspending.
  • Work with an advisor. A trusted advisor will help you articulate your goals and design a portfolio to help you reach those goals while managing market volatility. But, your advisor’s value doesn’t end there … in fact, one of the most valuable things your advisor can do for you is to provide behavioral coaching along the way. Research has found that when an advisor applies behavioral coaching, performance increases from 2-3% per year.[4]

For over 10 years, Brinker Capital Retirement Plan Services has worked with advisors to offer plan sponsors the solutions to help participants reach their retirement goals.  When plan sponsors appoint Brinker Capital as the ERISA 3(38) investment manager, this allows them to transfer fiduciary responsibility for the selection and management of their investments so they can focus on the best interests of their employees. This fiduciary responsibility is something that Brinker Capital has acknowledged, in writing, since our founding in 1987.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

[1], December, 2016

[2] The Experience of Regret: What, When, and Why.

[3] Dalbar, Inc., Quantitative Analysis of Investor Behavior. Boston: Dalbar, 2015.

[4] 10 Surefire Ways to Ruin Your Financial Future, Dr. Daniel Crosby.