Corporate Fiduciary
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Diane E.R. Johnstone,
Senior Vice President and Trust Officer |
Dear Salisbury Bank Trust Officer
:
I understand that you are a "corporate fiduciary." What is that exactly? Aren't you just a different flavor of stockbroker or financial planner?
SHOPPING FOR ADVICE
DEAR SHOPPING:
"Fiduciary" is a legal term that describes the duties that one party owes to another in a business relationship.
A fiduciary duty is the highest duty of care in the law and has been a standard element of trust practice for decades. There are many elements to fiduciary duties, but perhaps the most important is the duty of loyalty, to put the interests of the client ahead of one's own interests.
A "corporate fiduciary" is a business entity, such as ours, that has been granted permission by the state to act in a fiduciary capacity. We can serve as trustee, and we can settle estates. In this capacity, we are subject to a wide range of audit controls and government regulatory supervision.
Most stockbrokers are not fiduciaries, and many financial planners have resisted moves to upgrade their client relationships to fiduciary status. Thus, we are different from these sorts of advisors in a way that can have legal consequences.
One example of this difference: We are compensated for our services with a fee that varies with the size of the account under management. We do not earn more based upon the transactions that we generate or the type of service that we recommend. Our interests are, therefore, always aligned with the interests of our clients.
We prosper when they do.
When we act as trustee, our investment decisions must be responsive to the needs of both current and future beneficiaries. This is not an ordinary perspective to have for portfolio management. Our approach cannot be risk free, but it does tend to be risk averse.
Diane E.R. Johnstone, Senior Vice President and Trust Officer
Do you have a question concerning wealth management or trusts?
Please contact me Banker@salisburybank.com.
© 2008 M.A. Co. All rights reserved.
This information is provided for informational purposes only and does not constitute tax or legal advice. Always refer to your tax advisor for guidance for your particular situation. Opinions expressed herein are subject to change without notice. Information has been obtained from sources believed to be reliable, but its accuracy and interpretation are not guaranteed.