One advisor suggests giving up your role as financial advisor to take over a client's estate.
Playing executor to a client’s estate is typically prohibited for the financial advisor, but how about switching up your role, asks one BC advisor.
“Often the advisor is the best candidate in certain situations. So, what do you do?” commented Ken MacCoy of Rite Partner Financial Services in Chilliwack, BC, on the WP website.
“…immediately remove yourself as the servicing advisor PRIOR TO accepting the appointment as trustee or executor. If you're no longer the advisor, there can't be a conflict of interest,” he suggested.
MacCoy is speaking from experience, as he once did so himself. A client that MacCoy had been servicing for about a decade, passed away in 2011. Her children, who lived a great distance away from Chilliwack, in Northern BC, requested he become executor of the estate on their behalf. He decided to boycott his role as servicing agent for life policies, and take on the role as executor, avoiding a conflict of interest.
“They both asked me to do it ... because of the proximity and because I knew their mother really well. We had been good friends,” MacCoy told WP in an interview. “It cost me time from my business, but I saved both children lots of money. When all was said and done, everybody was pleased.”
Deemed a conflict of interest by IIROC under its Dealer Member Rule 43 , members are prohibited from acting as a power of attorney, trustee or executor. Doing so is considered “inappropriate conduct, a conflict of interest and a violation of the general business conduct standards,” unless the person is 'related' under the Canada’s income tax act by blood relationship, marriage, common-law or adoption. The MFDA takes a similar stance under MFDA rules 1.1.2 and 2.5.1.
Though MacCoy is neither a member of IIROC or MFDA, he agrees with this cautionary approach, saying that both sides should not be played at the same time. (continued.)
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“It would be a conflict of interest. It is double dipping if I was paid on the insurance or the investment side, and collecting money as a trustee or executor,” he said. “Let’s be honest, there’s too much going on these days. People are ripping off the public … and more often than not, they are people that are dealing with money.”
With that in mind, MacCoy recommends advisors considering making the leap over to executor or trustee, ensure that all their ducks are lined up before doing so. This includes, he says, establishing a legal agreement between you and the beneficiaries, seeking out proper legal representation and adequate coverage for your services.
“If you’re looking to make a couple of extra bucks, be careful what you wish for because there is an awful lot of time involved,” said MacCoy, adding that it took 2.5 years to settle the estate he took over. “If things are not done correctly, so the beneficiaries are happy, you are going to be taken to task.”
Would MacCoy take on the roles as executor again?
“It would depend on the circumstance,” he said.
“Often the advisor is the best candidate in certain situations. So, what do you do?” commented Ken MacCoy of Rite Partner Financial Services in Chilliwack, BC, on the WP website.
“…immediately remove yourself as the servicing advisor PRIOR TO accepting the appointment as trustee or executor. If you're no longer the advisor, there can't be a conflict of interest,” he suggested.
MacCoy is speaking from experience, as he once did so himself. A client that MacCoy had been servicing for about a decade, passed away in 2011. Her children, who lived a great distance away from Chilliwack, in Northern BC, requested he become executor of the estate on their behalf. He decided to boycott his role as servicing agent for life policies, and take on the role as executor, avoiding a conflict of interest.
“They both asked me to do it ... because of the proximity and because I knew their mother really well. We had been good friends,” MacCoy told WP in an interview. “It cost me time from my business, but I saved both children lots of money. When all was said and done, everybody was pleased.”
Deemed a conflict of interest by IIROC under its Dealer Member Rule 43 , members are prohibited from acting as a power of attorney, trustee or executor. Doing so is considered “inappropriate conduct, a conflict of interest and a violation of the general business conduct standards,” unless the person is 'related' under the Canada’s income tax act by blood relationship, marriage, common-law or adoption. The MFDA takes a similar stance under MFDA rules 1.1.2 and 2.5.1.
Though MacCoy is neither a member of IIROC or MFDA, he agrees with this cautionary approach, saying that both sides should not be played at the same time. (continued.)
#pb#
“It would be a conflict of interest. It is double dipping if I was paid on the insurance or the investment side, and collecting money as a trustee or executor,” he said. “Let’s be honest, there’s too much going on these days. People are ripping off the public … and more often than not, they are people that are dealing with money.”
With that in mind, MacCoy recommends advisors considering making the leap over to executor or trustee, ensure that all their ducks are lined up before doing so. This includes, he says, establishing a legal agreement between you and the beneficiaries, seeking out proper legal representation and adequate coverage for your services.
“If you’re looking to make a couple of extra bucks, be careful what you wish for because there is an awful lot of time involved,” said MacCoy, adding that it took 2.5 years to settle the estate he took over. “If things are not done correctly, so the beneficiaries are happy, you are going to be taken to task.”
Would MacCoy take on the roles as executor again?
“It would depend on the circumstance,” he said.
