Estate Professional — Financial Advisor

Instructions

Advise trustees and executors on when to engage a financial advisor for trust and estate assets, how to evaluate advisors, and how to ensure fiduciary-quality management.

When You Need a Financial Advisor

• Managing investment assets within a trust or estate during administration
• Rebalancing a decedent’s portfolio to align with trust purposes and beneficiary needs
• Creating an investment policy statement (IPS) for ongoing trust management
• Evaluating whether to retain or liquidate concentrated stock positions
• Coordinating asset allocation with distribution schedules and beneficiary timelines

Typical Costs

How to Find and Select

• Prefer fee-only fiduciaries — they are legally required to act in the client’s best interest
• CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst) designations
• NAPFA (National Association of Personal Financial Advisors) for fee-only advisors
• SEC or state investment advisor registration — verify via the SEC IAPD database
• Look for advisors with specific trust and estate management experience
• Referrals from the estate attorney or CPA carry weight

Questions to Ask

• “Are you a fiduciary at all times, and will you put that in writing?”
• “What is your experience managing trust assets specifically?”
• “How do you determine an appropriate investment strategy for a trust with multiple beneficiaries?”
• “What are your all-in costs including fund expenses?”
• “How do you coordinate with the trustee, CPA, and estate attorney?”
• “What is your approach to concentrated positions inherited from the decedent?”

Red Flags

• Commission-based compensation with no fiduciary obligation
• No specific trust or estate investment experience
• Recommends complex products (variable annuities, private placements) without clear justification
• Cannot explain the prudent investor rule as it applies to trustees
• Unwilling to provide a fee schedule in writing
• Does not ask about the trust document’s investment provisions

Working Effectively

• Share the trust document — it may contain investment restrictions or directives
• Establish an investment policy statement before making changes
• Coordinate tax-loss harvesting and capital gains with the CPA
• Review fees annually — negotiate as AUM grows
• Ensure the advisor understands trustee fiduciary duties, not just personal financial planning
• Request quarterly performance reports benchmarked against appropriate indices

Examples

Scenario: Trust holds $1.2M in brokerage assets with income and remainder beneficiaries. Action: Engage a fee-only fiduciary advisor with trust experience. Create an IPS balancing current income needs with remainder growth. Budget 0.5–1% AUM annually.

Scenario: Estate holds a concentrated stock position (40% of portfolio in one company). Action: Engage an advisor to develop a diversification strategy considering tax implications of liquidation. Coordinate with the CPA on capital gains timing.