Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘Fiduciary’

Conflict of Interest: Sole interest or Best Interest

Posted by William Byrnes on March 17, 2014


by Roland Ortiz

One of the most fundamental tools for estate planners, either professional or individuals, is a trust.    Specifically, an inter vivos trust which is a legal arrangement by which property under state law can be transferred by a grantor to a trustee for management and stewardship.  Typically used to transfer grantor assets away from their gross estate, while allowing beneficiaries the benefit of life income, distribution of grantor’s assets or both.  This benefit begins and ends with a trustee’s administration of all assets in the trust.

When accepting this position, the trustee must adhere to the trust provisions and the Uniform Trust Code when evaluating investments, distributions, as well as the termination of the trust.  These provisions and codes are the guidelines for the trustee to administer the trust with fidelity and prudence.  For a trustee, duty of loyalty and good faith for the betterment of the beneficiaries are the cornerstones by which their position exists.

Read the full article at http://www.advisorfyi.com/2014/02/conflict-of-interest-sole-interest-or-best-interest/

Roland Ortiz currently provides clients with evaluations on fixed income trading, derivative trading, security trading, accounting, and portfolio valuations.  You can reach him at:  www.linkedin.com/pub/roland-ortiz/27/622/806/

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SEC comments muddy the waters in fiduciary standard debate

Posted by William Byrnes on July 29, 2013


The debate over the fiduciary standard that will become applicable to many financial professionals may be coming to a head as the looming deadline for comments on SEC proposals has motivated some advisors to express disapproval over a perceived weakening of the potential standard. Because a heightened fiduciary standard could increase advisors’ compliance costs, while simultaneously increasing consumer confidence in the quality of their advice, it is critical that advisors know the rules of the game.

Recent indications that the SEC may deviate from its previously expressed intent to expand the traditional standard applicable to investment advisors, however, represent a curveball for advisors who are not currently subject to a strict fiduciary standard; the outcome once again seems up for grabs.

Today’s bifurcated approach to fiduciary regulation

read the full analysis at LifeHealthPro – http://www.lifehealthpro.com/2013/07/01/sec-comments-muddy-the-waters-in-fiduciary-standar

 

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Do Your Clients’ International Assets Create Criminal Tax Exposure?

Posted by William Byrnes on August 12, 2011


Retirement plan sponsors face increasing regulatory scrutiny and significant liability as plan fiduciaries. Can you leverage off these fiduciary concerns and generate advisory business for your firm?

There are a couple of key approaches you can use to address sponsors’ concerns about their fiduciary responsibilities and sell to the plans and their sponsors.

Believe it or not, there are a number of plans that don’t use an advisor—with the plan sponsor choosing to go it alone to save a few dollars. As reported in a previous edition of the Advisor’s Journal, a significant of number of employee retirement plans (19%) don’t use an outside investment advisor.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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SEC Unprepared to Implement the Fiduciary Standard for Broker-Dealers

Posted by William Byrnes on March 28, 2011


Broker-dealers will be subject to a fiduciary standard of care no earlier than the second half of 2012, predicts Richard Ketchum, Chairman and CEO of the Financial Industry Regulatory Authority (“FINRA”).  Mr. Ketchum’s remarks come a week after SEC chairman Mary Schapiro said that the SEC has “a lot of work to do” before putting “pen to paper” and writing the fiduciary standard rules.

Causes of the delay were hinted at by a pair of reports issued by the SEC last month, one of which concluded that broker-dealers and registered investment advisers (“RIA”) should be subject to the same fiduciary standard of care. The other report provided recommendations for improving the examination of investment advisors, concluding that a Self-Regulatory Organization (“SRO”) should be appointed to conduct examinations of investment advisors. An SRO is a private organization that is granted some regulatory authority over a particular industry. SROs are typically funded by member user fees.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the fiduciary standard in Advisor’s Journal, see SEC Fiduciary Standard Study Answers Few Questions (CC 11-25)Study Finds that Universal Fiduciary Standard Will Hurt Investors (CC 10-97) and What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10 40)

Your questions and comments are always welcome. Please post them below or call the Panel of Experts.

 

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Advisor/Trustee Ends Up Responsible for a Trust’s Tax Bill?

Posted by William Byrnes on March 19, 2011


You’d better think twice before agreeing to act as trustee for your clients’ trusts, since doing so can cost you far more than the goodwill and fees it generates.

We all know that, depending on the circumstances, a trust, its grantor, or its beneficiaries can be held responsible for tax liability stemming from trust income.

What about its trustee?

Although trustees are not usually personally responsible for a trust’s taxes, a trustee can be stuck with the tax bill if the trustee breaches his or her fiduciary duty to the beneficiaries. A U.S. District Court recently considered a trustee’s liability for GST taxes when the trust’s beneficiaries claimed that the trustee failed to keep them informed of their potential liability for taxes stemming from trust distributions.

The trustees’ mistake in this case could cost them over $1 million.  Read the full analysis by linking to AdvisorFX!

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SEC Fiduciary Standard Study Answers Few Questions

Posted by William Byrnes on March 13, 2011


The SEC has finally released its anxiously awaited study of whether a fiduciary standard of care should be applied to broker-dealers; but, like the study on adviser examinations, the report leaves as many questions as it answers. The fiduciary standard study recommends that brokers be held to the same standard as register investment advisers (RIAs).  Although the study doesn’t provide details on how the switch to the fiduciary standard will be implemented, there are hints as to what brokers can expect.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the fiduciary standard in Advisor’s Journal, see Study Finds that Universal Fiduciary Standard Will Hurt Investors (CC 10-97) and What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10 40).  Comments are welcome below.

 

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SEC Approves FINRA Suitability and Know-Your-Customer Rules

Posted by William Byrnes on February 26, 2011


The SEC recently approved FINRA proposed rules—FINRA Rules 2090 and 2011—that amend and consolidate know-your-customer and suitability obligations for broker-dealers and their authorized representatives.  The new rules are based on, and replace in-part, similar NYSE and NASD rules. According to FINRA, the amended know-your-customer and suitability rules are intended to protect investors by “promoting fair dealing with customers and ethical sales practices.”

The new rules are effective as of October 7, 2011.  For previous coverage of the suitability standard and the debate over the proposed fiduciary standard in Advisor’s Journal, see What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10-40) and Study Finds that Universal Fiduciary Standard Will Hurt Investors (CC 10-97).

Under the know-your-customer rule, firms are required to use reasonable diligence respecting the opening and maintenance of every account and to know essential facts about every customer. “Essential facts” are facts required to …. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

 

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Study Finds that Universal Fiduciary Standard Will Hurt Investors

Posted by William Byrnes on December 6, 2010


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The Wall Street Reform Act1—signed into law by President Obama on July 21, 2010— grants the SEC the power to impose a fiduciary duty on broker-dealers. Although the SEC has not yet moved to apply the fiduciary standard—already applicable to registered investment advisors—to broker-dealers, both sides of the argument have made their voices heard, commissioning studies and sending volleys of comments to the SEC.

Holding broker-dealers to a higher standard would seem, at first glance, to be a positive for their customers.  But a November 1, 2010, Securities Industry and Financial Markets Association (SIFMA) commissioned study calls into question whether applying a fiduciary standard of conduct to all brokerage activities would help investors.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the fiduciary standard of conduct in Advisor’s Journal, see What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10 40).

We invite your questions and comments by posting them below or by calling the Panel of Experts.

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