August
2010
Trustee Investing
Since the introduction of The trustee Act 2000, trustees now have special duties relating to the service and admin of trust funds. The duty of care applies to professional and lay trustees. Even So higher standards are expected from professional trustees.
A legal duty of care is applicable to the trustee investments that are held. For existing and new trusts, the trustees must take into account the trusts objectives and the suitability of the investments to be held.
Trustees have a responsibility to protect the asset value of the trust fund, whilst providing income for the beneficiaries. It is fundamental for trustees to consider the suitability of the investments held, funding, the type of trust in place and the requirements of the beneficiaries.
A varied portfolio of assets should be used to meet the trusts unique targets.
This type of approach can help to reduce the risks within the trust investment funds by vesting across individual asset categories. It is critical to take into account risk any special prerequisites of the trustees. This could also include investing in an ethical or sociably responsible style.
Trustees have an administrative duty to review the assets held within the trust on a regular basis. This can be an endless and protracted process, particularly if the trust executives are not knowledgeable investors.
Trusts and Independent Financial Advice.
It is essential to seek unbiased and impartial advice on the assets held inside any form of trust arrangement. We continually advise existing and new trustees on acceptable asset allocation investment strategies.
Trustees often engage the investor services of a bank or stock-broker. Occasionally the service is not unique to the needs of the individual trust. A one size fits all philosophy may not take into consideration the personal needs of the trust. E.g., the prerequisites of a large educational trust could be different to a small family trust.
The costs to administer the investments are an important component. The admin costs charged by stockbrokers and banks for trust investment funds advice can be high. This will impact on the returns the trust can accomplish.
Our investing procedure takes into account the charges, as this is a recognized element when we advocate unique investment funds.
If as trustees you are looking at investing it is important to remember that the value of the trust investment and the income generated could possibly fall as well as rise. There is no guarantee you will get back more than you vested.
Consilium Asset Management are based in Chipping Sodbury and offer a unique Educational Trustee investment management service Education trusts.
