The Trustee’s Challenge

Trustees face a difficult challenge. The normal complexities of managing an investment portfolio are compounded by fiduciary duties. Trustees must:

• Provide appropriate distributions to income beneficiaries;

• Avoid compromising growth of principal, so as to fulfill trust obligations to remaindermen;

• Document compliance both with requirements of the trust instrument and with state and federal law.

Many financial firms are eager to help. But delegating investment duties is itself a matter of fiduciary discretion, and therefore subject to standards of prudence. Rigorous due diligence is required. What should you delegate? What costs are reasonable? How should you evaluate competing vendors? How many of them are in a position to offer truly disinterested advice?

Schultz Collins Lawson Chambers, Inc., is an independent consulting and investment advisory firm. As investment counsel [1], we offer co-fiduciary support for the many investment issues trustees confront. Because we don’t represent any product or service provider, our advice is objective, unbiased, and intended only to help you discharge your fiduciary responsibilities.

• Investment Policy [2]: We develop a written Investment Policy Statement for each client. As the governing document for the trust portfolio, the Investment Policy Statement specifies target asset allocation, risk/return objectives, protocols and procedures for asset management.

• Financial Analysis [3]: We analyze both individual trust assets, to test their suitability, and the portfolio as a whole, to gauge the probability it will meet its spending and wealth accumulation objectives.

• Liability Mitigation [4]: We establish, execute and document prudent procedures for portfolio decisions, and provide a legal and economic rationale for portfolio policies.

• Performance Monitoring [5]: At least annually, we evaluate trust asset performance.

• Portfolio Sufficiency [6]: Over time, we regularly and systematically test the likelihood that the current value of the portfolio - which naturally fluctuates unpredictably with changes in the capital markets - will continue to support trust distribution policy, so that minor adjustments may be made on a timely basis, thus avoiding large and unpleasant surprises down the road.

Download our Trusts, Endowments & Foundations color brochure [7] in pdf format.