The “Settlor” Appointed Investment Advisor

Direct investments by appointing an IA

The Trust Investment Advisor or IA is by far the most challenging of all roles to have in a fiduciary relationship. The IA of an Asset Protection Trust (APT), is tasked with the very important  function of growing and perpetuating the trust fund on behalf of the beneficiaries. Once the investment suitability has been determined, the IA has the meticulous task of formulating an Investment Objective Setting and Bench Mark for the trust.

As referred to in the APT post, the investment component of an APT is usually part of the discretionary mandate of the trustee. However, due to the dynamic benefits of an APT, the investment component can be removed from the trustee and placed in the hands of a trust IA. This person has the ability to direct the trustee in regard to investments. With that being said, the other discretionary features of the APT still remain in tact. I.e. Distributions of income and capital as well as the trust period.

In most cases, the IA is located in a jurisdiction which is NOT the same as the settlor. This feature protects the integrity of the trust by eliminating any uncertainty as to the mind and management of the trust.

Last but not least, the IA should be qualified. Once an IA is appointed, the trustee will typically rely on language that fully indemnifies them against loss.

Is control of the investment piece crucial to your decision to go discretionary or directed? Have you considered the cost of appointing a professional IA as an alternative to a discretionary manager or fund?