Can You Keep Your Fidelity or Schwab Advisor When You Hire a Corporate Trustee?

For many families considering a corporate trustee, one concern comes up almost immediately:

Will I have to change my financial advisor?

If you have spent years working with an advisor at Fidelity, Schwab, or another financial firm, the prospect of hiring a corporate trustee may raise concerns that your investment relationship will also need to change.

The good news is that hiring a corporate trustee does not necessarily mean giving up your existing financial advisor.

Depending on how the trust is structured and the corporate trustee you select, investment management and trust administration can remain separate. That allows families to benefit from professional trust administration while preserving an investment relationship they already know and trust.

Why Do Some Corporate Trustees Want to Manage the Investments?

Traditionally, many corporate trustees operated under a bundled model. The institution served as trustee while also managing the trust’s investment portfolio.

For some families, that arrangement can be convenient. One institution handles both investment management and trust administration.

But it may not be the right fit for someone who already has an established advisor.

Your financial advisor may have worked with your family for years or even decades. They may understand your investment philosophy, risk tolerance, concentrated positions, business interests, retirement strategy, and broader financial objectives.

Appointing a corporate trustee does not necessarily mean you want to replace that expertise.

The key is choosing a trustee whose business model allows those two relationships to coexist.

How Can a Financial Advisor and Corporate Trustee Work Together?

Trust administration and investment management are different responsibilities.

Your financial advisor generally focuses on the investment portfolio, including investment strategy, asset allocation, risk management, and ongoing portfolio decisions.

The corporate trustee focuses on administering the trust. Depending on the trust agreement, those responsibilities may include:

• Maintaining trust records and accountings
• Coordinating tax reporting
• Processing distributions
• Communicating with beneficiaries
• Reviewing and maintaining trust documentation
• Coordinating with attorneys, accountants, and other advisors
• Carrying out the trustee’s applicable fiduciary responsibilities

A trust can be structured so that these responsibilities are divided rather than concentrated with one institution.

How Does a Directed Trust Help You Keep Your Advisor?

A directed trust is one way to accomplish this separation.

In a directed trust, certain responsibilities traditionally held by the trustee are assigned to another individual or entity. Investment authority, for example, may be assigned to a designated investment advisor, while the corporate trustee remains responsible for the administrative duties assigned to it under the trust agreement.

This can allow the family’s existing investment professional to continue managing the portfolio while the corporate trustee provides professional trust administration.

For families who value their existing advisor relationship, that can be an important advantage.

What About a Delegated Trust?

A delegated trust provides another potential structure.

In a delegated arrangement, the trustee delegates investment management to an outside investment advisor while retaining the oversight responsibilities required under the governing trust and applicable law.

The distinction between directed and delegated trusts is important because the responsibilities and potential liability of each party are different.

But from the family’s perspective, both structures can address a similar concern: adding professional trust administration does not always require replacing the investment professional already serving the family.

An estate planning attorney and prospective trustee can help determine which structure is appropriate based on the trust document, applicable law, and the family’s objectives.

What If Your Advisor Is With Fidelity or Schwab?

If you work with an advisor whose practice uses Fidelity, Schwab, or another custodian or investment platform, ask the prospective corporate trustee how it approaches outside investment relationships.

Questions worth asking include:

• Can my existing financial advisor continue managing the trust investments?
• Does your firm require investment management to move in-house?
• Do you administer directed or delegated trusts?
• How will you communicate and coordinate with my advisor?
• How are investment directions handled?
• Are there operational or custody requirements we should understand before establishing the trust?

These questions can help identify potential issues before the trustee is appointed.

Why Separating the Two Roles Can Be Valuable

Keeping investment management and trust administration separate is about more than preserving a familiar relationship.

It allows families to choose professionals based on their specific expertise.

If you believe your financial advisor is the right person to manage your investments, you can select that advisor based on investment capabilities and your existing relationship.

You can then evaluate a corporate trustee based on an entirely different set of criteria: fiduciary experience, trust administration capabilities, responsiveness, recordkeeping, beneficiary service, and long-term continuity.

The family does not have to choose one institution simply because it bundles both services together.

How Independent Trust Company Can Help

Independent Trust Company is an independent corporate trustee focused on trust administration. Our model is designed to work collaboratively with financial advisors rather than replace them.

ITC administers directed and delegated trusts that can allow families to maintain existing investment relationships when appropriate for the trust structure. For families that have spent years building confidence in their financial advisor, the right trust structure can provide professional trust administration while helping preserve a relationship that is already working well.