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The True Role of the Trusted Advisor

Much has been written in recent years about the role of the "trusted advisor". A trusted advisor plays a key role in achieving client goals in their best interests and is worth their weight in gold. To do so, a trusted advisor needs to be able to provide clients with sound advice based on experience but also on the ethical dimensions of their decisions.

Providing good advice involves far more than simply carrying out client instructions. Lawyers should not be mere scribes or mouthpieces and tax advisors and accountants should not be mere number crunchers. A trusted advisor will advise their clients not only on the best way to implement their instructions, but also on the potential pitfalls and the ethical issues which could arise based on their practical experience and professional judgment, as well as encouraging and supporting their clients in making difficult decisions.

Unintended consequences can often result from a chosen course of action of which clients may not be aware, sometimes because they have no relevant first-hand experience to guide them.

For example, a client who has a second spouse and children from a previous relationship may wish to ensure that his or her spouse and children can receive some of the client's personal effects upon his or her death. There are, however, several different options available to the client to achieve this goal.

The client may think that a simple bequest in his or her will of personal effects to his or her spouse and children together as they agree is all that is needed. However, an experienced estate planner will likely advise the client that this approach is almost certainly bound to cause friction, if not disputes, between the spouse and the children when they attempt to determine who receives which specific items. Alternate methods of achieving the client's goal which are more likely to avoid disputes include a trust of the personal effects for the spouse's lifetime, specific bequests of items of importance to the spouse and children, setting down a "round robin" method to be used for choosing items, or having a third party involved in making the decision.

In this situation, the choice of executors will be critical to achieving the client's goals without disputes and options should be carefully considered for potential problems. Simply appointing the spouse with the children as executors, for example, could be a recipe for disaster. While this advice may be difficult for the client to hear, it will be invaluable in putting in place a plan which will not only fulfill the client's goals but avoid unexpected, unintended and unpleasant consequences for the client's family, which will almost certainly override any desire to "keep it simple".

It is also important for the advisor to ensure that ethical considerations are not compromised when assisting clients in achieving their goals. Ethical breaches can occur out of fear that the advisor's business will suffer if the client goes elsewhere should the advisor not "cooperate". Loyalty to clients can also result in unethical behaviour by an advisor, and while loyalty is fundamental to the relationship, blind obedience is not a requirement of loyalty. Further, a client is not well served in the long run by advisors who do not point out ethical issues or dilemmas inherent in the client's desired methods or stated goals. While the client may not at the time thank the professional for such advice, it needs to be given regardless in order to ensure the client's best interests are served and the trusted advisor's professional and ethical obligations fulfilled.

Trusted advisors are more important than ever in today's society. The increase in commercialism has many downsides, including that advice may be conflicted and not in the client's best interests. Advisors will need to do more to ensure they identify and eliminate such conflicts and maintain a high standard of professional and ethical conduct. And for those who aspire to be a trusted advisor, they will need to:

"... worry about what will enable the families they serve to get to the next generation in healthy, flourishing condition."

-Susannah Roth

[1] Family: The Compact Among Generations, by James E. Hughes, Jr. (2007: Bloomberg, New York), at page 241.

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.

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