Playing executor to a client’s estate is typically prohibited for the financial advisor, but how about switching up your role, asks one BC advisor.
“Often the advisor is the best candidate in certain situations. So, what do you do?” commented Ken MacCoy of Rite Partner Financial Services in Chilliwack, BC, on the WP website.
“…immediately remove yourself as the servicing advisor PRIOR TO accepting the appointment as trustee or executor. If you're no longer the advisor, there can't be a conflict of interest,” he suggested.
MacCoy is speaking from experience, as he once did so himself. A client that MacCoy had been servicing for about a decade, passed away in 2011. Her children, who lived a great distance away from Chilliwack, in Northern BC, requested he become executor of the estate on their behalf. He decided to boycott his role as servicing agent for life policies, and take on the role as executor, avoiding a conflict of interest.
“They both asked me to do it ... because of the proximity and because I knew their mother really well. We had been good friends,” MacCoy told WP in an interview. “It cost me time from my business, but I saved both children lots of money. When all was said and done, everybody was pleased.”
Deemed a conflict of interest by IIROC under its Dealer Member Rule 43
, members are prohibited from acting as a power of attorney, trustee or executor. Doing so is considered “inappropriate conduct, a conflict of interest and a violation of the general business conduct standards,” unless the person is 'related' under the Canada’s income tax act by blood relationship, marriage, common-law or adoption. The MFDA takes a similar stance under MFDA rules 1.1.2
Though MacCoy is neither a member of IIROC or MFDA, he agrees with this cautionary approach, saying that both sides should not be played at the same time. (continued.)