Trusts

  • When trusts have been in existence for a period of time, Trustees may not be aware of the fees being charged by investment managers. It is a best practices policy to review the fee arrangements for trust investment accounts on an annual basis to see if the fees still make sense. The market changes dramatically, and what once was a fair fee arrangement may no longer be so today. It may be prudent from time to time to renegotiate fees that are not in line with current market rates.

  • If an account has incentive fees, it is critical to monitor when and how these fees are being paid. If there is a high water mark for incentive fees (which means losses must be made up before fees are charged), then it is important to make sure that fees are being correctly calculated. It is important to understand all the fees that are being charged, from custody fees to investment management fees to incentive fees. There may also be trading costs, other transaction fees and then fees in underlying investment funds. For large and complex trusts with multiple managers, it is important that fees are independently checked and verified periodically by accounting professionals to make sure they are being charged properly.