Page 46 - February 20, 2025 Bulletin

BUSINESS PARTNERfeature article

Svitlana Keeney

Compliance Office
Compliance Hub

While some believe that fiduciary trust services and wealth • Legal Responsibility: Fiduciary duty is a legal standard. For
management services are often thought to overlap, they are based example, trustees, executors, and advisors in fiduciary roles
on distinct differences and serve different purposes. To elaborate, are legally bound to act in a way that benefits the trust or the
wealth management services are designed to address a client’s all- individual they serve.
encompassing financial health, including aspects such as retirement • Focus on Long-Term Interests: Fiduciaries are often involved
planning, tax efficient strategies, asset allocation, risk management, in managing assets that are held in trust, with a focus on
and investment advice. It targets financial growth and preservation preserving and growing the assets for the beneficiaries over a
of wealth over the long term while adapting to the client's changing lengthy period.
financial needs. • Conservative Approach: Given the legal responsibilities and
On the other hand, fiduciary trust services are much narrower in duty to protect the client’s interests, fiduciary trust services tend
focus, concentrating on asset management and placement within a to take a more conservative approach to investing and asset
legal trust. Fiduciary trust services are tailored to safeguard assets, management.
maintain the integrity of the trust, and ensure that the intent of the Wealth Management Services:
grantor is fulfilled with a clear focus on long-term responsibility. Trust
management ensures that the assets are adequately administered, the • Comprehensive Financial Planning: Services are more
terms of the trust are adhered to, and the distribution to beneficiaries holistic in nature, often encompassing not just investment
occurs as intended. While wealth management addresses a wider management, but also tax planning, estate planning, retirement
more complex scope of financial planning, fiduciary trust services are planning, and even lifestyle management.
more of a specialized mechanism within that broader framework. • Client-Centered Approach: Wealth managers typically focus
A large Financial Institution (FI) may establish a wealth management on understanding the client’s overall financial situation and
group consisting of several interlocking divisions, branches, goals, tailoring solutions to help clients achieve those objectives.
subsidiaries, and affiliates that provide a broad range of tailored While wealth managers can be fiduciaries, they do not always
financial products and services on a greater scale. A small FI, such as operate under the same strict legal framework as fiduciaries.
a community bank, may simply operate a separate “Trust” division • Investment Focus: Services often emphasize investment
or department that provides traditional fiduciary services and may management, with the goal of maximizing returns based on the
also provide access to retail brokerage services through an affiliated client’s risk tolerance and financial objectives.
or unaffiliated third-party firm located within the bank’s branch
network. • Broader Service Scope: Wealth managers often provide a range
of services beyond investment, such as business succession
Let’s take a closer look at the basic principles of each to clarify the planning, philanthropic strategies, and asset protection
differences: strategies.
Fiduciary Trust Services: Key Differences:
• Duty of Care: A fiduciary is legally obligated to act in the • Fiduciary Duty: Fiduciary trust services have a legal obligation
best interests of their client. This means prioritizing the to always act in the client’s best interest, while wealth
client’s needs over their own, avoiding conflicts of interest, management services may not always operate under the same
and ensuring all decisions are made with the utmost care and legal obligation.
diligence.

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