As advisors, our relationships with clients often span
decades, seeing them through life's most significant milestones. Two of the
most challenging events we must be prepared to handle are a client's death or a
decline in their capacity to make sound financial decisions. Your professional,
diligent, and swift response in these situations is essential to protect your
client's legacy, their assets, and the firm.
Upon learning of a client's passing, your first and most
critical responsibility is to secure their assets and halt all transactional
activity. This process begins the moment you receive notice, whether it comes
from a formal announcement or an informal phone call from a family member. Your
first step is to immediately notify the Compliance Department and document how
and when you learned the news.
From there, the Compliance department will orchestrate the
formal process, beginning with instructing the Custodian to restrict all
affected accounts from any trading or disbursements. While non-transactional
oversight may continue, no new instructions can be accepted or executed. Your
role will be to act as a professional liaison, providing the client's family or
their attorney with a list of the legal documentation required to re-establish
authority over the account, such as a death certificate and letters
testamentary.
The Compliance Department will review all submitted legal
documents to ensure they are complete. Only when authority is formally
established and accepted by the custodian can the account restriction be
lifted. It is critical to understand that the client's passing renders the original
advisory agreement null. Therefore, before providing any new advice, you must
engage the executor, trustee, or heir with a new advisory agreement; in many
cases, this will also require establishing a new account in the name of the
estate or trust. Until this official process is complete and a new agreement is
in place, you must not provide advice or accept trading instructions from any
party.
To summarize:
- Immediately notify the Compliance Department & the proper custodian
- Do not place or accept any trades or disbursement instructions.
- Assist the legal person in charge to re-establish account authority which might include opening of proper accounts
- Maintain diligent, and timely communication throughout, and document all actions and communications.
Please see the Policy and Procedure Manual for the full policy.