It is common for master preneed trusts to have investments directed by an independent fund manager. The pooling of smaller trusts allows funeral directors to achieve the critical mass needed to engage professional asset management. When investment functions are delegated, the trustee typically wants to be relieved of the supervision and liabilities that accompany those
manager
Missouri and the Investment Advisor: A Chinese Wall
By Bill Stalter on
Among the rule proposals suggested by the Division of Professional Registration to the State Board of Embalmers and Funeral Directors was the following definition of “External Investment Advisor”:
any licensed, qualified investment advisor approved and authorized by the trustee of the preneed trust and who holds no personal interest in any assets of the preneed …
The Wulf Conviction: Defining a New Fiduciary Standard for Fund Managers?
By Bill Stalter on
Posted in Master Trusts, Preneed
The jury did not buy the Wulf defense, and now the former NPS fund manager faces a much, much longer prison term than Doug Cassity. To get a better understanding of the positions taken by the prosecution and the defense, we will seek briefs and jury instructions. However, the US Attorney’s press release gives some…
The NPS Criminal Trial: Vicarious Liability?
By Bill Stalter on
David Wulf may stand alone in the crosshairs of the criminal prosecutors, but his fate will impact the NPS preneed trustees (and possibly other registered investment advisors who manage death care funds).
Mr. Wulf had a situation that is unique from what existed in Illinois, Wisconsin, and Tennessee, but is familiar to other death care…
Coming This August: The Nuremberg Trial
By Bill Stalter on
Posted in NPS/Lincoln
Once again, I have spoken too quickly.
After lamenting to the Memorial Business Journal that the NPS plea bargains will deprive consumers and the industry the opportunity to hear how Doug and his crew perpetrated so many frauds, the sole remaining NPS defendant may grant my wish. As the Funeral Service Insider reports that Herr…
Michigan’s Plan: Target Date Investment Strategy
By Bill Stalter on
I stand corrected.
A representative of the Michigan Funeral Directors Association advises that their request for proposal for a new investment advisor for the master trust has resulted in the selection of a firm that will not only assume a true fiduciary relationship to funeral directors and consumers, but that will also guide the Association…
Master Trusts: Finding the Rails
By Bill Stalter on
Posted in Fiduciary, Guaranteed, IFDA, Master Trusts, Missouri - SB1, Non-guaranteed, Preneed, Trust Funded
Both the Memorial Business Journal and the Funeral Service Insider commented last week on the Milwaukee Journal Sentinel’s February 7th article regarding the former executive director of the Wisconsin Funeral Directors Association. Several issues were raised that should be included in future industry debate, and in particular, I would agree with Mr. Isard’s questions whether…
A False Sense of Security: the hold harmless for investment oversight
By Bill Stalter on
We previously discussed how the funeral home or cemetery assumes most of a preneed trust’s investment risk when selling a guaranteed preneed contract, and therefore should be afforded a role in the trust’s investment decisions (Fund Managers: Is Your O&E Coverage Current?). But in that same post, we were careful to point out…
Preneed Fund Manager: Is your O&E coverage current?
By Bill Stalter on
Many state preneed regulators share the point of view that the payments made toward a preneed contract belong to the consumer until the prearranged funeral is provided. This perspective was adopted by the California Attorney General in its Eighth Cause of Action brought against the California Funeral Directors Association and its Master Trust. The AG…
Regulating out of context: Missouri and investment advisors
By Bill Stalter on
Posted in Missouri - SB1
Over the next year, Missouri will examine the various flaws of SB1. One of those flaws concerns the independent investment advisor and the ‘fix’ meant to preclude conflicts of interest.
Preneed trusts have a poor track record in terms of investment performance. Trustees often fail to appreciate the key factors that impact investment strategies for…