When it comes to estate planning and wealth transfer, financial advisors have long been wary of professional trustees. That’s understandable, given that the management of an estate’s assets automatically pass from the advisor to the trustee upon the client’s death.

But times are changing, and there is a new spirit of co-operation. Advisors recognize that trustees can add value to the estate planning process, while trustees are adopting a less predatory approach.

Co-operation was the rule of thumb until Canada’s major trust companies were taken over by chartered banks in the 1990s, says Kevin Birch, a financial advisor and general partner with Edward Jones in Burlington, Ont. “The banks’ culture called for them to acquire new assets,” he says. “Whenever the trust divisions were called on to act as trustees, the management of a deceased client’s assets was taken over by the bank’s wealth-management arm.”

That created a conflict of interest for advisors who didn’t want to lose the clients’ assets but still recognized that a professional trustee’s involvement was appropriate.

Firms such as Toronto-based Legacy Private Trust were established to help fill the void. “Our only business is the provision of fiduciary services,” says the firm’s president, Robert Wilson. “Our goal is to work with, not compete against financial advisors.”

The conflicted relationship between advisors and professional trustees was costing the trust companies considerable business, says John Hamilton, president of Toronto-based Royal Trust Co. , which represents about 50% of Canada’s corporate trustee market.

“The institutional trust business was in decline for 10 to 12 years,” says Hamilton. Three years ago, Royal Trust introduced a new model that enabled the company to work more co-operatively with independent advisors.

“We no longer compete with financial advisors,” says Hamilton. “We work with them to augment the service proposition and enhance the customer’s experience.”

— JOANNE SOMMERS