Professional fiduciaries provide vital services
ďThe San Jose Mercury News has unfairly attacked the professional fiduciary profession,Ē says Michael Gray, CPA. He explains the vital role of these professionals.
Professional fiduciaries are a relatively new profession in California. They have established their own organization, the Professional Fiduciaries Association of California (PFAC) to promote high standards of practice and continuing education for its members. They have also initiated legislation establishing regulation through the California Department of Consumer Affairs.
The San Jose Mercury News has recently run a series of articles criticizing professional fiduciaries for excessive fees.
A fiduciary acts as an executor, administrator, trustee or conservator for an individual. That means they have to act in that personís place to manage their finances and their personal care. Itís an awesome responsibility. The fiduciary is required to account for every dollar that they receive and every dollar that they pay from the clientís funds on behalf of the client. The fiduciary is required to place the interests of the client first, for which the fiduciary is compensated with fees. The hourly rates of the fees are comparable to those of other professionals, such as CPAs and attorneys.
For court-supervised accounts, the judge reviews the fees for reasonableness and approves or disapproves them for payment.
In some communities, ceilings have been adopted to limit the compensation of professional fiduciaries. The limitations have been so onerous that professional fiduciaries have decided to no longer offer their services for court-supervised accounts in some of those communities.
The judicial review of the fees is a sufficient check. In addition, the California Department of Consumer Affairs has authority to review abuses and take disciplinary action. Government regulation of pricing of other goods and services hasnít worked in the past. It is more expensive to do business and to live in some communities than others, and professionals should be able to recover those costs in their fees.
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- Michael Gray
- Michael Gray, CPA
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