I had the pleasure last week of taking part in the Leadership Workshop for Life Insurance Stewards at The Hotel Thayer at West Point, NY. The event, organized by Don Trone (www.3ethos.com), brought together a number of professionals from the legal, financial planning and insurance world to review and edit the first draft of Best Practices Standards for Life Insurance Stewards. The vast majority of the work behind the document was done by others prior to the meeting, but I was thankful to take part in the editing process and look forward to working on and promoting the Standards. I will be addressing this document in the future on this Blog and also on ITM webinars, but wanted today to note two related items that jumped out at me.
The first was a quote contained in a book that I received during the session. The book is entitled Fiduciary Ethos, Living in a Fiduciary World, Volume One: Investment Management, by Don Trone. It is a great book for anyone in the investment world, and it can be easily adapted to our TOLI world. Among the many ideas and concepts that jumped out at me was the Law of Increasing Risk, an idea that Don espouses. The Law states:
The risk of investors not meeting their goals and objectives decreases proportionally by the number of additional prudent practices employed.
Since the goal of ITM is to put a complete prudent practice around TOLI Trust/Policy Management and we at ITM have spent years attempting to perfect this, you can see why this resonated with me.
The second and related item that jumped out at me was the fact that whenever a discussion of trustee liability came up at the event, one point was made over and over again. In any situation where liability is being reviewed, the focus is not as much on the outcome as on the process employed by the trustee. This point was made by attendees who often deal with litigation on all levels. Many things outside of your control can affect an outcome, but if you are being accused of not living up to your TOLI duty you had better be prepared to show the prudent practices that you employed.
Both of these items drove home the point that needs to be remembered by all trustees….the outcome cannot always be (completely) controlled, but the process can.