I am an Estate Planning Attorney.
A recent case in Florida points out the dangers and pitfalls of attorneys wearing too many hats.
An attorney who prepared various trusts and wills for a client, then sold the same client various annuity products. The attorney was eventually disciplined and sued for multiple charges of conflict of interest. In their ruling, the Court stated: “An attorney is simply not allowed to enter into a business transaction with a client unless the transaction is fair to the client and three elements are met:
- The terms of the transaction are fully disclosed and transmitted to the client;
- The client was advised in writing to seek independent counsel; and
- The client gives informed and written consent to the attorney’s role in the transaction, including whether the attorney is representing the client in the transaction.”
This result did not surprise me. I have believed for more than 20 years that it is virtually impossible to be an estate planning attorney one minute and sell insurance, annuities or mutual funds to the same client the next. In my opinion, it is a clear and absolute conflict of interest. Moreover, I do not understand how someone can be competent in both areas at the same time. Estate planning law is complex and it takes a lot of effort to keep up to date with all of the changing laws, cases and rulings. I personally go to at least 5 full days of continuing education a year, read multiple trade magazines, articles and cases about estate planning. I strive to always learn and to be better.
Over twenty years ago, I made the simple and clear decision that I was solely, and forever, an Estate Planning Attorney. I decided that I would not practice any other kind of law not directly related to estate planning. Hence, I do represent clients in divorces, personal injury lawsuits, trademarks, real estate settlements, immigration, etc. Moreover, even though it may be financially rewarding, and even though I am a Certified Financial Planner, I firmly believe that selling any type of investment or insurance product to my clients (or sharing in the commission or fees that someone else earned off of my clients) is absolutely WRONG. I want to be independent, unbiased, and give advice to my clients that is in their absolute best interest.
There are many so-called “estate planning attorneys” who do not share my views on this. These attorneys do sell their clients investments or insurance products and many do practice multiple areas of law. It is hard for me to understand why a client would not want his or her estate planning attorney to just be an independent advocate that can give advice and guidance without making additional money in the process. How can the client really trust that their investments and insurance or annuity products are right for them if there is not independent and separate counsel and investment advice?
My simple advice is to only work with fully independent professionals who direct their time and energy to being the best in their field. The world has become too complex to provide for professional advisors becoming adept and the best at many different fields at the same time.
FYI, I recently commented on this subject for Financial Advisor Magazine: “The Horror” – Gary Altman Stresses the Dangers of Not Working With a Legitimate Estate Planning Attorney”