Trusts and POA shield retirees from 1% adviser fees

A 65-year-old couple who watched their parents' cognitive decline enable financial fraud is weighing trust and durable power-of-attorney structures to protect retirement accounts — while avoiding the typical 1 percent annual adviser fee for asset management they don't want.

"A person who holds power of attorney should put your interests first," Quentin Fottrell, personal finance columnist at MarketWatch, wrote in response to the couple's question. "That's called having a fiduciary duty, and it comes with legal ramifications."

The couple, who are also helping care for their aging parents, hold IRAs, an HSA, and a joint brokerage account with money-market investments. They want planning guidance — what Fottrell described as "a financial GPS" — without surrendering day-to-day investment control. Financial advisers typically charge about 1 percent annually of assets under management, a rate that falls to 0.50 percent or lower for portfolios above $1 million to $5 million, according to the column.

Without advance planning, a court would likely appoint a guardian or conservator to manage the estate if both spouses become incapacitated. Establishing a trust with a named successor trustee and a durable power of attorney for assets outside the trust can bypass court supervision entirely, preserving the couple's investment preferences — including their stated wish not to have all assets moved into the stock market.

Two instruments, one goal

A trust manages all assets formally transferred into its name. If the couple dies or becomes incapacitated, a successor trustee steps in without court involvement. For assets outside the trust, a durable power of attorney gives a named agent authority to sign tax returns, communicate with agencies such as the Social Security Administration, and handle other legal or financial matters.

The column warns that power of attorney documents carry abuse risk. "It's very easy for a child to convince their parents, in a vulnerable moment, to sign a power of attorney document," Fottrell wrote. Unlike guardianship or conservatorship, which fall under court jurisdiction, POA power operates outside direct judicial oversight. The column recommends a dual power of attorney — appointing two or more agents — as a safeguard.

The Moneyist column has documented numerous cases of elder financial abuse. In one instance, a son liquidated his mother's 401(k) to pay for her nursing home and kept the remaining funds. In another, a woman stole her sister's Social Security number and persuaded her sister's husband to sign away his power of attorney while he was hospitalized.

Fee-only planners fill the gap

For couples seeking guidance without asset management, the column points to certified financial planners who review the full financial picture rather than push commission-based products. Many fee-only fiduciary advisers operate as registered investment advisers, regulated by the Securities and Exchange Commission for larger firms or by state securities regulators.

Fee structures vary: some advisers charge a flat planning fee, while others charge a percentage of assets under management. The column cautions that credit union advisers are paid by their employer, so their advice is not truly free, and readers should ask whether an adviser works on commission, fees, or both.

The couple's 60s represent a critical planning window. Early-stage dementia patients may still handle routine bill payments but struggle with bank statements, taxes, or more complex financial decisions — warning signs that families should monitor as part of any incapacity plan. Readers should verify current fee structures and legal requirements against the latest official guidance from regulators and qualified legal counsel.

This article is for informational purposes only and does not constitute investment advice.