Managing a Special Needs Trust (SNT) comes with tremendous responsibility. Trustees are not only tasked with safeguarding the financial future of a beneficiary with special needs, but they must also ensure that trust assets are invested wisely and in compliance with complex legal and financial rules. While some trustees may feel pressure to manage investments on their own, most — especially non-professionals — are better served by hiring an experienced investment advisor.
Why Trustees Shouldn’t Go It Alone
Trustees have a legal duty to prudently manage trust assets. But unless the trustee is a sophisticated investor, managing large sums of money without professional guidance can lead to mistakes that jeopardize both the value of the trust and the beneficiary’s eligibility for vital government benefits. That’s why working with a knowledgeable investment advisor is often one of the most important decisions a trustee can make.
Understanding the Role of an Investment Advisor
An investment advisor provides professional guidance on how to grow and preserve the trust’s assets, helping the trustee make informed decisions that align with the trust’s goals, timeline, and risk tolerance. For SNTs, the primary objectives typically include:
- Preserving the principal to ensure funds last as long as the beneficiary needs them.
- Generating income to cover ongoing expenses.
- Achieving growth to keep pace with inflation and future financial demands.
What sets SNT investment planning apart from standard portfolios is the added complexity of protecting the beneficiary’s eligibility for needs-based public benefits such as Medicaid or Supplemental Security Income (SSI). A knowledgeable advisor understands how to navigate these unique requirements.
What to Look for in an Investment Advisor
Choosing the right advisor requires more than just reviewing past performance. Here are key qualities trustees should seek:
- Experience with Special Needs Trusts – Look for advisors familiar with the specific legal and financial rules that apply to SNTs.
- Fiduciary Responsibility – Advisors should be legally obligated to act in the trust’s best interests, not their own.
- Custom Investment Strategies – Every trust is different. The advisor should tailor their strategy to the beneficiary’s needs, life expectancy, and goals.
- Aligned Investment Philosophy – Ensure their approach matches your goals, whether that’s conservative income generation or moderate growth.
- Transparent Fee Structure – Avoid hidden fees or commission-based advice. Seek clarity and honesty.
- Strong Communication Skills – Regular, clear updates are essential for monitoring performance and adjusting strategies as needed.
- Reputation and References – Check credentials and request referrals. Look for designations like CFP (Certified Financial Planner) or credentials verified by FINRA.
Building a Successful Relationship
Once a qualified advisor is selected, trustees should:
- Establish Clear Goals – Define what success looks like for the trust, including expected expenses and growth needs.
- Create an Investment Policy Statement (IPS) – This document sets the rules for managing trust assets and helps keep the strategy on track.
- Monitor and Adjust – Periodically review performance with the advisor and make adjustments as circumstances change.
- Keep Good Records – Document decisions and advisor communications to protect against liability and demonstrate proper trust management.
Peace of Mind Through Professional Guidance
Hiring the right investment advisor helps trustees fulfill their duties while giving families peace of mind. A thoughtful, well-informed investment strategy ensures that the trust continues to provide for the beneficiary’s needs — now and in the future.
