Understanding and screening rural professional advice

Finance
with Don Fraser
Fraser Farm Finance

Let me say at the outset that the vast majority of rural professionals provide outstanding advice and assistance to their clients. They work tirelessly for the best outcome. Eighty per cent of the professionals do a great job, but 20 per cent leave a lot to be desired. Isn’t that the case in all aspects of life?

Remember the 80:20 rule in everything. Eighty per cent of the fish are caught by 20 per cent of the fisherman; and 80 per cent of the real estate is sold by 20 per cent of the agents. Nevertheless in some circumstances, and for some reason, much of the advice metered out often reflects in self-interest and money.

Some examples might include a large family with lots of rural assets with a weak solicitor, who had been asked repeatedly over many years to provide a formal succession plan. In frustration the settlors looked for a new team to provide the plan and the solicitor finally acted and made some effort, which was inadequate in my opinion. He sat on the file and did nothing until he was pushed. In whose interest was the solicitor acting?

Trusts

I’ve had clients whose solicitor would not form a trust to hold the hard assets. More than that, he refused to form trusts for most of his clients. The reasons seem unsure but it would appear he thought he would lose control of the assets and his money flow upon their death.

And more clients who owned several valuable houses in a growing city; their accountant and financial advisor advised them to sell the houses and put the cash into his investment funds.  Always remember these people need your money to give them enough critical mass of money to invest and get a return for you and themselves. The houses, in this case, were obviously going to rise rapidly in value and would have more than doubled in value. I was cross, gave my opinion once, and left them to it.

Then there are those unscrupulous family members, who get their aging parents to change the will at the last moments with the solicitors knowing what was going on, cutting others out. There are some shocking examples of this.

I have gone into negotiations for clients only to find the solicitor agreeing to something less because he did not want an argument. Frustrating at the least. In one case it cost the client $90,000 for plant he did not want.

Huge responsibility

Some trustees have absolutely no idea of what is going on, who are influenced and agree to situations that should never, never happen. Being a trustee brings a huge responsibility and is onerous and not for the faint-hearted.

Ordinarily, beneficiaries do not make good trustees and professionals should advise accordingly. Their self interest tends to over-ride what is best for the trust and what the settlors wanted anyway. I had one case where all five children were trustees on the advice of their lawyer.

Then there are the expensive and nasty matrimonial. Both parties agree initially to try to sort it out. Then independent solicitors are employed and look out, the war starts. Yes, they may be doing what is right for their client, but what about the arguments and destruction of trust between the two that have parted let alone the effect on the children caught up in it.  Not to mention the large draw of legal fees by both parties, when the original solution was obvious, easy and cheap. They tell me that in the States you got to one floor in the law firm and they fight for you; and once the money starts to run out and the clients have spent enough you go to the next floor down called mediation!

Huge fees

Some professionals farm their farming clients for huge fees. I could go on telling stories of unfair and one-sided advice and self interest from beneficiaries, trustees, solicitors and accountants all day. The point is, weigh the advice carefully, get a second opinion, and take a realistic view on what you are trying to achieve and be careful.

In summary, going back to my original caveat that most professionals do a brilliant job, but there are a few who do not act in the best interests of their clients, and let the industry down. Dishonesty and lack of impartiality makes me very grumpy and I feel for those who suffer as a result.

Disclaimer – These are the opinions of Don Fraser of Fraser Farm Finance.  Any decisions made should not be based on this article alone and appropriate professional assistance should be sought. 

Don Fraser is the principal of Fraser Farm Finance and a consultant to the farming Industry.

Contact him on 0800 777 675 or 021 777 675. A disclosure document is available on request.

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