Safeguarding the minor beneficiary
Sophisticated technological advances are urging on the evolution of the Retirement Fund landscape. These advances are seemingly re-shaping the manner in which Beneficiary Funds are being administered, which in turn has a noteworthy impact on Fiduciary Dut
Beneficiary Funds, if managed correctly, should safeguard the death benefits of a minor child, ensuring that their up-keep and education is provided for. While automating the process which attends to their needs may improve service efficiency, there is concern about the amount of human interaction being removed from the administration process.
The flipside of technology
Although the “technology trend” is encouraging, the flipside to improved service efficiency is that the service quality of the administration process is threatened.
Removing the human element from the administration of Beneficiary Funds removes the Ethic of Care that ought to characterise the product. Children who have lost their parents have also lost their primary source of care. While Guardians do, to a degree, fulfil this functionality, a caring approach through a Beneficiary Fund needs to be adopted to ensure that a Beneficiary’s well-being is safeguarded.
In a socio-economic environment riddled with poverty, children need to be given the roots they require for optimal development. Through a Beneficiary Fund, a child is ensured access to these roots, should his parents not be present. This access cannot only be facilitated through a system. Mediation in the form of human interaction needs to be present, to ensure that the child’s full potential is reached.
Dangerous assumptions
Automating the allocation process assumes that funds will be utilised appropriately. This is problematic as misappropriation of funds is not a new concern. A system cannot guarantee that funds allocated to Guardians will be used 100% appropriately. Appropriate allocation can only be guaranteed by human discretion.
A Beneficiary Fund utilised to facilitate education is illustrative of this concern. Relying purely on a system-based process suggests that a record reflecting a Beneficiary’s Grade is enough to validate an education allowance. A question such as; does the Beneficiary have the materials necessary for each learning outcome, cannot be answered by a system. A system cannot act as a watchdog – Fiduciary Duty is essential.
While Fiduciary Duty largely refers to a trustee’s stringent duties, such as ethical trust administration, Fiduciary Duty needs to be fulfilled by the financial planner too. When selling a product or service, a financial planner forges a relationship with the client. This relationship should be built along fiduciary principles as the client’s trust and confidence initially lies with the adviser.
Quality over efficiency
Although products that rely on technology should not be excluded we must distinguish between products that utilise technology to assist in service quality, and those which rely on technology purely for service efficiency. The purpose of a Beneficiary Fund means that service quality should be a primary objective.
As the first line of trust, initial discretion between the two should reside with the financial planner – because the Ethic of Care resides first and foremost with the adviser. Once trust is reposed in the financial planner, Fiduciary Duty, characterised by an Ethic of Care extends to the trustee and fund administrator.
Safeguarding the beneficiary
The purpose of a Beneficiary Fund should not be over-shadowed by technology and its promise of service efficiency. Every aspect of a Beneficiary’s well-being should be safeguarded through a personalised service; actualised through an Ethic of Care.
