1. Burned Once… Using KRIs to Avoid Litigation and Vice Versa
Joan R. Dindoffer
VP and Chief Compliance Officer
Private Fiduciary Services
Comerica Bank
Detroit, Michigan
(313)
March 31, 2010
Note: The views expressed are those of the presenter, and not Comerica.

2. Burned once, shame on you. Burned twice, shame on me.
Learn from mistakes.
Litigation
Complaints
Audits
Regulatory Exams
Media Reports
Reported Cases

3. Pay attention to potential risks at each step in the life of an account.
Account Acceptance
Assets
Expectations
Circumstances of appointment
Account Reviews
Initial Post Acceptance & Annual
Administrative & Reg 9
Discretionary Distributions
Complaints
Litigation

4. No surprises! All the signs were there: Account Reviews
Discretionary Action Minutes
Complaint Logs

5. Caution Signs Concentrations Own bank stock Other conflicts
Alternative investments
Closely held assets
Real estate
Performance
Depletion of principal

6. It’s not always what it seems. Also look for these red flags:
Family dynamics
Squabbles over tangible personal property
Step families
Substance abuse
Spendthrifts
Significant distributions
Unequal distributions
Depletion of principal
Liquidity needs
Account pledged as collateral for bank loan
Difficulties with prior trustee

7. T.A.R.P. (the kind you CAN control)
Track and Trend
Track by officer, market, business unit, product line, amount of exposure, how surfaced
Trend over each of these criteria
Analyze for pervasiveness and root cause
Report to management and independent compliance oversight committees
Program changes to mitigate risk including enhancements to systems, policies & procedures, controls, and training.

8. Identify the ROOT CAUSE of the complaint, loss, or claim.
Customer service
Investment performance
Appropriate investment objective
and adherence thereto
Poor administration
Documentation
Communication

9. Sample Forms

10. Analyze the problem. Fix System Revise Procedures/Process
Look for system defects
Policy, procedure & process gaps
Widespread unfamiliarity with policies
Flagrant disregard of policies
No perceived issue
Individual training
Supervision
Conscious business risk

11. Jump into action, before history repeats itself.
Immediate claims
-best controlled with prompt attention.
Extrapolate globally to:
-Fix systems
-Address control gaps
-Enhance policies and procedures
-Train
-Sensitize management to business risks
-Address identified pockets of personnel and supervisory issues.

12. (With apologies to Ben Franklin.)
When all else fails
Follow these common sense axioms from
“Poor Joan’s Almanac.”
(With apologies to Ben Franklin.)

13. “Mean what you say, and say what you mean.”
Make sure you are following the terms of the governing document, including all amendments, codicils, and court orders.
Make sure you follow your policies and procedures. Don’t establish unrealistic standards.
Follow through on correspondence. Under promise, over deliver.

14. “Document, Document, Document.”
If it’s not in writing, it doesn’t exist.

15. “Keep your friends close, and your clients even closer.”
Know your customer.
Know the family dynamics.
Be alert to changes in habits.
Over communicate.
Verify client authorizations.

16. “Two heads are better than one.”
Dual control over
Security of physical assets, medallion stamps, checks.
Secondary approval of address and statement changes.
Oversight of transaction processing
Trading errors
Wire instructions
Reconciliations

17. “Work smarter, not harder.”

18. Questions and Comments
Thank You!