COMMENTS ON "MULTIDISCIPLINARY PRACTICE" (MDP)

 

There is a growing trend across America to essentially merge the practice of law, accounting and financial services in one conglomerate practice. This process is known as a "Multidisciplinary Practice" or MDP.

The process is being fueled by tremendous amounts of money and pressure from very large organizations such as the "Big Five" CPA firms and the large "wire houses" like Merrill Lynch, American Express, etc.

You have seen one tip of the iceberg here in California in January of 1999 when CPA's were allowed to sell commission products to clients. This process will continue and eventually become a fact of American life from what we see in all of the various trade journals.

Once again, I will quote from a favorite journal, Conspectus Current (Spring 2000):

"Whether we agree with it or not, MDP is a growing reality. In our view, and that of many others, the war to prevent MDP has been lost. We are left only with the option of negotiating an acceptable surrender, and perhaps fighting a few rear guard battles.

MDP is going to happen, because it is already happening. As estate and wealth planning professionals, we need to work together to create a new vision of practice. If we do not, all of us will suffer, but it will be our clients who, in the end, will lose the most. We ask all of you, our readers, to stay current on this issue and give as much input as possible to our local, state, and national associations."

Another interesting article from the Spring Conspectus Current was also revealing. The title is, "Professional Liability Issues for Estate Planning Attorneys (and CPA's) Working with Life Insurance Products." The main gist of this article is seen in the following quotation:

"When selecting life insurance and administering ILITs, clients and trustees often rely upon estate planning attorneys for "expert" advice, perhaps because the client and trustee are inexperienced in this area. This is true even if the attorney is not trained or licensed to sell insurance and does not receive a commission or referral fee for the purchase of insurance.

Unfortunately, the trend is for courts to find attorneys liable for insurance company failures and poor performing policies. Moreover, courts have found attorneys liable, not only to grantors, but also to trustees and trust beneficiaries. Thus, attorneys must understand their duties and liability when planning with life insurance."

It is interesting to think about what may happen in a MDP with CPA's or attorneys selling products they are not really familiar with, unlike a professional agent who would be.

The message I would like to get across to you is that MDP is apparently here to stay. Who is on your team to help you attract and keep quality clients? We would like to be part of your "Team" along with the other members with whom you are aligned, so that we can "go to the market" together and successfully compete in an MDP world.

 

A list of our upcoming seminars may be found on our Resources page, on the Estate Planning Learning Center page, or you may call Diane Hermann at (949) 453-2900 or e-mail her at inquiries@brownstreza.com.