Specific Financial Products and Services (Trust, Insurance, Securities)
Fiduciary, insurance, and securities work carry distinct rulebooks
Trust and fiduciary. A fiduciary owes loyalty and prudence, must avoid self-dealing, and must follow the governing instrument even where it conflicts with diversification advice. National banks exercise fiduciary powers under 12 CFR 9, which requires board oversight, an independent audit, and specific handling of collective investment funds. ERISA plans add exclusive-benefit and prohibited-transaction rules. IRAs bring contribution deadlines, required minimum distributions, the 60-day rollover window, and early-distribution penalties. UTMA accounts are irrevocable gifts held by a custodian, not a trustee.
Insurance. Insurance is state-regulated and sold through licensed individuals. Anti-tying rules generally prohibit conditioning credit on the purchase of insurance, subject to narrow safe harbors and legally required coverages such as flood and hazard insurance.
Securities. Brokerage in a bank runs through a registered broker-dealer; recommendations are governed by Reg BI and fiduciary standards. Reg S-P and Reg S-ID cover privacy and identity theft.
Traps
- Treating a safe deposit box as a deposit; it is a bailment, is not FDIC-insured, and its contents are not covered.
- Selling a mutual fund or annuity in the lobby without the required physical separation and signage.
- Assuming fiduciary powers allow self-dealing when the instrument is silent.
Worked example
A customer asks whether the $50,000 variable annuity sold at a branch desk is FDIC-insured. It is not. The sales area must be physically distinct and the disclosure must state that the product is not FDIC-insured, is not a deposit, is not guaranteed by the bank, and may lose value.