As of year-end 2016, according to government data compiled by Spectrem Group, national bank trust departments had the lowest number of personal trust accounts since this information has been tracked (1998). Similarly, bank trust assets have continued to decline, despite the anticipated Baby Boomer wealth transfer and a booming stock market. What has happened to the trust industry?
- Be willing to act as agent or co-trustee. Many investors do not believe a bank can understand the needs of their family. Therefore they appoint a spouse or family member as trustee. This family member, however, does not understand the administrative challenges ahead. There also is rarely a plan for a successor trustee. By working with the family member, it is likely that your organization will eventually become the trustee.
- Form relationships with local RIAs. Many of these individuals are reluctant to advise their clients to place assets into trust because they are afraid they will endanger their relationship with their clients. By providing agency services and allowing for outside investment management, you will be opening up a new pipeline. Be willing to educate advisors regarding trust services. In many cases, advisors may not be as knowledgeable as they believe regarding the benefits of trust.
- Focus on how trust can assist families with complex asset transfers. While a farmer may not believe he or she has sufficient assets for a trust, explain how the value of the farmland impacts the estate and why a trust may be beneficial. The same is true for family businesses. Many investors do not understand how trust might apply to them.
- Populate your staff with financial planners and salespeople, not just administrators. One of the reasons that the brokerage and advisory businesses have been able to attract wealthy clients is the type of individuals they employ. While trust administrators, often focused on details, may be appropriate for the trust business….wealth management is broader than just trust administration. Create teams to service clients with different needs and different personalities.
- Make sure your technology is competitive. Not only should beneficiaries and their advisors be able to view their accounts 24/7, you must be willing to text, Skype and use other forms of both mobile and non-mobile technologies.
- Focus on their financial goals. Trust is really just a legal constraint protecting their assets (or the beneficiaries’ assets). Forming a relationship focused on helping them to achieve their long-term financial goals is more important than focusing on “trust” and “fiduciary” issues. That is an expectation.