August 3, 2015 Millionaire Fact of the Day
August 3, 2015 Fact of the Day: Where did all the trust accounts go?
DID YOU KNOW THE NUMBER OF TRUST ACCOUNTS HAS BEEN IN DECLINE FOR YEARS, BUT ASSETS IN THOSE ACCOUNTS FLUCTUATE WITH THE MARKETS?
The number of wealthy households continues to increase annually, but that number is not reflected in the investment in trust funds. This is because a number of wealthy households are no longer investing their trusts, or setting them up at banks or trust companies. In 2014, however, assets in trust funds increased by $65 billion to a total of $948 billion. Unfortunately, this increase in assets was primarily based upon market growth.
But what can be done to increase the number of investors using trusts to safeguard their money? Financial providers and advisors need to work with wealthy investors to create estate plans. Currently fewer than 25 percent of Millionaires have an estate plan in place.
Another opportunity for banks and trust companies is to promote their common and collective funds. These funds generally have lower fees than mutual funds because mutual funds are subject to all of the reporting costs required by the SEC. There are only 85 bank trust institutions currently offering common/collective funds, a decrease of three funds from the previous year. The number is down dramatically from a decade ago.
Spectrem’s annual Trust Update examines federal numbers related to account openings, closings, assets under management, assets under custody and agency accounts as well as collective and common funds being added and subtracted. The report provides an accurate size of the trust market in the United States.
To learn more about Spectrem Group's 2015 Personal Trust Update, click here