Our list of advisor-friendly administrators has expanded by 35% in under three months. Vendors keep coming out of the woodwork to cooperate with advisors instead of fight them for clients.
With close to $7 trillion at stake as wealthy American families shift their liquid assets into trust, more independent trust companies are targeting advisors — the key center of influence — to get their share.
Our latest survey of the trust industry (click the cover to the right for a copy) turned up another four corporate trustees that have all decided to align their interests with the advisors that ultimately push accounts their way.
To download our newly expanded and updated list of trust companies with a similar mindset, click here.
After all, there’s plenty of assets for everyone to get what they need, says Michael Roberts, who runs the personal trust business at Atlanta-based Reliance Trust.
Firms like ours simply don’t have a natural delivery channel sending us clients, so for our financial well being we need to work with and not against the advisors,” he explains.
“I know the first time I ever stole a client from an advisor, it would be the last from that advisor, and it’s a small industry and people talk.”
For advisors and sometimes owned by them, too
The four firms joining the club this quarter are Reliance, LPL’s Private Trust Company, Casper-based Wyoming Trust and advisor-owned National Advisors Trust.
The first thing that you’ll notice is that half of them are owned by advisors or by independent brokerage firms on behalf of their advisor affiliates.
LPL runs Private Trust Co. primarily as a way to give its nearly 13,000 brokers a way to offer their clients trust services without fear of handing the AUM to a potential competitor.
And National Advisors Trust has pioneered a similar approach, initially for the consortium of advisors who created it — the “shareholders” — and now as a more open institution.
Both companies will happily accept business from non-affiliates. National Advisors Trust, in particular, is actively courting non-shareholder RIAs.
“There’s still a conception that you have to buy into the company to use our services, but we actually opened up about five years ago,” says CEO Ronald Ferguson. “We are absolutely interested in talking to new firms and working with new advisors.”
Like other advisor-friendly trust companies, these institutions don’t have in-house wealth managers hungry for commissions or management fees, so the motive to ingratiate themselves into the lives of your best clients and squeeze you out just isn’t there.
They don’t have proprietary investment products to push into trust portfolios. And in most cases, they don’t even mind if your preferred custodian hangs onto the money.
Widening the playing field
Given their national focus, Private Trust and National Advisors Trust have national trust charters to ensure that they can serve any advisor and his or her clientele.
However, every company we talked to is willing and able to work with advisors around the country, and the number of hot trust jurisdictions is expanding rapidly.
This quarter opens the list to Wyoming, which offers wealthy families no state income tax and a wide range of specialized trust vehicles but has as yet remained in the shadow of more famous trust havens like Alaska, Nevada, South Dakota or Delaware.
According to Wyoming Trust trust officer Tassma Powers, Wyoming can offer everything that nearby South Dakota can, only hundreds of miles closer to the ranches and ski lodges of the elite.
Like its counterparts, Wyoming’s trust charter supports dynastic trusts that theoretically last up to 1,000 years, as well as asset protection trusts designed to shield family wealth from lawsuits. Moreover, there’s no state income tax.
And as in equally vacation-home-rich New Mexico, Wyoming trust companies also excel at administering trusts built around real estate holdings as a way to keep those ranches
As such, saving the plane ticket can make the difference for advisors who already schedule an annual trip or two to Jackson Hole to meet their clients.
Support for the centers of influence
The ability to support directed and delegated trusts, in which advisors go on managing the assets even after they pass into a trust, is a necessity. But every firm on our list goes a lot farther.
With no in-house wealth management operation, a truly advisor-friendly trust company looking to grow its business needs to work overtime to help the advisors it works with grow theirs.
Just about every company on our list offers some form of marketing support to help advisors integrate trusts into their other client service offerings.
National Advisors Trust, for example, feeds its affiliates — not just the shareholders, but the entire book of business — with plenty of training materials and even a private label program that lets advisors market themselves as a full-fledged trust company.
Naturally, National Advisors Trust is still doing all the paperwork and other heavy lifting, but the advisor now has a new competitive lever to pull when prospecting for trust-hungry clients and the lawyers and accountants who have their ears.
“We’re not expecting them to become trust officers, but we want to give them an entree, the confidence to knock on those doors,” explains Ron Ferguson. “We want them to feel comfortable that they have something that differentiates them from the investment advisor down the street.”
That proposition in itself aligns these companies not only with the interests of the advisors they work with, but with the future of the industry.
As Michael Roberts of Reliance Trust reminds me, the stranglehold the money center banks and wirehouses once had on the high-net-worth market is loosening fast.
“I spent 20 years working with a national bank trust department and saw them losing share, but my efforts to get people to team up with investment advisors fell on deaf ears,” he says.
“Advisors know how to talk about investments and their clients demand better investment products. This way, we let them do what they do best and concentrate on what we do well, and everyone wins.”
Scott Martin, senior editor, The Trust Advisor
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