As explored in Part One of this two-part series, trusts can be multi-faceted in their various uses and a key tool in the advisor’s arsenal to help clients, especially during times of transition. Beyond trust planning applications, offering trust services can also help with various aspects of practice management, including helping to attract new clients, gaining portfolio shares with existing clients and by providing “visibility” to customer loyalty in a competitive landscape and through generational wealth transfers.
A market ripe for growth
The trust market offers growth opportunities, and forward-looking advisors would be wise to consider integrating trust services into their business models. Recent regulatory developments have implications for retirement savings; The House has passed the Setting Every Community Up for Retirement Enhancement (SECURE) act, and the Senate is working on its own version, the Retirement Enhancement and Savings Act (RESA). Specifically, the proposed changes to the extended period for IRAs create new considerations for advisers, which position trusts as an increasingly important option to help manage and potentially reduce taxes accordingly.
Additionally, only 23% of advisors offer trusted services, highlighting an untapped market opportunity. As competition for clients continues to intensify, M&A activity intensifies, costs decline and client expectations rise, trust services can offer a differentiator and real added value to businesses. clients as they navigate the transitions of their lives.
Trust services can offer clients control over their assets, potential tax savings, a long-term plan based on individual needs, and privacy, all in one place. By creating an opportunity to improve existing customer relationships, these services can help solve complex planning issues, as well as potentially attract new customer assets who may appreciate or require these types of benefits for their unique needs. Advisors can also gain access to the next generation of clients if they inherit wealth through these trusts.
Find the right expertise
As discussed in Part 1, trusts can be complex with many types, purposes, rules, and legal requirements (which may also vary by state). It’s no wonder that so few advisors offer trusted services today, but they don’t have to be trusted experts to deliver the services.
For advisors interested in taking a second look but lacking the resources to run in-house, outsourcing may be a good option. These six areas are important for advisors to consider when evaluating the outsourcing of potential strategic partners for trust services.
Independence. As part of your due diligence in securing a strategic trusted services partner, ensuring that you can maintain your independence after selecting a partner is key. You can look to a local bank or trust company, but it is important to consider that your local bank may offer the same investment services as you and seek to extend its relationship with your client beyond trust services. . Choosing a working trust company with independent advisers can help avoid competition.
Services provided. Trusted services and level of service may vary from company to company. Some trust companies only offer administrative trust services, while other companies may offer more comprehensive options, such as providing investment options and / or investment management within the trust. Variations in the level of service can have a significant impact on the client and advisor experience.
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