The banking industry's dominance in personal trust services is beginning to slip, according to a new study.
Personal trust assets held by U.S. banks fell 10%, to $986.2 billion, in 2005-down from a peak of $1.1 trillion in 1999, according to a study by Spectrem Group.
The number of personal trust accounts at U.S. banks also dropped 23% last year, and have gone from 929,036 in 1999 to 719,658.
Banks, according to the study, are losing market share to nonbank trust services, including independent trust companies. Traditional bank trust services are also less appealing to younger consumers, who are often doing self-trusting or using family members as trustees, according to the study.
The one advantage banks can still leverage in dealing with competition is that they are viewed as more trustworthy than other trust service providers, according to the study.
"For banks intending to remain in the personal trust business, the erosion in both trust assets and accounts since 1999 suggest a significant re-evaluation of their trust offerings is in order," says Catherine S. McBreen, managing director of Spectrem Group. "Everything from providing up-to-date online tools to making sure trust department staffers are skilled enough to be perceived as wealth managers are critical."