Regulators would throw questions at the founders, who would then come back with a set of answers-a back-and-forth process that dragged on for months. The entire process took 16 months, compared with the typical application process of six to eight months, Kopczynski says. Along the way, National Advisors Trust did have to make some changes. The original charter application, for example, placed virtually no emphasis on making profits, and placed most of its emphasis on delivering service to shareholders. Regulators demanded more of a focus on profits, partly through a more aggressive asset-gathering plan.
The company was hoping to attract $1 billion in custodied assets in a little over a year. It was a reasonable goal, company officials say, if not for one twist of fate: The company got its charter the day before September 11, 2001.
It was, as Kopczynski recalls, the worst possible time for advisors to try to sell clients on anything new, let alone a total relocation of their assets. In many instances, advisors just held off on trying to move any assets until the climate got better. It wasn't until late last year, in fact, that the momentum started to build, company officials say, to the point where now the company is averaging close to $100 million in transfers a month.
With the acceleration in the growth of assets, the trust company has expanded its array of services, says David Roberts, the trust company's president and CEO. The company has service agreements with more than 20 companies that give clients access to things such as alternative investments, private foundation services, qualified retirement plan services and separate manager products. "We've created interfaces to some of these firms so they can allow their separate managers to run assets, while we do the underlying custody here," Roberts says.
The trust company has found that its 401(k) services are in most demand, comprising the largest percentage of custodied assets, followed in size by basic custodial accounts and then trust accounts.
The trust company has been taking a conservative approach to taking on new members, preferring to concentrate on cultivating services for its existing clients, rather than rapidly taking on new shareholders. The second offering conducted earlier this year, for example, only happened because the company had a list of 26 companies that had been waiting months to be granted access, says Roberts.
National Advisors Trust conducts due diligence on all advisors who apply to be members, Roberts adds. The trust company, he says, prefers fee-based advisors, which it defines as firms that derive 75% or more of their revenue from fees. They also want firms that are serious about using the trust company's services. Indeed, the founders expected those services would be its primary attraction and have been somewhat surprised that its custodial services unit has taken off to the degree that it did.
"We want firms that have an active interest in using the facilities of the trust company, rather than being passive investors or using us as a standby mechanism," Roberts says. "The trust company is designed to support these firms, and since it operates as a co-op, the expectation is that owners will actually use its services."
Advisors who use National Advisors Trust's services say they feel they have a greater influence on service quality than they would with a larger national company. Kurt Brower, president and co-founder of Brower & Janachowski in Tiburon, Calif., says this is reflected in things such as the ability to get a mutual fund quickly added to the trust company's platform, or controlling the format of client statements. "That can be a pretty complicated process with a larger company," says Brower, who is one of the company's founding advisors.
Burkhart of Savant Group says he values the confidentiality provided by custodying client accounts with a trust company, as opposed to a broker-dealer. Another benefit is the ability to forge a multi-generational relationship with clients, he says.