Vinton Fountain opened a fee-only investment advisory shop about ten years ago, after spending 16 years in the bank trust business. It made him an old pro around trusts. The distinction, and the firm's ability to navigate trusts, has become a calling card to wealthier families in the Wilmington, N.C., area, where Fountain Financial Associates is located. "We just had a family whose elderly parent died and they were unhappy with the 800-number relationship they were given by the bank trustee," says Fountain, who is the president of his firm. "They came to us and we ended up acquiring not only the $2 million trust, but another $10 million the family had in brokerage assets."

How did the wealthy family find Fountain Financial Associates? Through an estate-planning attorney the firm networks with at lunches and after-work meetings. "If you can deliver this solution to the high-net-worth space, attorneys and CPAs will love you and your numbers will get bigger," says Fountain, who is affiliated with ING and uses ING Trust for clients' estate-planning needs. "When you address the need for trusts, you increase your position as your clients' primary provider. You're not a broker or product provider, you're the CFO or coach of their global relationships. Now you're dealing with multiple generations. You're hired to help them develop and implement their plan and transfer their wealth. You can see how that expands the tenure of your relationship," he adds.

Fountain has discovered what advisors, broker-dealers and trust companies are also finding: The greater your trust expertise, the more likely you are to attract higher-net-worth clients, greater assets and stickier client relationships. You can either build it in-house by hiring talented trust bankers or build an outsourced team of specialists.

ING Trust assets grew by 25% to $270 million through June 28, Susan Anderson, president of ING Trust, said during the Trust University the firm held before the start of its National Planning Conference outside Washington, D.C., this summer. "This meeting was a huge success," Anderson said.                 "Typically we get 30 advisors or so. This year we got 100." ING Trust has just added four employees, including a national trust officer, to ramp up for the growth the firm expects to see in the trust arena. "We're targeting the advisors who do more in-depth wealth planning. Our job is to make them look good and keep them central to the client relationship.

Right now, Fountain estimates that 50% of the $225 million his eight-person firm manages came in the door because of the firm's trust work and 20% of AUM is already in trusts. "This has really helped us to compete and differentiate ourselves," Fountain says. "Investment performance is no longer enough. Clients want to be able to protect their assets for the next generation and successfully transfer them. How we do that and help them dramatically save on taxes now and in the future is how I believe we deliver the most value to our clients."

Bruce Merrell, vice president of financial planning at United Advisors, a five-office advisory firm, agrees. "I still feel that some of the greatest value we can add is with our trust work," says Merrell, an advisor and attorney who oversees planning for the firm's offices in Florida, New Jersey, New York, Michigan and Ohio.

Merrell says that more and more clients who want to control their money are seeking advisors who work routinely with trusts. "Boomers are coming in with more money that they control because of defined contribution plans. They have actual assets, but they also have more complications, like multiple and mixed families. Many want to provide for the second wife or husband, but want to make sure the money goes to their own kids and not the spouse's," he says.

With trust assets growing as much as 30% in the past year, trust companies and broker-dealers are adding resources, technology and training to encourage advisors to work more deeply to find and create client trusts. "We continue to develop a very robust trust offering that will include the rollout of our new workstation, Wealth Central, which will have trust reporting integrated," says Ron Fisk, executive vice president for Fidelity Institutional Wealth Services. "So far, we're seeing lots of advisors support and move existing trusts. The real training comes in with new trusts and trusts that are being implemented. We've seen trusts services growing at 30% to more than $270 billion in assets in the past 12 rolling months," he adds. "We're excited by the clients advisors are bringing in. The nature of the client, their high affluence level and age, reflects the marketplace's needs, and we want to make sure we're one step ahead."

To help advisors oversee the highly technical and complex nature of trusts for their clients, Fidelity Institutional has in-house experts who work with individual advisors on large cases. The firm has also developed a network of local trust organizations that can help advisors get up to speed.
"We're seeing a lot of wealth managers become interested," Fisk says. "Advisors are being taken into trusts because that's where the marketplace is taking them. It leads to a significant relationship with investors. The ongoing challenge is training and education."

The Private Trust Company (PTC), owned by LPL Financial, has grown about 15% annually and now provides trust administration services for $67 billion in assets. PTC doesn't provide investment management services; it allows clients to delegate that function to their financial advisors. "Trusts are a natural fit because over the past couple years, our high-net-worth clients have increased about 80%," says CEO Christopher Poch. "I met with a client the other day who is worth $2.5 billion."

To continue to help advisors court wealthy investors, LPL is building out an extensive field support system designed to provide advisors with all-in-one experts who can help them navigate high-net-worth clients' advisory, insurance, trust and alternative investment needs. "We anticipate hiring a lot of people and will be the only company that has these expert resources in the field for advisors," Poch adds.

Schwab Institutional continues to grow trust assets at a vigorous rate, with assets that total some $151 billion (see sidebar). Cathy Clauson, vice president of product marketing in charge of trusts at Schwab Institutional, says more and more wealthy investors are being driven to advisors' doors because of the consolidation in bank trust departments and because of the shift in the service model from local bankers to toll-free phone centers.

Says Fountain, "We see people all the time who simply do not believe that the people answering the phones at the banks are capable of implementing their families' trust wishes and documents."

Schwab's Clauson says advisors are evolving right along with their clients. "In the past," she says, "everyone was a money manager. Then planning happened and everyone became a wealth manager. Now they're being pulled upstream into family office territory. Clients' need for trust services is driving this metamorphosis.

"We find that in this space, especially at the $5 million in investable assets level, you have to know trusts. These families know what they need, so you have to be able to offer recommendations and adjustments as needed."

Clauson says Schwab is getting traction with its offerings and is helping an advisor move a $50 million trust, one of the largest, to Schwab. "We're very pleased with the pipeline. We have 200 trusts in review at any time, and we use both inside and outside counsel to expedite things. The big takeaway is that most clients have trusts. So reading the documents, making sure client intent is served and making sure all relationships are friendly to you, the advisor, is critical. If you don't, those assets can be pulled from you exactly when the widow or widower need you the most," Clauson says.

Fountain works with ING Trust to include language in all his client trusts that allows Fountain Financial to remain the investment advisor when a client passes. "It's something the client likes, ING likes and we like it, because it keeps the team intact and the same people who built the plan get to execute it," Fountain says. "I was just on the phone this morning with an 83-year-old woman who just lost her husband, and because we're named as the advisor, there are no new relationships she has to deal with in her time of grief."

At Raymond James Trust, assets are coming in the door at a record pace, says President Dave Ness. "We've taken in more than $450 million in assets in the first nine months of the year," he says. That's a significant record for Raymond James. It is directly related to the firm's recruiting success, as well as the fact that the firm has 16 years of operating experience and the trust company is starting to see trusts implemented as clients pass. On the recruiting front: "We're doing business with 100 new financial advisors just since the beginning of the year, and they are bringing trusts with them," Ness says. "As long as the recruiting success at Raymond James continues, we no reason why we won't continue to see 20%-a-year sales increases."

Schwab Finds Advisors Are Central To Investor Decisions

Registered investment advisors have the greatest impact on clients' estate planning decisions, according to exclusive new study findings provided by Schwab Institutional to Financial Advisor magazine.

"We are seeing that this is where the recommendation from advisors really becomes crucial," says Cathy Clauson, vice president of product marketing in charge of trusts at Schwab Institutional, of the study results. Approximately 1,000 advisors were surveyed for the new Independent Advisor Outlook Study, a semiannual survey of advisor sentiment from Schwab Institutional, which has $151 billion in total trust assets.

The study found that for the largest percentage of respondents (35%), advisor recommendations have more impact on estate planning decisions than any other factors for the largest percentage of respondents. (See Figure 1.)

  The findings make it clear that investors look to advisors for information and help regarding trusts, says Clauson. "I'd say that in general advisors are talking about trusts with clients about 35% of the time. But the advisors who know trusts think that number is low. They're talking about trusts in every conversation. I think the study underscores that if you're assuming that clients are turning to their CPA or someone else, now you know they're counting on you to have this conversation."

The study also shows that advisors (59%) are using living or revocable trusts more than other estate planning tools. (See Figure 2.)
But that should change as the need for trusts tracks the aging of baby boomers, Clauson says. "Right now, clients are starting to care about retirement, but they still want the flexibility of a revocable trust. As they age more, they'll want to lock in the tax benefits that irrevocable trusts provide."