As explored in part one of this two-part series, trusts can be multi-faceted in their various uses and a key tool in advisors’ arsenal for assisting clients, especially during times of transition. Beyond trusts’ planning applications, offering trust services can also assist with various aspects of practice management, including helping to attract new clients, gaining wallet share with existing clients, and offering a “stickiness” to client retention 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 incorporating trust services into their business models. Recent regulatory developments have implications for retirement savings; The House 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). More specifically, the proposed changes to the stretch period for IRAs create new considerations for advisors, standing to position trusts as an increasingly important option to help manage and potentially mitigate taxes as a result.

Additionally, only 23% of advisors offer trust services, highlighting an untapped market opportunity. As competition for clients continues to heat up, M&A activity gets hotter, fees drop lower and client expectations climb higher, trust services can offer a differentiator and a true value-add to clients as they navigate life transitions.

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. Creating an opportunity to enhance existing client relationships, these services can help solve complex planning issues, as well as potentially attract assets from new clients who may value or require these types of benefits for their unique needs. Advisors can also benefit from gaining access to the next generation of clients if they inherit wealth through these trusts.

Finding The Right Expertise

As touched upon in part one, trusts can be complex with many different types, purposes, rules and legal requirements (which can also vary by state). It’s no wonder that so few advisors are offering trust services today, but they don’t have to be trust experts to offer the services.

For advisors interested in taking a second look but don’t have the resources to execute in-house, outsourcing can be a good option. It’s important for advisors to consider these six areas when evaluating outsourcing potential strategic partners for trust services. 

Independence. As part of your due diligence in securing a trust services strategic partner, ensuring you’re able to maintain independence after selecting a partner is a key point. You could look to a local bank or trust company, but it’s important to consider that your local bank may offer the same investment services as you and look to expand their relationship with your client beyond trust services. Selecting a trust company that works with independent advisors can help avoid competition.

Services provided. Trust services and the service level can vary by 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. Service level variations can have a big impact on both the client and advisor experience.

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