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."