Trusts all too often have represented a black hole in the business of financial advisors. Advisors could spend many years building a relationship with a client family, only to see it completely disintegrate upon someone's death as a bank trust officer swoops in and takes control of the family assets.

Gone are the advisor's clients, their assets and any hope of a continued relationship with the beneficiaries-all because the advisor was a bystander when it came to trust planning. But this scenario is changing. Some advisors no longer are content with just sending flowers upon the death of a client.

More and more advisors are finding ways to incorporate trust services into their businesses by striking relationships with trust companies or forming such firms themselves. And advisors are discovering that you don't have to be a large firm, with millions in capital, to be a player in a client's trust planning needs. It is possible, experts say, for small, independent firms to add trust services affordably.

John Sandager, founder, president and CEO of Santa Fe Trust in Santa Fe, N.M., tells advisors that the addition of trust services to their businesses is both a defensive and offensive play. "It's defensive because they won't lose assets because Mr. Smith dies and they have to send millions in assets to Wells Fargo," says Sandager, whose trust company specializes in working with financial advisors.

As for the offensive play, Sandager says advisors with trust services can turn the table on banks and trust companies. "We're tearing down the walls and allowing them to go after trillions in assets sitting in trust companies," he says. "Offensively, you can go to all your clients and say, 'Do you have family trusts?'"

There are several ways for advisors to offer trust services, each offering varying depths of control over the whole trust-planning process. Perhaps the most efficient route for a small firm, observers say, is to strike a relationship with a trust company that enables the advisor to manage a client's trust assets.

Some independent trust companies, most notably Santa Fe Trust, which was founded in 1997, and Capital Trust of Wilmington, Del., founded in 1999, were chartered for this very purpose and were built from the ground up with advisors in mind.

These companies will typically serve as a client's fiduciary and trust administrator, while an advisor retains the role of asset manager-under the oversight of the trust company. It is a mutually beneficial relationship: Advisors bring business to the trust companies, while retaining the relationship of clients and their beneficiaries.

"A typical trust company does everything we do and one thing more-they manage the assets," Sandager says. "But we do monitor the asset manager. We are the ultimate fiduciary."

Jeff Lauterbach, president and founder of Capital Trust, says another route advisors sometimes take is to become involved in trust planning by having a client name a noncorporate entity, such as a friend or relative, as trustee. The client then typically will utilize a cadre of professionals to handle the trust administration, while the advisor remains asset manager.

But such an approach can be risky if the advisor doesn't have the necessary expertise, he says. "They can put themselves in a very precarious situation if they don't do it correctly," Lauterbach says.

Another avenue for advisors, particularly those who want more control over the trust-planning process, is to convert their business into a trust company or start one to run parallel with their planning business. Two primary issues advisors have to keep in mind in considering this are capital and expertise, experts say.

Depending on the state in which the trust company is chartered, it could take at least several million dollars in startup capital. Besides capital, a firm needs to make sure it has the necessary in-house expertise to take on the trust services that go above and beyond asset management, Lauterbach notes.

"I think it's certainly beyond the reach of a small firm," he says.

In some circumstances, however, firms find that this is the best way to go. John Meyer, president of Boeckermann Grafstrom & Mayer Wealth Management in Minneapolis, says his firm started a trust company after seeing several large clients set up trusts.

The firm, with about $300 million in assets under management, estimated it stood to lose up to 50% of its business if it didn't become a player in its clients' trust services, Meyer says. "We wanted some way of keeping that trust work not only here, but away from big banks," he says.

One of the reasons the creation of a trust company was possible is that the firm was able to take advantage of friendly capital requirements and laws in South Dakota, Meyer says. As a result, the firm was able to charter Cornerstone Private Asset Trust Co. LLC in Sioux Falls, S.D., with about $300,000 in capital.

Some trust companies offer options that fall somewhere in between partnering with a trust company and creating one from the ground up.

National Advisors Trust Co., for example, was started last year when a group of advisors pooled their resources. They cite their undertaking as the first time a trust company has been started by advisors, for advisors.

"A big issue is being able to control the process," says Stuart H. Welch III of The Welch Group in Birmingham, Ala. Welch is among about 85 founding advisor shareholders of the trust company. "This allows us to deliver a higher quality of service for a lower cost."

One of the unique aspects of the company is that seven committees of advisors run all aspects of the business, including investing, technology and marketing, Welch says. Although the company is legally required to be managed to generate a profit, he says the aim of the company is service-oriented. "We're defining what the service quality looks like," he says. "Our goal is not for the trust company to make a ton of money."

National Independent Trust Co. was chartered in November 2000 to assist advisors who want to run their own trust companies, but without the work involved in a typical startup. "Basically, we have a setup in which they own their own trust operation within the big NITC umbrella," says Tom Batterman, president of the Vigil Trust division of NITC in Ruston, La.

Stuart Allen turned to NITC when he was looking for a way to enter the middle trust-services market-comprising clients with between $500,000 and $2.5 million in assets-in the Portland, Ore., area. Working with NITC, he converted his two-year-old asset-management business, Allen Capital Management, with $21 million in assets under management, into Allen Trust Co.

The transition was made easier by the fact that Allen had experience as a trust officer with Wells Fargo. Noting that in-house expertise is essential in any transition, Batterman says NITC normally has one of its own professionals initially act as the de facto trust officer for advisor firms that start a trust company. "I don't think a person should start a trust company without involving, at some level, a trust officer," Allen says.

Some advisory firms have come up with unique ways to incorporate trust planning. Jill Pletcher, with about 18 years of experience in the trust business, left U.S. Trust two years ago to work for her husband Mitch's business, Concord Investment Counsel in Irvine, Calif.

Pletcher's official title is director of client relations, but she essentially works with clients on trust planning, with Santa Fe Trust acting as the official fiduciary and trustee and Concord as the asset manager. She started pursuing the trust-services market about eight months ago, and has since brought in about $15 million in trust assets with "another $5 million to $6 million in the hopper," she says.

The business she has won includes former clients at U.S. Trust who have moved accounts over and Concord clients who also have trust service needs, she says. "What I do is kind of act as go-between between the client and Santa Fe Trust," she says.

Even with the existing opportunities for advisors, some believe that there's still a way to go in breaking down the wall that separates the advisor and trust industries. "The options, I think, are limited right now, largely because of capital constraints and expertise requirements," says Steve Kanaly, chairman of the fee-only National Association of Personal Financial Advisors (NAPFA) and co-chairman of the Kanaly Trust Co. in Houston.

Kanaly feels it's partly a cultural divide. Trust companies, he says, are more used to banks and estate attorneys feeding them clients than financial advisors.

But he expects that over time, trust companies will recognize the value of working with advisors. "The independent trust company needs a generalist like the fee-only financial planners we have at NAPFA," he says. "Independent advisors are natural marketers and natural business developers. The question is how they split the revenue and the relationship."