RIAs have to get ready, because if they aren't looking for trust assets already, trust assets are certainly going to come looking for them.

Barbera says his firm has started confronting trust-curious clients-about 20 of them in the last year have asked, about 10% of his clientele. TGS is trying to figure out how to proceed-cautiously-and find the right dance partner to take over the trust admin. They don't want to be the trustees themselves (a dangerous proposition, say observers, one that puts the advisor in legal crosshairs). But they need to find relationships with trust administrator companies that won't also try to poach their investment management. The worry is that the client is ultimately forming a relationship with a brokerage company, not the RIA, and RIAs are jealously guarding their relationships.

"We have an independent RIA," Barbera says. "We're not a trust company. Our custodian, Raymond James, they are, but should we offer more options? Should we maybe have somebody with a bigger name? We're reluctant to engage in a relationship with a trust company if they're all about sort of 'getting' the money, and I know that's a big problem with the RIA space."

Mike Flinn, a regional trust consultant at Phoenix-based Advisory Trust Company of Delaware, a part of Wilmington Trust Co., hears this story a lot. "There's a certain amount of risk you take with a trust company, if they are in the business of investment management, that they are going to threaten your core competency," he says.
And he thinks if you go onto one platform with your trust, it might be hard to leave. "What happens if you leave the Raymond James fold?" he asks.

The Topic You Hate?
Many advisors hate talking about the subject, says Flinn. And part of that is that it's confusing.

Flinn's company, registered in Delaware, offers directed trustee and trust administration services to high-net-worth families, working exclusively with advisors. He says his company's arrangement allows the advisor to manage assets, while companies like Pershing, TD Ameritrade, Schwab or Fidelity can handle the custody (they are all beefing up their custody services to help advisors navigate the trust waters). Flinn says his company was designed specifically not to compete on asset management or custody but to work with RIAs who want to be the center of the relationship with the client.

He says that one of his missions is to educate advisors who might not know they can move the trust assets out of the banks in the first place. "The independent advisor marketplace often doesn't understand that they can go after these assets," he says. "I get four phone calls a year from an advisor who's sitting in a meeting with a husband and wife and the wife says to the advisor, 'Jeez, we love what you're doing with our $850,000 portfolio-our IRAs or whatever. I sure wish you could manage my mom and dad's trust, of which my brothers and sisters are beneficiaries.'"

They can, says Flinn, who says his job is to help RIAs ask their clients about their trusts and hunt down portability language that would allow the advisors to move the money.

"My estimate," Flinn says, "is that if you look at your book of business as an RIA, 5% to 10% of your clients are associated with a trust. If they are dealing with 100 families, five to ten are associated with a trust. Some may be revocable, some may be irrevocable." Sometimes the clients don't think it's relevant and don't mention it because they think the trust is stuck, he says. "I would say rarely is it stuck. Every trust has an opportunity to be moved. It's like a fly with six feet; how many of them are on the fly paper? Sometimes, it's four feet; sometimes it's one foot."

The factors to consider, he says, are, No. 1, portability language. "Because that can give people clear language that they can get rid of the corporate trustee and appoint a new one." Next, he says, it's the size of the trust. "Smaller ones are easier to move. Larger trusts create more revenue for the corporate trustee." (He draws an arbitrary line between small and large at $1.5 million.) The third factor is motivation. "How much do they want to do it? The end client has to be more motivated. But I would say rarely can a trust under any circumstances not be moved."