How to Improve the Operational Efficiency of Trust Services

By Cynthia Stephens, VP of Marketing, ByAllAccounts on Tuesday, March 26th, 2013

Demand for trust services is on the rise. One in two (57%) financial professionals recently polled in a Wealth Transfer, Estate Planning and Planned Giving Survey  cited an increase in demand last year. And, 46% believe there will be a further increase of up to 20% this year.

Growing demand is being fueled by an aging customer base (67%) and the current regulatory climate (53%). Neither of these two conditions appears likely to change in the near future.

For heads of trust operations these trends will create challenges during the coming year as well as offer new opportunities for investment and tax planning in this post-cliff environment.

Operational efficiency challenges

It’s not my intent to take a position in this blog on the merits of managing trust services in-house versus selecting a third-party administrator.   Those decisions will depend on a multitude of issues ranging from your firm’s unique business model, the volume of trust accounts, availability of in-house experts and systems, or accounting requirements. 

What does tend to be common across bank trusts, family offices and independent trust companies with varying systems and processes are three operational issues:

1.       Reducing manual data entry for shadow accounting purposes

2.       Managing investments at a household level

3.       Having consolidated reporting across trust accounts and those held away that your portfolio managers advise on

Scaling operations to meet the growing demand of new and existing customers will either require adding more staff and/or using technology to jump to the next level of operational efficiency. Once again, these decisions will vary by firm. Here’s how a few firms have chosen to tackle these issues.

Bank Trust using a Third-Party Trust Accounting Platform

A growing wealth management and trust management group within a bank wanted to reduce the time spent manually inputting transaction data from statements into a third-party trust accounting system. It was important that their clients with accounts would not have to change brokers (e.g., Morgan Stanley). This group chose to use data aggregation to feed data into its trust accounting platform to save 2-3 hours per week that could now be devoted to something else.

Bank Trust Using Morningstar Office® for Household Level Reporting and Analytics

A firm with hundreds of investment accounts in a third-party trust accounting system wanted to manage these investments at a household level, functionality that their trust platform did not offer. This firm chose to use aggregation technology to electronically get data from their trust system’s web portal and into Morningstar Office for the richer reporting and analytics they desired.

Custodian-agnostic Family Office/Trust Using Commercially Available Portfolio Management Software

A family office within a commercial bank made a decision not to limit clients to one custodian. This differentiated offering necessitated a bigger burden to provide clients with a consolidated report across all their holdings. They chose to automate the data collection and normalization into their Advent™ system to more efficiently provide a complete financial picture.

It’s not my intent with these examples to say that your situation is identical to them or that there is a simple “one size fits all” solution. Each firm will make business and technology decisions that impact both their operational requirements and overall efficiency.

What I would state is simply that while each situation may have unique attributes, your network of operational peers is a great resource and sounding board as you research your options.

You May Also Be Interested In…

Portfolio Management and Trust Accounting systems that ByAllAccounts integrates with (Systems We Support)

Goal-Based Wealth Management: Preparing Clients for Retirement (Blog post by James Carney, CEO, ByAllAccounts)

Wealth Transfer, Estate Planning and Planned Giving Survey (Executive Summary)

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