An investment marketing firm has come up with a way for bank trust departments to serve the middle class.
Cross Marketing Inc., Peapack, N.J., is peddling a revocable living trust product that it hopes will help banks connect in an underserved market.
The program, dubbed Cross Generations Trust Services, provides preprinted, simplified revocable trust documents that banks can offer to clients they normally avoid. Traditionally, trust departments serve wealthy clients - with at least $500,000 to invest - to maintain the "critical mass" necessary to turn profits.
"The living trust product creates another advisory relationship with the bank that allows the sales of investment products and creates an income stream for life," said James J. Fridl, Cross Marketing's president.
Cross Generations is promoted as a niche service for trust departments to give clients in other areas of the bank as an alternative to wills.
A revocable living trust can have a will built in to take care of assets that fall out of the trust, but essentially it distributes assets to beneficiaries soon after the holder's death.
"It has inherent consumer value because it avoids probate, it's not time-delayed, and it's confidential," Mr. Fridl said.
He hopes that banks will view his company's product as an advisory service.
With clients acting as their own trustee and de facto investment manager, the bank has a lot more leeway in selling annuities and mutual funds to them, Mr. Fridl said.
Ann W. Figueredo, consulting director in the investment products division of the Spectrem Group, a San Francisco consulting firm, said this may be the first case of an investment marketing firm's setting up a living trust program for banks.
Wells Fargo Bank, San Francisco, has marketed its own living trust program for clients with as little as $50,000 for the last eight years.
Wells Trust charges a minimum annual fee of $600. Annual fees of 1.5% of market value are charged for accounts with less than $250,000, then 1% for larger accounts.
Instead of charging more for less, the Cross Generations Trust Services Program has a one-time fee of about $950 to be split between the bank, the investment marketer and the client's attorney.
Ms. Figueredo is intrigued by the up-front fee offered by Cross Marketing.
"It's just a simple living trust with a one-time fee, which is still fee income, and it attracts clients to the bank brokerage," Ms. Figueredo said.
Cross Marketing is best known for marketing annuities and mutual funds to 110 banks.