Financial services firms are making it easier for their investment advisers to address a broader array of clients' trust needs, ranging from estate planning to philanthropic giving.
Last week Pershing LLC, a Jersey City unit of Bank of New York Mellon Financial Corp., said it is giving its investment advisers and broker-dealers access to a variety of investment services provided by four trust administration companies.
Other large financial services companies, including Wachovia Corp. and Fidelity Investments, have started similar offerings in recent years.
"So many households now need trusts," said John Feldman, sales director at Ameritas Life Insurance Corp. of Lincoln, Neb., which started using Pershing's services in recent months. "It's a great opportunity for our advisers."
Ameritas, which sells annuities, mutual funds, and other investment and insurance products and services, has more than 17,000 registered representatives nationally that are licensed to sell securities.
Sometimes their high-net-worth customers want to create trusts for purposes ranging from reducing estate taxes to earmarking wealth for charity, but a few years ago Ameritas could not handle certain types of accounts, Mr. Feldman said in an interview last week. For example, sometimes it could not provide trust administration services for people who had small accounts or needed trustees licensed in the state of California.
By working with Pershing and its financial advisers, Ameritas can provide its clients with a wider array of trust administration services from AST Capital Trust Co., Reliance Trust Co., Santa Fe Trust Inc., and Wilmington Trust Corp. As a result, Ameritas can offer trust services for accounts of most sizes, even those amounting to merely $250,000 or so, he said.
Individuals who use the services pay prices that range from 0.15% of their assets (for accounts larger than $10 million) to 0.75%, depending on factors like account size and providers involved. Clients also receive services from experts such as lawyers and accountants.
"Their job is to make sure things go as stated," Mr. Feldman said. "I pretty much leave it at that, but they're available, and they work hand in hand with the adviser who has the relationship with the client."
Thomas R. Livergood, the chief executive officer of the Wheaton, Ill., consulting firm Family Wealth Alliance LLC, said "there's big potential" demand for this type of service from companies like Ameritas.
A financial adviser who manages money for a client who has a trust set up with another company that provides investment services runs the risk of losing that customers's business, Mr. Livergood said. For example, if the client dies, the heirs might leave the adviser for that other company.
"It makes sense to have an independent trustee that's not conflicted with appointing itself as an investment adviser," he said.
The trust business is expanding quickly. According to a report the California consulting firm Tiburon Strategic Advisors' released in June 2005, there were nearly 4 million personal trusts in the United States, more than twice the number eight years earlier. These accounts collectively had $3.3 trillion of assets.
The number of trusts continues to grow as the aging baby boomers increasingly need such services to manage their wealth.
"Firms are trying to get in front of this," said Shadia Kirk, vice president and product manager in Pershing's product management and development group. "It's a big wave."
In September 2005, Fidelity said that it was offering investment advisers services from 10 trust companies, including American Guaranty and Trust Co., Colonial Trust Co., Pitcairn Trust Co., and Santa Fe Trust Inc.
Wachovia provides trust services for investment advisers in every U.S. state in areas ranging from real estate to charitable giving. Since getting into the trust business seven years ago the Charlotte company has gathered almost $8 billion of assets.
Carol Claytor, managing executive of broker trust for Wachovia Wealth Management, cited factors such as the growing number of retiring baby boomers.
R. Hugh Magill, an executive vice president and chief fiduciary officer at Chicago's Northern Trust Co., said that the integrated trust and investment advisory services it provides to the affluent give it a competitive advantage over rivals such as independent investment managers.
"One of the fundamental aspects of fiduciary services is doing what's in the best interest of the client," Mr. Magill said. "When the provider is several steps removed from the actual client, it's difficult to do that."
Historically, banks ruled the trust business, because they were once the only ones who acted as trustees. Charles Roame, the managing principal of Tiburon Strategic said that others can provide the same services, and what companies such as Pershing are doing has become the rule rather than the exception.
"It's what they're all doing, because they need to do it," Mr. Roame said.
