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Monday, February 12, 2001


Reported by Tamiko Toland

TD Waterhouse is doing more than keeping up with the Joneses; the firm is one-upping them. The New York-based firm has added trust services to its adviser offerings, following a similar announcement from Schwab last year. Unlike US Trust, Capital Trust Company of Delaware does not compete for advisers' business.

When Thomas Bradley, president of TD Waterhouse Institutional Services, told advisers about the new offering, he emphasized the independence and non-competitive nature of the firm's new partner. However, he told the MutualFundWire that Schwab's service through US Trust did not affect TD Waterhouse's decision to find a provider of its own.

"We all react to what our advisers want, what they need," he explained.

The announcement follows the establishment of a similar co-marketing relationship between Capital Trust and DataLynx earlier this year. Capital Trust also shares relationships with Commonwealth Equity, in Waltham, Massachusetts, Cambridge Analysts, in Fairfield, Iowa, and Capital Analysts, in Radnor, Pennsylvania.

"I know that the reason that all these organizations promote us is because we're independent of anyone in the money management business and we don't have a retail effort," said Jeffrey Lauterbach, chairman, president, and chief executive officer of Capital Trust. "Also, the fact that we're in Delaware with all of its advantages."

In order to facilitate transactions in its arrangement with TD Waterhouse, Capital Trust is in the process of building an information bridge. The bridge, which is expected to be ready in the first half of the year, has to reconcile reporting and exchange across two very different platforms. TD Waterhouse and Capital Trust will share development costs in an arrangement which has not been finalized.

"The real issue is taking information out of a brokerage platform and sucking it into the appropriate accounts into a trust accounting platform," said Lauterbach. "We use Sungard Series Seven, but it generally does not talk to brokerage platforms."

While DataLynx does use a trust platform, making bridge development easier, Lauterbach said his company has adopted a wait-and-see approach.

"A lot of technology investment is driven by volume of activity, and most people would choose not to make the investment until you had the volume," said Lauterbach. "We intend to move ahead with the bridge [with Waterhouse] regardless, because we think the advisors will do enough business with us to make the investment worthwhile."

Capital Trust provides both custodial and non-custodial trust capacity to its clients, but most TD Waterhouse clients will continue to custody with TD Waterhouse. For non-custodied assets, the firm charges 65 basis points for the first $500,000, with a scale that decreases to twenty-five basis points at the highest asset level.


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