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Thursday, October 17, 2013

Bank Trusts Want More Third-Party Funds

Reported by Tommy Fernandez

More than 80% of bank trust departments expect to increase their consumption of third-party funds over the next two years, according to new research from Cerulli Associates.

   The October 2013 issue of The Cerulli Edge-U.S. Asset Management Edition examines bank trust officers and their high-net-worth clients, wholesalers targeting high-net-worth advisors, and young investors' use of direct providers and financial advisors.   

"For a number of years, individual investors, families, and businesses have opted for bank trust organizations to provide and implement wealth management advice," stated Donnie Ethier, senior analyst at Cerulli. "Conventionally, high-net-worth and ultra-high-net-worth households have elected bank trusts as a way to minimize taxes, enrich philanthropy efforts, and enhance estate planning. Bank trusts have always been a top destination for asset managers, but the focus has intensified in recent years."  

Ethier added that "While trust officers often serve as the decision-makers by evaluating managers and composing portfolios, many banks have transferred these responsibilities to other centers of influence,...Banks' most frequent tactic is to empower a centralized research team with the authority to make all decisions on external managers."

?However, Cerulli's survey reveals that asset managers find national banks, super-regionals, and local bank trusts similarly attractive, regardless of their history of using external managers. This overall optimism may cloud distribution efforts, specifically when constructing salesforces. In addition, the long sales process will most likely reflect an institutional-like transaction.  

  "Asset managers should be aware of concerns among trust companies," Ethier states. "While the majority of bank trusts anticipate assets shifting to third-party managers in the next two years, another three-quarters of bank trusts identify the acts of researching external managers, and building a research group to do so, as their greatest challenge in moving the needle."  

Here is the press release:
Company Press Release

Bank Trust Departments to Increase Use of Third-Party Funds



    October 2013, Boston. New research from Cerulli Associates, a Boston-based global analytics firm, finds that more than 80% of bank trust departments expect to increase their consumption of third-party funds over the next two years.   

    "For a number of years, individual investors, families, and businesses have opted for bank trust organizations to provide and implement wealth management advice," states Donnie Ethier, senior analyst at Cerulli. "Conventionally, high-net-worth and ultra-high-net-worth households have elected bank trusts as a way to minimize taxes, enrich philanthropy efforts, and enhance estate planning. Bank trusts have always been a top destination for asset managers, but the focus has intensified in recent years."  

    The October 2013 issue of The Cerulli Edge-U.S. Asset Management Edition examines bank trust officers and their high-net-worth clients, wholesalers targeting high-net-worth advisors, and young investors' use of direct providers and financial advisors.   

    "While trust officers often serve as the decision-makers by evaluating managers and composing portfolios, many banks have transferred these responsibilities to other centers of influence," Ethier continues. "Banks' most frequent tactic is to empower a centralized research team with the authority to make all decisions on external managers."

  ?Cerulli's survey reveals that asset managers find national banks, super-regionals, and local bank trusts similarly attractive, regardless of their history of using external managers. This overall optimism may cloud distribution efforts, specifically when constructing salesforces. In addition, the long sales process will most likely reflect an institutional-like transaction.  

    "Asset managers should be aware of concerns among trust companies," Ethier explains. "While the majority of bank trusts anticipate assets shifting to third-party managers in the next two years, another three-quarters of bank trusts identify the acts of researching external managers, and building a research group to do so, as their greatest challenge in moving the needle."  

    Cerulli stresses the importance of an asset manager delivering performance that is consistent with its philosophy merger and acquisition activity. 

   ####

  NOTES TO EDITORS:

     These findings and more are from: The Cerulli Edge - U.S. Asset Management Edition, October 2013 Issue.
    

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