A third of the affluent have set up a trust, with large differences based upon Age (older affluent are more likely to have set up a trust) and Wealth (those with more wealth are more likely to have set up a trust). The slight increase seen in trust accounts and assets in trust accounts is not encouraging given the vast differences in trust usage based upon age. Clearly, those in younger age groups are not using trusts as extensively as those in older age groups, probably because they are not as familiar or comfortable with them.

Merger activity among banks has created a very skewed universe of personal trust institutions. The top ten personal trust providers have become mega-institutions. The top ten providers hold over $30 billion in personal trust assets, up from $29 billion last year. On the other end of the scale are about 1,400 institutions with personal trust assets under $400 million. These small institutions lack the scale required to provide the state of the art technology and products provided by larger organizations. They succeed through personalized (though often manual) services and draw upon local centers of influence (e.g. attorneys, accountants) for referrals of business requiring a bank trustee. These smaller providers often hold smaller accounts and have more localized relationships than the mega banks and can have more of an impact on educating their clients on trusts and options within those trusts.

Educating the affluent, as always, is the hurtle and the goal. Even among those who currently have trusts, their nature is not entirely understood. When asked why more of their assets are not being held in a trust, a third indicated they wanted control of the funds and/or they wanted liquidity. Twenty percent felt certain assets do not belong in a trust and 6% just had not gotten around to it while another quarter listed other reasons for not putting more of their assets in a trust. Clearly, given these open-ended answers, much confusion remains about the nature of trusts. Those who don’t have a trust, give as the most common reason that no one has ever talked to them about it.

Of those who have trusts, 80% are acting as trustee for those trust assets. Most are satisfied with their role and with the self-trustee process as a whole. Less than 10% feel the role of self-trustee is more work than they anticipated and just over a quarter would solicit the help of a professional if they were to do it over.

It is not surprising to find that over half list their desire to maintain control of their assets as their primary reason for self-trusteeing. As the number of affluent continues to rise and more move into the self-trustee environment, financial institutions must adjust their services and marketing to meet this group of investors needs.

Bank trust departments, in particular, must reevaluate how they are offering trust services. If banks can effectively link these important perceptions to the services they offer through education and communication with the affluent, they may be able to take advantage of the growing need for trust services. For more information: UHNW Professionals

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