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Financial Planning > Trusts and Estates > Trust Planning

Trust (services) key to RIA success

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The argument for registered investment advisors to offer trust services to their clients is compelling. According to a new white paper from Charles Schwab Institutional, trusts can provide an ideal vehicle for the $41 trillion to $100 trillion in assets projected to change hands as 76 million baby boomers retire over the next 20 years, part of which will be transferred to future generations through lifetime gifts or estate distributions.

The use of trusts corresponds directly with age and wealth, and it’s likely that your high-net-worth clients fit the trust-user profile. Spectrem Group, a research and consulting firm that specializes in affluent and retirement markets, found that 45 percent of a recent survey’s respondents over age 56 held assets in trust. Additionally, the amount of personal wealth corresponds directly with the likelihood of using trusts: 42 percent of respondents whose net worth exceeded $1 million held assets in trust accounts, versus 28 percent for those with less than $1 million. This means that an estimated 58 percent of people with over $1 million in assets lack trusts.

Longer life spans are another factor that will increase the adoption of trusts. Many boomers are likely to spend 30 or more years in retirement without a traditional pension. Consequently, they must manage their personal savings efficiently for longer periods of time to generate adequate retirement income and leave a legacy for their heirs, if they desire. This need is likely to enhance the appeal of living trusts that can provide professional investment management for life and continuity of management after the retiree’s death.

Trust services can benefit both wealth management clients and wealth management firms. Clients receive the numerous financial management benefits traditionally derived from trusts; wealth managers can use trusts to strengthen relationships with existing clients, attract new ones and increase multigenerational asset retention.

Deciding to offer trust services requires a careful analysis of several things, however, including:

  • Your firm’s objectives and capabilities
  • A technical understanding of the different trust types and their main features and applications
  • An understanding of the operational tasks needed to support trust services


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