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Cerulli Associates: Bank trust assets rose in 2012

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Trust assets held by banks edged up three percent in value in 2012, a new report shows.

Cerulli Associates published this finding in the third quarter issue of the “Cerulli Edge-Advisor Edition.” The report examines the integration of bank organizations as banks evaluate wealth management as a core business, as well as trends in the retail broker-dealer and registered investment advisor channels.

The report estimates bank trust assets at the close of 2012 at $2.252 trillion, up from $2.188 trillion in 2011. The 2012 figure is just shy of the total reached before the onset of the 2008 credit crisis, when bank trust peaked at $2.329 trillion.

Cerulli defines a bank trust organization as a division of a bank or registered broker/dealer that provides fiduciary wealth management advice under the 1940 Investment Advisors Act, which exempts banks from securities registration.                    

“Cerulli anticipates moderate growth (3%) during the next four years, which reveals the obstacles that lie ahead for the industry,” the report states. “A consequence of the recent financial crisis includes [high net worth] investors diversifying wealth managers, with an average of 3.7 providers in 2010.

“Not surprisingly, registered investment advisors (RIAs) and direct-to-consumer providers are reaping the benefits,” the report adds. “Embracing and implementing open architecture may empower bank trusts to overcome their competitors’ opinions that banks remain too conservative and cannot meet the demands of younger, wealthy generations.”

The percent of households that allocate 90 percent or more of their investable assets with a primary provider was 24 percent in 2012. This proportion, the report notes, is in line with the percentages observed in recent years , including 2011 (22 percent), 2010 (23 percent) and 2008 (24 percent).

High net worth investors less than 39 years of age are “highly likely to be self-directed investors,” the report states. Four in ten (41 percent) of affluent individuals between the ages of 30 and 39 (and 40 percent below age 40) fall into this self-directed category.

The report adds these advisors will likely only seek advice from a financial professional at “special events.”


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