Congress gave advisors who have the right trust industry partners a huge windfall. Now it’s time for everyone and their clients to take advantage of the opportunity.
Even when it looked like Congress would repeal the estate tax, the wealthiest families in America weren’t exactly counting on the new wind of dynastic freedom blowing forever.
It was a boom season for the trust companies nimble enough to compete for those assets without getting in the way of the advisors who already have the relationships in place.
Nobody sees the trend slowing in the new year. This time, the opportunity is in the hands of the advisors — providing of course that they have the right partners on their side.
We’ve published a guide to the top advisor-friendly trust companies for 6 years now. The 2018 edition is the most important of all, which is why we’re releasing it as early in the year as we can.
As always, it’s free. You can download it HERE.
Double the opportunity
The companies we talked to in compiling this year’s guide had a great year. Some — like South Dakota-based AdvisorTrust — doubled their client assets, while others saw their AUA surge anywhere from 10% to 25%.
That’s a flood of new money in a year when a lot of pundits predicted the death of the personal trust and the industry as a whole spent the spring struggling to ignite more than 6% to 7% aggregate growth.
The secret was knowing more than the pundits. Old money had already watched the estate tax ebb and flow over the past century. They know no repeal would ever be truly “permanent.”
And when Congress failed to even fully repeal the tax at all, doubling the exemption only created a new opportunity for old and new money alike to shield another $5 million in trusts.
Even if they’d already done all the estate planning they could, locked in every tax break available for the long term, suddenly 2018 gives them the chance to do it all over.
In effect, all the trusts in place to date are only half of what the new rules make available. We’re not approaching the end of the trust boom. We’re resetting the gauge to zero.
Furthermore, the shifting treatment of state, local and property taxes changes the math on moving money into trusts across jurisdictional borders. People in high-tax “blue” states will want to transfer funds to traditional low-tax trust havens like Nevada, South Dakota and Delaware — not to mention up-and-coming states like New Hampshire and Wyoming.
And the new advantages around pass-through businesses are already driving incorporation in those states. Tying those entities to trust is a natural.
Advisors who can recommend the right solutions have a natural competitive edge on those have who for all practical purposes decided to bury their heads in the sand.
After all, we’re all here to capture assets from rivals while protecting our own best clients from ambitious interlopers. Odds are good your best clients want to integrate trusts into their planning. If you don’t cooperate with that, you’re not part of their long-term solution.
All the friendly partners you need
Of course the trust industry doesn’t have a great reputation among advisors. A lot of established names in the field use their relationships with trust grantors and beneficiaries to prospect more money away from the families and ultimately their advisors.
That’s why we concentrate on companies that explicitly take another, higher road. They don’t invest in in-house wealth management operations of their own.
They’re content to administer the trusts and let the advisors who built the accounts go on running the money. They’re dynamic and offer more than cookie-cutter solutions. Some, like Provident Trust, are becoming takeover targets because their platforms beat everything else the industry has managed to come up with so far.
Others, like Peak Trust, are on the move on their own, acquiring counterparts in states like Alaska while building a cross-state presence in Nevada and elsewhere. These aren’t the dull institutions of yesteryear. They’re the future.
And since trusts are by definition stickier than personal wealth, that partnership can stretch a lot longer than relationships that depend on a mortal client and, at best, his or her spouse.
The Baby Boomers at the backbone of most advisors’ books of business are largely retired and moving toward the grave year by year. When they die, their heirs tend to take the money to new venues — robot platforms and so on.
When that money’s passed on through a trust, it’s the trust that decides who manages the money and collects the associated fees. That’s why the establishment covets these accounts and why advisors in the know are happy to suggest trusts to clients who need a stronger estate plan.
After all, trusts exist because they provide advantages. Freedom from estate tax — where and when it’s a problem — is only the tip of the iceberg.
We provide all the moving parts in our guide. It’s right HERE.
