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How Should RIAs Offer In-House Trust Services?

September 12, 2017

The majority of RIAs that offer trust services to their clients do so through a third party because few clients demand it, InvestmentNews writes. Yet some firms prefer to manage trust assets in-house, according to the publication.

Only 9% of RIA clients receive trust services from their advisors, according to a Fidelity Investments' 2016 RIA study cited by InvestmentNews. And only 27% of RIAs offer trust services, according to the study. Of those, 74% include them as part of their overall fees, 12% charge a separate fee, 7% include the fees as part of an overall retainer and 9% charge hourly, Fidelity found.

Erika Safran, owner of Safran Wealth Advisors, outsources trust services to specialists for the 5% of the firm’s clients who require them, she tells InvestmentNews. But Safran believes handling trust services internally could help her firm bring on more trust beneficiaries, according to the publication. Adam Nugent, chief executive of $325 million advice firm Foresight Wealth Management, tells InvestmentNews his firm plans to offer trust services this fall without initially charging any additional fees for them. Doing so will help Foresight offer the kinds of services provided at family offices and therefore continue building value and bringing more to its clients, he says.

On the other hand, even larger firms sometimes choose to offer trust services through outside relationships, InvestmentNews writes. Paul Taghibagi, senior partner at the $6.8 billion advice firm SEIA, tells the publication that offering those services in-house would cause more headaches, requiring the firm to bring on lawyers and CPAs and buy liability coverage and insurance.

RIAs affiliated with larger firms that have in-house trust services may be in a better position, according to the publication. Tim Holsworth, president of AHP Financial Services, gives clients requiring trust services access to Raymond James’ trust department, with which his firm is affiliated, InvestmentNews writes. That way, he can offer the services, have Raymond James do due diligence and still be the rep on the account, he tells the publication.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.