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Is Your Bank Trust Department Costing You Millions?

By: Nick Perini
Friday, February 16, 2018

The hallowed walls of a bank trust department may seem intimidating to many clients.

Maybe the bank was hired by your parents or grandparents to manage the family assets. Alternatively, maybe the bank was recommended by your attorney after you came into a substantial sum of money.

Once your assets are there, the bank trust department knows what to do – right? They’ll do the right thing – won’t they? Banks are known for charging reasonable prices – aren’t they?

You may not think that you have choices, or the ability to lower the fees that you pay to the bank. We see things differently. High costs are one of the most significant headwinds to creating wealth, and there are many fees to watch out for when talking about your trust accounts. Most banks charge an administrative fee and a management fee, and then invest your money in products that charge an additional fee. That’s too many fees.

Telling the bank that you’d like to hire an independent investment manager while your assets remain held at the bank can be one of the most straightforward and cost-saving strategies to help you and your family keep your wealth. Remember, every dollar you save on fees is a dollar that can continue to grow in the future. That means one dollar saved now can become many dollars later.

How to Assess Your Bank Trust Department

Here are a few questions that you can ask your bank trust department to learn more about how they manage your trust and at what cost.

1.     Who analyzes your investments to initiate strategic shifts in the positions that you hold? Do they depend on computer-generated analysis or is their process a collaborative effort where teams gather to make the most rational changes based on your unique risk profile?

2.     Who oversees the administrative functions of your trust? Is it possible to speak with your team periodically? Are they local? Is it someone in a call center? Can you meet this person face-to-face?

3.     What’s the ratio of client to portfolio manager? How many trusts do the administrator and investment manager oversee and how much time they can spend on each of them? If it seems like they manage an overwhelming number of accounts – maybe they do.

4.     What is the ratio of client to portfolio manager? Ask for a comprehensive breakdown of the annual fees for which the trust is paying such as:

·        Administrative

·        Management

·        Investment Product

·        Miscellaneous

Once you collect this data, evaluate it or let Beese Fulmer help you to assess it. If you’re curious about alternative methods of managing your wealth or are unhappy with the answers you receive, it’s likely time to make a change.

It’s Your Money. Don’t Be Afraid to Take Charge.

Trust officers will sometimes push back when you ask to hire outside help.  Be firm. In most cases, it’s your right to hire a new investment manager that can potentially save you a bundle. Keep your wealth where it belongs, with you.

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The Beese Fulmer FREE Wealth Profile

Our WEALTH PROFILE helps us gather the type of information we've found essential in establishing who you are…where you want to go…and how you want to get there.
  • We start with basic background information about your assets and objectives.
  • Then we define your goals for the portfolio and what we call your Investment Psychology (conservative, moderate, or aggressive? patient or reactive? hold-and-grow or make withdrawals?).
  • We determine your attitudes and behaviors concerning the market, a meaningful guide to your favored portfolio philosophy.
  • The final section characterizes your personality in general terms and relating to finances.
Before proceeding, think about your total wealth; not just your investments, but your real estate, bank accounts, business assets, and insurance. These are all part of your total wealth picture.

While we specialize in the investment piece, we will take other assets into account in order to build a portfolio that best complements these assets.

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