Meet Your New Competition – And It’s Not a Trust Company
The landscape for trust organizations is changing. What once was a well-defined industry with clear boundaries is now seeing an influx of new players, and the competition is no longer just other trust companies. Learn how to adapt and differentiate your trust organization in a crowded market.
The new reality
In the past, trust organizations faced competition primarily from other trust companies. However, this dynamic is shifting as Registered Investment Advisors (RIAs) are increasingly entering the trust space. The reason is simple: RIAs recognize that by not offering trust services, they’re missing out on a significant portion of their clients’ assets.
For RIAs, obtaining a trust charter and taking on fiduciary duties has become more appealing as it allows them to manage all their clients’ assets, rather than leaving a substantial portion on the table.
Targeting the HNW advantage
The competition might be changing, but the target clients remain the same—high-net-worth individuals (HNWIs). These clients represent a significant revenue stream and are highly sought after by both trust organizations and RIAs. However, the approach to serving these clients is evolving.
Progressive financial institutions are beginning to think more holistically about the services they offer to HNWIs. It’s important to view HNW clients like a sophisticated organization with complex financial needs. This can include offering services ranging from cash management and loans to investment advisory and trust services.
As Watts points out, “The perfect institution will cater to the full financial needs of HNWIs and the businesses they own. The future of the financial competitive landscape lies in offering a comprehensive package that meets all these needs under one roof.”
For smaller trust companies, the strategy may involve partnering with larger institutions to offer a more extensive range of services. By aligning with brokerage providers, these smaller companies can tap into a broader client base and provide the holistic services that HNW clients are increasingly demanding.
Strategic shifts in the financial services industry
Historically, the financial services industry was characterized by strict boundaries—everyone stayed in their lane. However, this is no longer the case. As Watts reflects, “When I was in banking, there was a trust department, and it was like a different company—there was such a separation. Now, those walls are coming down, thanks to technology and the ability to do and see more.”
Technology has been a game-changer, enabling trust organizations to expand their services. The focus has shifted from a transaction-based model to one centered on asset gathering. In this model, clients pay a fee based on a percentage of their assets under management (AUM), aligning the interests of both the client and the advisor.
For trust organizations, the strategy moving forward should involve leveraging technology to gather more assets and offer a broader range of services. This approach not only helps retain existing clients but also makes the organization more attractive to potential clients who are looking for comprehensive financial solutions.
Staying ahead
The competitive landscape is changing rapidly, and trust organizations need to adapt to stay ahead. One of the most effective ways to do this is by using technology to your advantage.
Trust organizations should begin thinking of themselves not just as fiduciaries but as holistic service providers. This shift in mindset is crucial for staying relevant in an industry where the lines between trust services, investment management, and other financial services are becoming increasingly blurred.
Additionally, the use of technology can help identify who your best clients are—the ones who generate the most income, cost the least, and have the highest potential for growth. Understanding this information is key to making strategic decisions about where to focus your resources.
“Do more with less”
In a crowded market, differentiation is important now more than ever. At the end of the day, trust organizations need to think critically about the products and services they deliver. Are you providing the services that HNW clients truly need? Are you leveraging technology to offer more comprehensive financial planning, trust services, and investment advisory?
“Doing more with less” can mean using models and funds that can be scaled across multiple clients, rather than managing individual portfolios for each one. By adopting these tools, trust organizations can deliver the types of investment results that clients expect while also increasing efficiency.
Trust organizations need to continually assess whether their organization is equipped to handle the needs of HNW clients.Do you have the tools and technology necessary to scale effectively? Are you taking steps now to offer more holistic financial services that will help you retain more business and generate more revenue?
Preparing for the future – Your next steps
The financial services industry is evolving, and trust organizations must evolve with it. Assessing the current market is a good way to determine if your company is ready for the future. Don’t miss out on future opportunities by not taking the right steps now.
Cheetah is here to help trust organizations navigate these changes and stay ahead of the competition. Our technology and expertise can empower your organization to offer the comprehensive financial services that HNW clients demand. Let’s work together to ensure your company is prepared for the future.
Ready to get started? Talk to our team.
