Trust Updates Archive
(Nov. 15, 2011 --Chicago, IL) -- Independent trust companies post the industry?s highest profit margin, according to Fiduciary Earnings & Expenses 2011, a sister publication of TRN.
If a trust institution?s goal is to boost the bottom line and its total trust and agency assets are under $100 billion, then it helps to operate like an independent, according to FEE 2011.
For independents, the key to profit appears to be focusing or limiting the number of services offered.
Unlike their bank-owned counterparts, independent trust companies tend to be ?boutique? fiduciaries. Their services are generally focused on three or fewer account categories, primarily personal trusts, investment management agency accounts, and employee benefit accounts (P.I.E.).
Only some 4 percent of independent trust companies have more than 10 percent of their assets in non-P.I.E. accounts. In stark contrast, more than half, 55 percent, of bank trust departments are full-service, that is, focused on more than three account categories.
Conversely, if the goal is to be a very large institution, with over $100 billion in total assets, independent trust companies are the structure to avoid. The rate of return on assets diminishes for independents as they grow total assets to nearer $100 billion.
FEE 2011 compares the performance of independent state-chartered trust companies to that of nationally-chartered trust companies and bank trust divisions. The report provides industry benchmarks on profit margin, return on assets (both gross revenues and net income), and expenses (both total and by subcategories). To view a a sample copy click here.
For information on ordering FEE 2011 click here.
No statement in this issue is offered as or should be construed as legal opinion or advice or as an indicator of future performance.
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