The October 2013 issue of The Cerulli Edge-US Asset Management Edition examines bank trust officers and their high-net-worth clients, wholesalers targeting high net worth advisors, and young investors' use of direct providers and financial advisors.  

"For a number of years, individual investors, families, and businesses have opted for bank trust organizations to provide and implement wealth management advice," Donnie Ethier, senior analyst at Cerulli, said.

"Conventionally, high net worth and ultra high net worth households have elected bank trusts as a way to minimize taxes, enrich philanthropy efforts, and enhance estate planning. Bank trusts have always been a top destination for asset managers, but the focus has intensified in recent years," Ethier said.  

"While trust officers often serve as the decision-makers by evaluating managers and composing portfolios, many banks have transferred these responsibilities to other centers of influence," Ethier added. "Banks' most frequent tactic is to empower a centralized research team with the authority to make all decisions on external managers."

Asset managers find national banks, "super-regionals," and local bank trusts similarly attractive, regardless of their history of using external managers. This overall optimism may cloud distribution efforts, specifically when constructing sales forces. In addition, the long sales process will most likely reflect an institutional-like transaction, Cerulli said.

"Asset managers should be aware of concerns among trust companies," Ethier said.  "While the majority of bank trusts anticipate assets shifting to third-party managers in the next two years, another three-quarters of bank trusts identify the acts of researching external managers, and building a research group to do so, as their greatest challenge in moving the needle," Ethier added.