Genworth Financial Trust Company announced a new program to help independent financial advisors find the trust companies best suited to working with them. Genworth is betting the right partnerships will help advisors keep trust assets that they otherwise would have referred away.
The program, called Trust Connections, introduces advisors to trust companies that specialize in working with clients of independent advisors. These companies provide trust administration and serve as corporate trustee, leaving the advisor to manage the investments. Often, advisors fear that trust companies have designs on taking over investment management of their clients' assets, in addition to serving as trustee.
"The premise is we want to give advisors all the tools they need to make a difference in clients' lives," said Brad Wheeler, president of Genworth Financial Trust Company. He said the program came about from a need in the market. Advisors would frequently ask his firm if it could recommend a corporate trustee (despite the word Trust in the Genworth unit's name, it does not serve as a corporate trustee, but instead handles custody for advisors).
Wheeler added that when he and his colleagues asked the advisors where they had been getting the trust services, the answer was almost unanimous: they weren't. "They said, 'I'm passing on the opportunity altogether,'" he said. "And many of them never even asked us. I knew the few who were asking were the tip of the iceberg. It became clear that we needed to find a solution for them."
So Genworth did a deep review over several months of 20 trust companies and narrowed the list to three that it felt had the best model for independent advisors. That meant the trust company allowed the advisor to manage the relationship with the client, and provided the advisor education and expert marketing support through the trust process.
The firms were Advisory Trust Company of Delaware, Reliance Trust Company of Delaware and Wealth Advisory Trust Company of South Dakota. Delaware and South Dakota are two states with the most established case law and trust laws that give clients and advisors the most options, according to Wheeler. They are especially good in asset protection, taxation and confidentiality, he said.
Genworth will provide the introductions and partner with the trust companies to provide education to the advisors on the trust process. Advisors will learn the right questions to ask and how to respond if a client says he or she is not happy with their bank trust department anymore, and asks if the advisor can manage the assets.
Often, both clients and advisors are misinformed about what they can and can't do under trust law. "A lot of times the client and sometimes the advisor sees 'irrevocable trust' and they think that means "I can't move those assets" and that's not the case," said Wheeler, adding, "irrevocable doesn't mean immovable."
Typically, the term simply means the beneficiary's interest won't be changed. It does not mean that the corporate trustee cannot be changed, or that a different company can't manage the investments in the trust.
Elizabeth Wine writes for On Wall Street.