Dear Mr. Miller:
For months I have been working with my Mom to determine and gain control (through the power of attorney that she gave me) of all of her investments. She has a number of them with several different brokerage houses, in addition to annuities and life insurance policies. Maybe 15 different contact points, and I’m not sure I’ve uncovered all of them yet. Where do I put all of these investments so they are under one roof and I can deal with them easily?
Going Crazy Son
Trust officer with the advanced certification
The best return
The lowest fees
How to Select a Trust Company that is the Right Fit
Rely on Your Attorney
Get help in making the right choice
We’ve spoken about this before but I keep getting asked the question again and again, and I keep seeing disasters for people who didn’t ask this question soon enough. So let’s deal with it.
They are a myriad of trust companies/banks and financial planners that would be delighted to handle your Mom’s money and investments. Do you use one of your present investment houses or do you use a completely different company? Let’s talk about Trust Companies. For a number of years, I tried to find the best one. I went through various iterations.
The biggest: That was easy. Bank of America is the largest. But would one of the really big trust companies be appropriate? If you are Warren Buffett you are going to receive its top people and they are going to fall over themselves to return your phone calls. You are not Warren Buffett. One of the large companies I have dealt with has several trust centers around the country for their “smaller accounts.” The junior trust officer is going to be to whom you are assigned. Maybe the junior-junior trust officer. I don’t know how many accounts that officer is handling at any one time (although I have been told it is a lot) but let’s agree that responsiveness and expertise is gong to be somewhat less than Warren would receive.
Trust officer with the advanced certification: I had to search high and low to find a trust company with an officer holding an advanced certification (CTFA) for trust officers. I finally found one. Three months later, she was at a different trust company. So that didn’t work and I moved on to my next iteration.
The best return: All of the Trust Companies tend to follow similar investment approaches, hire the same types of smart people to handle the investments, and each report their returns by varying different methods preventing comparison (there is no federal formula for calculating return as there is with mutual funds). So that didn’t work.
The lowest fees: Comparing fees is equally impossible as the one with the lowest annual fee probably has certain other costs and vice versa. Unless you ran two identical investment accounts through two different companies for a year it would be difficult or impossible to know for sure.
Obviously, none of those approaches worked. So how do you do it?
How to Select a Trust Company that is the Right Fit: I finally came down to the best is the one which is going to be the most responsive. And that responsiveness depends on your situation. Again, getting back to Warren Buffett, pretty much any trust company is going to fall over themselves to return your phone calls. But since you are not that person, you need to find a trust company that will be responsive to your needs. And unless you are Uber wealthy, that generally is not one of the larger trust companies.
You also want a company with whom you can build a relationship. There is a trust company that is very large with relatively low fees (no, I’m not going to name names). They have different levels of investment divisions. Less than $500,000, less than $1 million, etc. They do a fairly good job. But, the good officers keep getting kicked upstairs to the next higher level leaving the investor to create yet another new relationship and the advisor to become familiar with the investor’s goals, time horizon, and risk tolerance. And, at the lower levels, the officer is typically a youngster (in his/her 20’s or 30’s). I don’t know about you, but I would like someone who is a bit more seasoned.
Rely on Your Attorney: So how do you know what company is “right.” That is your attorney’s job. Yes, that’s right, your attorney should not be there to just draft documents as this person should have a wealth of experience and knowledge that can be used for your benefit. He/she should know with whom he has a good relationship and who has good responsiveness for your wealth level. After all, if the attorney has been around a while then he should have already dealt with a number of this companies.
Transfer Assets: Once that company is selected, all (or at least most) of the investments will be transferred (generally in kind so that there is no tax ramification) to the selected company. And life will become much easier for you (just one monthly statement and one person with whom to discuss things). And certainly, life will be much easier for the manager if something happens to you.