RIA Valuation Insights

A weekly update on issues important to the Investment Management industry


Trust Companies

Margins and Compensation Practice Management Transactions

5 Takeaways from the Association of Trust Organizations’ (ATO) 2023 Annual Meeting

During ATO’s annual meeting in New Orleans, industry experts weighed in on pressing topics for independent trust companies. Key discussions revolved around the limited impact of the FTC’s proposed ban on non-compete agreements, the potential advantages of AI in trust administration, and the unique financial trends and risks observed in the TrustCo sector. For those in the trust industry seeking insights on its current state, this conference provided invaluable perspectives and recommendations.

Is the Best Wealth Management Platform Really an Independent Trust Company?

The most frequently ignored topic in the wealth management industry may be its first cousin, the independent trust industry. While many still associate trust work with banks, and banks still represent more than three-quarters of the trust industry, the growing prominence of independent trust companies is causing many participants in the investment management space to take another look. In some regards, independent trustcos look a lot like wealth managers, only more evolved. In this post, we discuss fees, what the current market environment and demographics mean for trustcos, regulatory trends, and our outlook for the future.

Treasures in the Attic

The Value of Future Fiduciary Appointments

Independent trust companies are frequently named in wills to serve as the trustee of an estate or living trust. These appointments may create a revenue opportunity for an independent trust company next year or fifty years from now. A trust company is sometimes notified of their assignment but isn’t always. Future fiduciary appointments certainly have some value; but how much and how do you measure it?

Whitepaper Release: Valuing Independent Trust Companies

The situation giving rise to the need for a valuation could be one of the most important events of your professional career.  Familiarity with the various contexts in which your firm might be valued and with the valuation process and methodology itself can be advantageous when the situation arises.  To this end, we’ve prepared a whitepaper on the topic of valuing interests in independent trust companies. 

Industry Trends

Trends with Independent Trust Companies

Independent trust companies are a growing segment of the trust industry.  While trust divisions of banks still represent about 84% of the trust industry, there’s been a trend towards independence that parallels that seen in the wealth management industry.  In this post, we highlight some of the trends impacting independent trust companies.

Industry Trends

Today’s Independent Trust Company

How Does Your Trust Company Measure Up?

As trusts have become more sophisticated, independent trust companies have become increasingly specialized with respect to trust administration.  Many independent trust companies today focus on specialized types of trusts or beneficiaries.  As part of this trend, trust companies are increasingly outsourcing investment management in order to focus on fiduciary issues. 

Practice Management

Are Trust Companies Changing for the Better?

Trust Company Sector Update

Trust law has evolved over time, most recently with modern trust laws in the 1980s and 90s established by certain states such as Delaware, Nevada, and South Dakota. Other states, such as Tennessee, have developed compelling trust statutes in more recent years. Just as trust law has changed with the regulatory environment, trust companies are changing to meet clients’ evolving needs.

Trust Banks’ Performance and the Role of Technology

Trust banks have generally lagged the broader indices since the financial crisis of 2008 and 2009. Against a bearish backdrop for the industry, all three trust bank stocks declined in the last few months of the year with falling client asset balances and rising labor costs. Northern Trust and BNY Mellon performed more in line with the market and traditional banks while State Street’s underperformance is largely attributable to investor skepticism surrounding its purchase of Charles River Systems last summer.

Trust Banks Underperform in 2017 Despite Rising Equity Markets & Yield Curve

All three publicly traded trust banks (BNY Mellon, State Street, and Northern Trust) underperformed other categories of asset managers during 2017, and only State Street outperformed the S&P 500.  While all three benefited from growth in Assets Under Custody and Administration (AUCA) and Assets Under Management (AUM) due to strong equity markets in 2017, the trust banks performed more in line with U.S. banks generally during 2017. 

Asset Management Industry Trends

Q1 Shows Glimmer of Hope for Active Managers and Continued Gains for Trust Banks

The First Quarter 2017 Asset Management newsletter has been released. This quarter’s newsletter focuses on the mutual fund sector, which has been plagued by asset outflows into ETFs and other passive strategies for most of the last decade. The first two months of this year do, however, offer a ray of hope as 45% of U.S. based active managers beat their relevant benchmark, resulting in February being the first month of inflows into active products since April 2015.

Trust Banks Thrive in 2016 on Steepening Yield Curve

All three publicly traded trust banks (BNY Mellon, State Street, and Northern Trust) outperformed the market in 2016, continuing their upward trajectory over the last few years but still lagging the broader indices since the financial crisis of 2008 and 2009. Placing this recent comeback in its historical context reveals the headwinds these businesses have been facing in a low interest rate environment that has significantly compressed their money market fees and yields on fixed income investments.

Investment Management

Mercer Capital provides RIAs, trust companies, and investment consultants with corporate valuation, litigation support, transaction advisory, and related services