Bank Trust Departments Don’t Charge Enough

Don’t tell the banks this but…

In this post at The Trust and Wealth Management Marketing blog, Jim Gust quotes an email he recently received:

Most bank trust departments are undercharging for their services, according to the Fiduciary Income Report analysis of stand-alone trust companies.

The report is a study of trust companies’ income and expenses, examining both profit margin and return on assets.

According to the report’s authors, trust companies that focus or limit their services to one or two account categories (such as, personal trusts, employee benefit, investment management agencies, or custody accounts) report significantly higher profit margins.

Trust companies on average netted 23 cents for every dollar of gross revenue, significantly higher than average net earnings reported by bank trust companies.

I can’t track down author’s source but its doesn’t surprise that their margins are probably pretty low. In more than a few of my recent trust litigation cases the choice of the successor trustee usually results from pitting 2 or more trust companies against each other and making them fight it out for fees.

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