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A Tale of Two Trust Companies: Exploring how to design the efficient, profitable and client-centric trust company

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Introduction

Trust companies should explore how

to constantly improve client service

and maximize profitability through

best practices in trust technology,

connectivity and workflow. Trust

companies must ask themselves if

they are leading the way, effectively

adopting and leveraging innovative

solutions, or are they an industry

laggard, doing business the same way

it has been done for decades? This

“Tale of Two Trust Companies” (in grey

and summarized in Table 1) explores

designing the efficient, profitable

and client-centric trust company

while avoiding the risks of failing to

deploy appropriate capabilities in

the ultra-competitive world of wealth

management.

Trust companies’ efficiency levels

may vary considerably. Some trust

companies use relatively more

operations staff, investment officers

and administrators than their peers,

and as a result, their profitability may

suffer. Other firms utilize leading

capabilities in technology, connectivity

and workflow to automate processes

and create a more customer-centric

offering, which can result in increased

profitability. Table 2, based on data

gathered from a variety of small

to medium-size trust companies,

Tellson Bank & Trust Darnay Trust

Technology

Reporting Limited format choice, no real-time data, available in paper format only

Customizable and configurable, real-time data, available on Internet & smart phone

UMA/UMH & Overlay Tools Not available Incorporating householding into trust platform for tax & trading optimization

Connectivity

Custody Manual reconciliations Integrated with custodian

Aggregation Manual only Holistic wealth management

STP and Automated Settlement Limited usage Fully incorporated into workflow

CRM Not utilized Utilized and integrated into workflow

Workflow

In-house vs. Outsourced Operations In-house, staff of 20 Outsourced, paying variable fee

Workflow Automation Limited, batch mode Extensively utilized, real-time processing

Compliance & Regulations Managed manually Automated with online sign-off & alerts

Portfolio Management Manual for clients & accounts Automated handling of clients & accounts

Table 1: A Tale of Two Trust Companies

It was the best of times; it was the worst of times…

Tellson Bank and Darnay Trust, located on opposite sides of Main Street in a large Midwestern city, also faced each other across a wide divide of technology and operational efficiency. Their fortunes were diverging as Darnay actively sought out next-generation advances in connectivity and workflow design, all the time maintaining a strong client-centric focus. Across Main Street, Tellson Bank & Trust continued to do business in much the same way as it had done for the past 20 years.

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indicates the relative potential for

improvement by moving from being a

weak performer to a top-performing

trust company.

Firms typically focus on the three

major areas of improvement,

technology, connectivity and workflow,

separately. In fact, most organizations

develop their continuous improvement

across the three dimensions over

time. Technology is the glue that

binds improvement methodologies

together for a best-practices trust

company. This paper lays out some

of the components of those major

improvement methodologies, which

may be deployed based on where

a firm sees the greatest potential

for gain.

Best-in-class trust companies of every

size should consider focusing on their

core competencies while utilizing

modern trust and wealth management

technologies, platform connectivity

and workflow to assist in supporting

a more efficient wealth management

business model. For trust companies

striving to be the best, that

means greater emphasis on client

relationships while top-notch platform,

transaction network and custody

vendors support the firm from behind

the scenes. Trust companies may not

need to make the leap all in one effort;

they can work to develop continuous

improvements from year to year as

they establish new partners, roll out

new technologies and make process

changes as a regular part of their

strategic development.

For your trust organization, are these

the best of times with increasing

profits and market share, or the worst

of times featuring a slow descent into

wealth management irrelevancy?

Best Quartile Average

Worst Quartile Average

Opportunity for Improvement

Trust Accounts per Administrator FTE

200 60 233%

Trust Assets per Administrator FTE

$300 million $60 million 400%

Trust Accounts per Trust Operations FTE

275 75 267%

Managed Trust Assets per Trust Investment Officer FTE

$400 million $100 million 300%

Source: Fast Track Advisors LLC based on survey of trust companies with trust assets under $5 billion

Table 2: Opportunities for Improvement in Trust Company Efficiency

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Wealth Management Technology — Laying the Groundwork for Connectivity and Workflow Optimization

Status as a best-in-class trust

organization begins with the

appropriate technology tools. In order

to provide connectivity and workflow

efficiencies, technologies have to be

flexible in terms of communication

and integration capabilities. As

the industry evolves, a trust firm’s

business model and supporting

technologies should be able to adapt.

For example, if the trust company

needed to provide derivatives or

alternative investments to their

clients, the platform should be flexible

enough to account for, trade and price

such instruments.

The trust accounting platform joins

all aspects of connectivity and

workflow together for superior trust

operations. Selection of a technology

platform requires the vendor to have

the capabilities and resources to

help the trust company keep current

with developments in industry and

regulatory changes.

In an effort to conduct business with

a best-practices model in mind, trust

companies should be capable of

processing information and managing

relationships in the manner best

suiting their clients’ expectations and

demands. This is easier when tools

and procedures are customizable

and configurable for all user groups:

management, administrators,

operations staff, investment officers

and clients.

Wealth Management Technology — “Differentiators” vs. “Enablers”

Wealth management technologies

may be classified as either “enablers”

or “differentiators.” “Enablers”

facilitate the delivery of products and

client services, while “differentiators”

are those technologies that directly

impact retail customers and whose

absence from a technology suite may

provide sufficient reason to change

wealth advisors. “Enablers,” on the

other hand, provide efficiencies that

allow trust companies to serve the

client in an optimal manner, but do

not directly interact and impact the

clients’ perceptions of the firm. Most

technologies are “enablers” that allow

for the timely and efficient handling

of clients’ assets, though they differ in

scope and impact.

Examples of technology enabling

systems include Customer

Relationship Management (CRM)

systems, most wealth management

platforms (e.g., trust, brokerage and

investment advisor, but not online

brokerage), and access via the

Internet, which has become a required

capability in the wealth management

space. “Differentiators” include client

reporting systems, online brokerage

platforms and aggregated platforms

like Unified Managed Accounts (UMAs)

or Unified Managed Households

(UMHs) utilizing overlay tools.

Lack of, or weaknesses in,

differentiating wealth management

technology capabilities may cause

clients to consider moving to another

Tellson Bank & Trust Company, operating from an elegant art deco building, was famous for serving the wealthy since before the Great Depression. The president of Tellson, Jarvis Lorry, stuck to his “old-iron” code-based, green-screen trust system; his trust managers assured him that it still did everything they needed. In reality, they worried that the process of converting to a newer, more flexible system could risk errors and client unhappiness. For Tellson to give clients new features like web and mobile access, many expensive work-arounds would be necessary, and integration with specialty systems was becoming ever-more difficult.

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wealth advisor. Most wealthy clients

already have providers; therefore, in

order to win their business, a wealth

management or trust company should

endeavor to offer that “something

extra” they are not receiving from

their current provider. Just any new

technology will not suffice; the new

technology should convey a broader

benefit that enhances the client value

proposition and therefore justifies

moving a relationship.

As noted, most technologies are primarily “enablers,” with three key exceptions:

• Reporting: Clients pay significant

attention to their investment

reports, looking for transparency

on what has been occurring with

their accounts. In fact, reporting is

so important that when a client sees

or hears of a better approach (for

example, at a cocktail party with

like-minded investors) they become

open to moving their account. Best

reporting practices include:

— Attribution reporting explaining

to the client the value added by

their investment officers and

asset managers compared to

movements due solely to the

market (“alpha”).

— Performance at the account,

household and investment

“sleeve” levels.

— Customizable, easily configurable

reports.

— Real-time holdings with current

pricing information.

— Information “where they want

it, when they want it”; in other

words, available both online

and, increasingly, on their

smart phone.

— Shared access with family

members, beneficiaries, brokers

and centers of influence like

attorneys and accountants.

• Online brokerage platforms: Clients

may elect to move their online

accounts to what they perceive as a

better online platform (for example,

one with a superior options tool);

moving from one online firm to

another is significantly easier than

moving from one trust company

to another.

• Overlay and optimization tools:

More and more clients want the

advantages of UMAs and UMHs

utilizing investment management

and overlay tools to gain tax and

trading optimization while providing

a holistic view of their wealth.

Further benefits of utilizing UMAs

and UMHs for trust companies and

clients are explained on page 8.

Darnay outsourced operations processing with a progressive partner who had also developed their trust platform. The CEO of Darnay Trust, Lucille Manette, asserted one of her strategic objectives was to actively seek out integrated technology and operations in order to lower costs and increase efficiencies.

At Darnay Trust, client reports were configurable and customizable, flexibly addressing needs of different clients and their administrators. Real-time data offered timely reporting, on the fly, which could be accessed by the investor, their administrator and their investment officer over the web, web-enabled tablet or smart phone.

Clients complained about the quality of their statements from Tellson; a single format displaying bare-bones cash and holdings data. Ad hoc and real-time reports were not available. Clients had to wait until well into the following month to get their account information.

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Diagram 1: Integrated Trust & Wealth Management Platform

The fact that the majority of

technologies are “enablers” in no

way minimizes their importance

in improving efficiency through

connectivity and managing enhanced

workflows; in fact, that is how they

add value. Enabling technologies

facilitate the transmission of

information seamlessly across the

wealth management space from

advisor desktop through middle-

office to back-office systems, and

then connect with systems from third

parties like exchanges, custodians and

pricing vendors. These capabilities

are largely unseen by investors and

only in their failure do they become

noticeable.

The Integrated Trust & Wealth Management Platform

Trust technologies should be

flexible enough to adapt to future

developments in connectivity such as

aggregation and custody integration,

and to enhancements in workflow

like single-entry of data and real-time

securities settlement. They need to

handle an increasing complexity of

wealth management products and

investment vehicles and should be

user friendly for operations staff as

well as administrative staff. Diagram

1 reflects a best-practices wealth

management platform technology

architecture, identifying both systems

users and integrated outside systems.

The trust and wealth management

platform is normally the hub around

which a trust company is built. Once

an organization has installed the

appropriate technology, it should

become much easier to drive their

unique value proposition and deliver

best practices in connectivity and

workflow necessary to expand

profitability.

The Trust & Wealth Management Platform

Client On-boarding

Trust Accounting

Automated Account Review Financial Planning

Investment Management

Reporting & Performance Measurement

Internet & Mobile Access

Wealth Mgmt. Firm Infrastructure

In-house Support Platform Vendor Support

Trust Company Platform Users

Integration Partners

• Advisors

• Clients

• Operations

• Administration

• Asset Managers

• Market Data

• Brokers

• Trading

• Cash Mgmt.

• Securities Lending

• Advanced Performance Tools

• Integration Tools

Custody

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Wealth Management Connectivity — Improving Client-Centric Integration

Trust companies exist in a world

of different markets and wealth

management capabilities, all of which

are being brought together through

connectivity for the end-user wealth

management client.

Custody

The custody business is growing more

complex as the regulatory landscape

evolves and competitive pressures

require additional investments in

technology and development of

greater controls. Optimal integration

requires highly functional connectivity

between the trust companies and

their custodians.

Custody has become an area of major

focus for trust clients. End-user clients

are expressing a preference for the

largest and best-known custodians.

Trust companies require a reliable

partner that can assist in meeting

their clients’ expectations. There are

four major custodians in the U.S.;

however, trust companies also have

options from among hundreds of

smaller custodians. In the long term,

it is difficult to see how these smaller

custodians will have the capital

strength to keep up with demands

for superior technology and security,

while meeting expanding asset

classes, geographies and regulatory

requirements.

Wealthy clients are looking at a global

world in terms of investment choices.

Best practices require that trust

systems be able to handle multiple

currencies from investment markets

around the world. When clients invest

in international investments, the

investments may need to be held by

a custodian in those markets. As a

result, the best domestic and foreign

custodians are developing integrated

global custody capabilities.

Custodians are responsible for

tracking corporate actions, providing

data to assist in reconciling clients’

share counts and prices. Automation

and tight integration with the trust

accounting system can avoid failure

to catch corporate actions that may

result in errors.

The extensive effort spent in

reconciliation of custody accounts

to client holdings, usually performed

in conjunction with the month-end

statements, is a waste of operational

and administrative time. A trust

company best-practice that

generates significant efficiencies

and cost savings is automatic daily

reconciliation between custody

records and holdings. Statements get

out sooner, with fewer errors, utilizing

less staff. Clients are happier and

profits improve.

Tellson’s clients, many of whom travelled or worked internationally, had started to express a preference to diversify their investments beyond U.S. markets. Although Tellson’s investment officers were now offering a few international mutual funds and ETFs, individual foreign equities that traded outside the U.S. were not available to be included in clients’ portfolios.

Tellson minimized connectivity with wealth management partners because of the constraints of their technology. For clients with assets not held at Tellson, there was no information concerning those assets on their trust statements. Trading costs were high, tax efficiency difficult; there was no form of holistic wealth management available to Tellson’s clients.

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Aggregation

Wealthy clients seldom have all their

assets with one firm. Clients often

prefer to utilize investment models

provided by a variety of types of firms

(e.g., trust companies, broker-dealers,

registered investment advisors, direct

product providers and qualified plan

providers through their workplace).

Clients want the freedom to be able

to select from among an almost-

unlimited universe of investment

choices across markets, countries,

currencies, asset classes and

custodians. Success does not come

from telling the client, “We can’t

do that.”

The wealth management advisor

who can provide a holistic view of

the client’s wealth across multiple

providers can generate several

significant benefits:

• Some trust organizations may be

required to comply with laws or

trust documents that require assets

to be managed as a single portfolio

necessitating a holistic view across

asset types.

• The wealth manager that does the

best job of aggregation is likely to

be perceived as the lead advisor for

the client, enabling them to manage

more of the client’s assets over time.

• Firms that successfully aggregate

the client’s assets will have

opportunities to gain “share of

wallet” and increase revenues

by managing the client’s wealth

in a holistic manner. Clients see

holistic wealth management as

an enhanced value proposition

enabling them to take advantage

of superior reporting and tax and

trading efficiencies.

Aggregation can be accomplished by

several methods, including screen-

scraping and permissioned access.

However, the superior methodology

is real-time aggregation via direct

electronic connectivity to the

custodians.

Straight-Through Processing of Securities Trades

Where trust investment officers

are initiating trades in individual

securities, rapid execution of the

investment strategy is preferred. This

can be accomplished by an automated

process known as “straight-through

processing” or STP. Leading STP

capabilities include entering the trade

once, with the system automatically

selecting the optimal exchange, the

universe of accounts that the trade

will be executed for, and confirming

the trade rapidly.

This trading efficiency can either

be accomplished directly on the

trust platform, through integration

with a brokerage platform, or on an

integrated platform that includes

functionalities of both trust and

brokerage. It is the benefits of STP,

not the method, that matter most.

Settlement

Straight-through processing is an

effective process almost all the time,

but occasionally trades fail to settle.

(In the U.S., these are called “DK” or

“don’t know” trades.) At that point in

time, the trust company is waiting on

settlement, has advanced either cash

or securities and has not received back

the opposite side of the trade, thereby

tying up both valuable capital and

operations time to fix the problem. By

utilizing a better-integrated settlement

process, trading organizations close

trades and post to client accounts in

a more expedited manner.

When a trade fails to settle, both

trading parties are exposed to the

changes in the market price of the

securities and subsequently may

have to resolve responsibility for

potential losses and gains. Such

negotiations can add significantly

more administrative time and cost

to the process.

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Streamlined settlement can occur

through a centralized matching and

affirmation process, or it can be the

result of a single custodian working

to speed matching and settlement.

Either is a preferable process

when compared to taking a “wait

and see” approach or relying on a

simple exception alert process. In

partnership with a strong custodian,

trust companies can institute better

settlement failure management and

increase profitability.

Connecting to a CRM Enhances Client Management & Data Handling

It is inefficient to enter data more

than once. Prospect and household

data should be set up in a Customer

Relationship Management (CRM)

system and that data should be ported

to the on-boarding and investment

policy statement systems once the

prospect becomes a client by utilizing

appropriate integration.

A CRM system also allows senior

management to monitor prospects

as they move through the sales

pipeline to become clients; such

tracking is necessary as the trust

business has a lengthy sales cycle

often measured in years, not months.

CRM systems facilitate sales and

revenue projections. Managers

should efficiently deploy their sales

force based on the number of client

households serviced and the number

of sales opportunities being handled.

UMAs, UMHs, Downloadable Models and Investment Management Tools for a Holistic Wealth Solution

Increasingly, investment managers

offer clients a large menu of external

asset managers who have passed

the trust company’s due diligence

process. This business model is known

as “open architecture.” The asset

managers are usually selected based

on their style and expertise, and

then assigned to manage a portion

of the portfolio as directed by the

underlying asset allocation model.

Even when incorporating a UMA or

UMH, preferred platforms should

still support trust functions such as

principal and income management,

disbursements and trading

restrictions.

UMAs and UMHs are normally able to

provide optimization across a variety

of investment products and account

types, including personal trust,

brokerage and retirement accounts.

Duplicate holdings and trading

inefficiencies are eliminated, while tax

optimization is supported. Utilizing the

aggregation tools, the client’s entire

wealth can be managed holistically.

Connectivity savings can result from

using a platform that can download

the asset managers’ portfolio models,

rather than handling and trading

actual client portfolios. These models

are then traded as efficiently as

possible for the entire client universe

while the investment management

(also known as “overlay”) tool looks

for appropriate trade sizes, cross-

trades and tax loss opportunities

in order to create a more tax- and

trading-efficient portfolio. Clients

who receive this service perceive a

stronger value proposition and are

Darnay provided their clients with the benefits of an integrated platform and custody, enabling accurate statements to be available within three days of month’s end. Holistic wealth management was a hallmark of the Darnay trust relationship, which clients valued. Client fees were moderately higher at Darnay because of the superior value proposition, and profits were significantly higher due to efficiencies of advanced technology and connectivity.

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often willing to pay higher fees for

enhanced benefits. A UMA or UMH

offering based on downloaded

models is usually more profitable to

the firm than a portfolio made up of

either individual securities plucked

from a focus list, mutual funds or

managed accounts. Industry trends

indicate that clients with UMA or UMH

accounts are less likely to leave their

wealth advisor.

Optimizing Workflow for Greater Profitability

Once a trust company has selected

the best technology and integrated

with the best global partners, they can

then focus on cost reduction through

improving their internal workflows.

Trust operations staffs process an

inordinate amount of data; accounts

are opened, assets transferred in,

disbursements are made, portfolios

are traded, statements are produced

and custody records reconciled.

Strong workflow automation and

real-time processing can provide a

better client experience by reducing

the time to perform these tasks and

resulting errors.

Outsourcing vs. In-house Processing

Trust companies have two major

options for processing: They can

perform all the functions in-house

with their own staff or outsource

to an organization that specializes

in processing for trust companies.

While in-house processing may

initially appear cheaper, the potential

lack of scale in an increasing-cost

environment and the difficulty of

locating trust operations staff to

replace retiring personnel, especially

in smaller markets, ultimately argues

for outsourcing. This enables the

trust company to focus on what they

do most capably — working with their

clients to meet their trust and wealth

management objectives.

Workflow Automation & Management

Savings through workflow automation,

which emphasizes the superiority of

the outsourcing model while leaving

trust companies to focus on their core

competencies, does not come easily.

Whether selecting an outsourcer or

processing internally, trust companies

may need to consider the various

workflow methodologies to improve

operations.

• Real-time processing of the trust

workflow provides a current,

updated status of transactions,

holdings and prices. Many trust

operations still process in a batch

or modified-batch mode, either

out of choice or due to technology

limitations. Real-time processing

allows monitoring of productivity

and immediate correction of errors

should they occur. Cash balances

and positions are available as

of the moment for evaluation

by investment officers and

administrators.

• Permission-based sign-ons support

appropriately managed access and

accountability, and provide a strong

audit trail.

Upon entering Tellson’s opulent 18th floor trust offices, clients were greeted by dark paneling and expensive artwork. Being a Tellson’s client had once had a certain cachet, but that cachet was rapidly diminishing in the modern wealth management era. Jarvis Lorry insisted on continuing their old-style trust culture, and his decision was reflected in their operational procedures. Mr. Lorry required his trust operations staff to work downtown in the office tower where he could walk around and chat with his employees, many of whom had been with the bank for over 20 years. Operations staff also walked around, transferring client information from one staff member to another for processing.

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• Standardized operational

procedures minimize multiple

variations in a process.

• Data should be entered just once,

and that entry should be automated

where possible. For example:

— Prospects in CRM systems

should automatically move with

their information to the trust

accounting platform once they

become clients.

— Asset information should fill and

automatically reconcile with the

custodians.

— Transactions should flow

seamlessly from investment

managers through to exchanges

and clearing operations after

being entered just once.

• Tight integration between front-

office workstations, middle-office

accounting systems and custody

reduces errors in holdings.

• For each workflow step, dashboard

metrics, alerts on open items

and error tracking should be

available to the appropriate staff.

Dashboard data should be enabled

to “drill-down” to the underlying

details.

Technology Supporting Compliance & Risk Management

The trust business is a unique form of

wealth management. Based in English

Common Law and dating back to the

Crusades, trust establishes a fiduciary

responsibility. Modern technology and

operations should be able to support

all regulatory requirements.

Depending on the specific needs of

the trust company, trust platform

providers and outsourcers may

need to administer a multitude of

requirements:

• Cost-basis reporting for different

types of investments; related rules

are being rolled out across different

asset classes over time. Cost-basis

reporting requires detail tax lot

tracking by trust platforms in order

to report to clients and transfer

data to future holders.

• Identity theft and privacy

requirements call for appropriate

handling of trust accounts with

the capability to notify clients

as necessary should suspicious

information or data breaches occur.

Access authentication for financial

accounts should be robust.

• Monitor adherence to applicable

regulations related to portfolio

composition and diversification

to ensure that the investment

objectives and the trust

management are in alignment.

Automated systems that share

data among administrators

and investment officers, while

allowing for geographically

and time-separated evaluation

and sign-off by the trust team

and supervisors, facilitate

greater workloads and can alert

management to open issues such

as uninvested cash and holdings

incompatible with the investment

policy statement.

• Support of pre-trade and post-trade

procedures is necessary to catch

inappropriate trades between

account reviews.

— Holdings must be evaluated to

eliminate assets that violate the

trust agreement or Investment

Policy Statement (IPS).

— Platforms may need the ability

to detect uneconomic de

minimus trades.

— Alerts and dashboards that notify

investment officers in advance

that the trade may cause a

violation of guidelines can be

very useful.

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Risk mitigation requires trust

management to regularly review

outside vendors regarding capabilities,

reliability and financial strength.

Reviews are required of custodians

and product providers such as

mutual fund, asset management

and insurance companies that are

utilized on the platform and within

the trust company.

Portfolio Management

The workflow requirements of

managing clients’ assets are extensive.

Trust investment officers need to

be able to build portfolios, evaluate

performance, make changes in client

holdings in multiple asset classes and

rebalance accounts. Efficient portfolio

management systems allow these

activities to be done at the

account or at the group of accounts

level. Accessing pricing data and

performance tracking software is

mandatory.

Risk modeling of the portfolios is

important to develop satisfied clients.

Most portfolios begin with an asset

allocation model based on the clients’

risk profile, investment time horizon,

disbursements plans and existing

holdings, each as identified in the IPS.

Once basic asset classes (equities,

fixed income and cash equivalents)

have been selected in broad

proportions, individual allocation is

made by sector, market and size of

firm capitalization.

Many trust investment officers utilize

mutual funds, common trust funds

and ETFs in their client portfolios.

Tools that can help detect style drift

and protect against unintentional

overconcentration in the underlying

equities can be very useful.

At the end of the day, the investment

officer must be reasonably certain

about achieving the clients’ objectives.

Portfolio modeling simulation helps

provide certainty about achieving

objectives that can be shared with the

clients. Historic or adversely skewed

simulation curves are optimal, but

Monte Carlo simulations are better

than nothing.

Conclusions

Trust organizations of all sizes

can establish a winning wealth

management model by deploying

leading practices in trust technology,

connectivity and workflow. Key

requirements for success include:

• Technology that features real-time

flexible reporting and householded

accounts with tax and trading

optimization.

• Connectivity that connects trust

companies with outstanding custody

and trading network vendors.

• Workflow that automates processes

and helps the trust company keep

current with portfolio compliance

requirements, with serious

consideration given to outsourcing

either or both trust operations and

investment management.

Opportunities for success can best

come from skillful partnering with

top-rated providers of technology,

Darnay Trust’s employees knew that, within the bounds of good fiduciary practices, they needed to process information in the manner that best suited their business model and their clients’ expectations and demands. Workflows were automated with tools that made processes rapidly customizable and configurable. Portfolio compliance was facilitated through an automated collaborative environment. Portfolio management was appropriately enabled to follow the best practices of the asset management industry. Dashboards and alerts kept Darnay’s employees abreast of developing portfolio issues before they could impact the client.

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custody and transactional networks

while the trust company focuses

on their core competencies. Trust

companies should utilize their capital

and expertise primarily in improving

client relationships to enhance

profitability.

Outstanding technology integrated

with exceptional business partners is

a necessary component to becoming

a more efficient and profitable

operation. Success still requires that a

trust company be staffed by energetic

administrators, investment officers,

operations staff and managers, all of

whom should be actively recruited

and retained.

Best-in-class status does not occur

by happenstance; it is a deliberate

long-term strategy designed to

optimize the profitability of the

organization and provide the end-user

client with a differentiated wealth

management value proposition. It

requires talking with top vendors in

custody, technology and outsourcing

to understand how their solutions

can improve profitability and client

focus. A strong team of dedicated

trust company personnel and the

right partners can create not just

a high-quality trust organization,

but a “best-of-times” wealth

management firm.

It is a far, far better thing I do than I have ever done…

Darnay Trust achieved loyal clients and greater profitability through harnessing the power of technology and connectivity to streamline workflows and become more client-centric. By exploiting efficient processes, they were able to minimize the number of staff while maximizing throughput in terms of transactions, quantity of clients and amount of client assets. Because of these efficiencies, Darnay Trust was able to be more responsive to their client requests for information and access to global assets and custodians. Darnay’s clients were happy with the self-service capabilities of their web and mobile access.

Right now, a new trust client is moving down Main Street. An existing client referral, he is headed to his first appointment with his new wealth manager, Darnay Trust.

About the authors

Jonathan Flitt Director Securities and Fund Services, Citi

Jonathan is a Director and Product Manager for Citi’s OpenWealth�

Trust Platform. In his current role, Jonathan is responsible for product development and product management.

Jonathan began his career with Citi in 1993, as an Operations Manager supporting Smith Barney’s retail products, including mutual funds and brokerage. During his 18-year career at Citi, Jonathan has held a series of managerial roles within Smith Barney Consulting Group, Citigroup Asset Management and currently Citi’s Investor Services.

He is a frequent speaker and is widely quoted in areas of asset management outsourcing and wealth management. Actively involved in industry groups, Jonathan is the Co-Chair of the Money Management Institute’s (MMI) Technology and Operations Committee. He has been an active member since the committee’s inception in 2000.

In 2010, Jonathan received the MMI’s All Star Achiever award for leadership and contributions to the managed accounts industry.

Jonathan holds an MBA from New York University, The Leonard N. Stern School of Business and a BS in Business Administration from the University at Albany, the State University of New York.

Robert J. Ellis Principal Fast Track Advisors LLC

Robert J. Ellis is an experienced trust professional and wealth management consultant. He is a Principal with Fast Track Advisors LLC focusing on wealth management providers’ client segmentation, product and delivery channel strategies, with subsequent implications for wealth management technologies, including platforms, planning and distribution systems.

Bob has over 25 years experience in financial services. Previously, he directed the wealth management practices at Celent and Novarica, both research and consulting firms. Bob has held senior executive positions managing trust, brokerage, financial planning, asset management, non-branch delivery channels and insurance business units.

Bob is the author of a variety of industry studies on trust companies, client segmentation, managed accounts, UMAs and TAMPs, online brokerage, social networking, financial planning, compliance systems and variable annuities.

Bob has been widely quoted in publications including Dow Jones’ The Wall Street Journal and Barron’s, and by news services like the Dow Jones Wire, Reuters, National Public Radio and Associated Press. He has also appeared in dozens of industry publications such as Registered Rep.

Bob earned an MBA from the Harvard Business School and a BBA from the University of Michigan, as well as gaining licenses as a CPA, securities principal and life/health/accident insurance agent in NY.

He can be reached directly at rellis@fasttrackadvisorsllc.com or at (607) 345 0800.

About Citi’s OpenWealth�

Citi’s OpenWealth seamlessly aggregates household-level data across wealth management platforms, investment managers and third-party custodians, and offers award-winning unified managed household capabilities for a front-to-back solution that eases key operational and administrative burdens and lets managers focus on building relationships and growing their business.

OpenWealth’s trust solution provides a complete package of trust accounting, operations outsourcing and custody services. With a complete suite of modular services that incorporate modern technology, automated workflow, extensive flexibility and the experience of a leader with a proven track record of building client-focused solutions, OpenWealth’s trust solution helps managers increase efficiency, monitor compliance and improve client service.

About Citi’s OpenInvestorSM

Citi OpenInvestor provides complete investment services for institutional, alternative and wealth managers through OpenWealth. Citi OpenInvestor combines the specialized expertise, comprehensive capabilities and the power of Citi’s global network to help our clients meet their performance objectives. With an on-the-ground presence in over 95 countries and over $12.5 trillion in assets under custody, Citi offers award-winning service and unmatched scale.

To learn more, contact Brian Corkery at (617) 824 1262/brian.corkery@citi.com or Jonathan Flitt at (212) 816 6953/jonathan.flitt@citi.com.

Global Transaction Services www.transactionservices.citi.com

© 2012 Citibank, N.A. All rights reserved. Citi and Arc Design and OpenWealth are registered service marks of Citigroup Inc. OpenInvestor is a service mark of Citigroup Inc.

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