When it comes to describing trust administration, most people wouldn’t say what they do is “fun” or “disruptive.” But Wealth Advisors Trust Company does. And that’s a big reason why clients of this South Dakota-based company enjoy using their trustee services.
Let’s face it. Trusts have been around for centuries. It’s an industry steeped in tradition and only changes with the times when it absolutely has to. And that’s the way it should be, right?
Wrong, says Christopher Holtby, co-founder and Trust Educator at Wealth Advisors Trust Company.
After working for many years in the wealth advisory industry, Holtby was approached in 2008 by a close friend and a former Ernst and Young colleague who suggested they start an independent trust company together.
At first Holtby turned down the idea.
“My response: No way. Advisors hate dealing with corporate trustees, and with good reason. But then, six months later, I agreed but on one condition: Our mission would be to use common sense and a passion for change to disrupt this 700-year-old industry,” he says.
And, thus, four former Ernst and Young team members and one insurance actuary came together in 2009 to form Wealth Advisors Trust Company.
They lured the best and most creative trust officers and specialists away from larger bank trust companies and their independent competitors. They established their headquarters in South Dakota, one of America’s most trust-friendly states, with no income taxes, relaxed restrictions around modifying trust documents, and the most protective trust privacy laws in the nation.
“More millionaires and billionaires use South Dakota trust law than any other top trust law state.”
But that was just the foundation. To ensure that the firm fulfilled its mission of transforming the industry, Wealth Advisors Trust requires everyone who joins the firm to fully embrace four core values: A full-on passion for change and innovation. A can-do spirit. A growth orientation. And a commitment to honesty, integrity, and selflessness.
“These values aren’t just lip service,” says Ralph Pence, another co-founder. “Everybody gets rated based a scale of plus, plus/minus and/or minuson these four values every quarter.” They leverage the tools and processes from Gino Wickman’s book Traction and the resulting Entrepreneurial Operating System (EOS®).
“Because honestly, if you don’t love this business and what we’re doing to create a transformative experience for advisors and their trust clients, then you really don’t want to work here,” says Pence.
When evaluating corporate trustees, or the best trust company, most advisors aren’t looking for those with the most assets under management or those who have been in business for generations. They want to work with a firm that understands their trust and client-related pain points. Onboarding. Distributions. Mediating conflicts among beneficiaries. Managing fiduciary risk. Increasing an advisors AUM.
Wealth Advisors Trust is committed to easing all of these pain points by applying its core values to solve the most intractable trust-related and business challenges - naturally and simply.
First, they decided that they only wanted to administer directed or delegated trusts where an investment advisor or wealth manager controls or oversees investment decisions, respectively.
“Advisors want to manage the money in a trust, since it helps them retain client assets and deepen relationships with beneficiaries. But they really dislike the nuts-and-bolts aspects of trust administration, like onboarding and handling distribution requests. So, early on, we decided to focus our disruptive lens on modernizing these ages-old labor-intensive processes.” says Holtby.
When thinking about where to begin, he decided that high-volume online retailers like Amazon offered the ideal business model.
“We quickly realized that trust administration is really a supply-chain-management challenge. A request or issue comes in, a solution goes out. And the best way to make these processes as easy and efficient as possible is to leverage digital technologies to automate traditional manual workflows.”
For example, the firm knew that it could take forty minutes or more for a trust officer to process a single printed trust distribution request form. So, in 2010 Wealth Advisors Trust developed the industry’s first fully online distribution request form application and its associated workflows. This innovation dramatically reduced processing time, improved accuracy and cured archiving headaches by allowing these forms to be stored and accessed electronically.
“ “Why are we doing it this way” is a mantra of our company.” Ralph Pence
In 2020, the firm took on one of the most onerous and time-consuming tasks for advisors, beneficiaries and trust administrators: Onboarding. After analyzing onboarding workflows and bottlenecks from the viewpoint of each constituency, Wealth Advisors Trust redesigned and optimized the entire process leveraging digital workflows.
“Now, the advisor can upload all onboarding-related documents that don’t require passwords. Our team reviews them and within four days creates a single checklist of everything that needs to be approved and by whom. This streamlined process does away with the endless back-and-both between advisors, beneficiaries and us, enabling onboarding to be completed much faster and with much less frustration,” says Jearon Cambron a Project Manager at the company.
But “going digital” is only the tip of the disruptive wave Wealth Advisors Trust uses to challenge the status quo and the way corporate trustees work with advisors.
For example, in 2012, the firm rolled out the industry’s first custodian-neutral Trustee IRA that advisors could use to offer the tax benefits of Stretch IRAs to beneficiaries of inherited Traditional IRAs. It was a very useful financial planning tools until it was discontinued in 2020 after the SECURE Act eliminated stretch IRA provisions.
But it’s not just in technology and products where the firm is changing the face of trust administration.
In 2017, Wealth Advisors Trust revamped its pricing model using a proprietary time- and risk-based algorithm that does away with traditional AUM-based fees. The algorithm updates come from data based on the trust administration workflows centered on a native cloud-based solution.
The benefit of this approach is that they can collaborate with advisors to come up with innovative solutions that reduce the time Wealth Advisors Trust needs to spend on fiduciary oversight and everyday administration. Less time and risk exposure translates into lower trustee fees.
Here’s an example. An independent adviser asked Wealth Advisors Trust to serve as sole corporate trustee for a complex $15 million trust with five beneficiaries who were constantly squabbling over its investment holdings and distribution policies.
The trust held both marketable securities and hedge fund assets. Given that the beneficiaries collectively requested 25 distributions per year, the level of fiduciary and compliance oversight needed to manage a single trust of this size and complexity would be extremely high—as would its associated trustee fees.
So, the Wealth Advisors Trust team put their heads together and came up with a better and cost-effective solution.
First, re-register the trust in South Dakota, where it’s relatively easy to modify trusts. Next, make it a directed trust, so the adviser could have full discretionary authority over investment decisions. Next, separate the one trust into five separate trusts so the adviser could manage investments and distributions the way each beneficiary wanted.
“Average is boring. Excellence is exciting. Let’s do exciting. More fun.” Nina Fillis, Trust Officer
This solution was embraced by both the advisor and the beneficiaries. Once implemented, it dramatically reduced the workload and fiduciary risk for Wealth Advisors Trust, enabling them to cut their fees by 20%-30% per year. In the first year alone these savings paid all outside legal costs needed to modify the original trust--an impressive return on investment for a trust that will be around for 20 years or more.
Everyone at Wealth Advisors Trust is empowered and expected to come up with disruptive ways to improve efficiency, lower costs, and make life easier for advisors and beneficiaries.
Not all of these solutions require modifying a trust document. In fact, some of their best outside-the-box thinking occurs when they think in client centric ways.
Here’s another example. Several years ago, an advisor brought over a $9 million legacy trust from another corporate trustee. The trust had a single beneficiary who typically requested 15 ad hoc discretionary distributions a year.
For each request, the advisor had to gather and submit the appropriate supporting documents. Then the trust committee had to meet to review and approve each request.
After a certain amount of time had passed, the trust officer analyzed the distribution provisions of the trust and realized that it would allow for the scheduling of automated distributions throughout the year up to a certain percentage.
After the trust officer and the advisor confirmed that this approach aligned with the beneficiary’s financial plan, it was quickly implemented, to the benefit of all. The advisor no longer has to spend hours of time filling out distribution-related forms. The Wealth Advisors Trust team no longer has to process and review individual distribution requests. And the beneficiary can make better financial decisions because he knows exactly when he will receive distributions throughout the year.
Providing innovative solutions like these may seem like rocket science to some in the trustee industry, but they’re all in a day’s work at Wealth Advisors Trust.
“For us, solving trust-related challenges is as natural as looking both ways before crossing the street,” says Kate Storhaug, Trust Specialist
“What makes us different is we don’t exceed expectations just because it’s our job. We do it because we all love doing it. Changing the status quo takes a lot of hard work, but for us it’s also a lot of fun. Especially when what we do helps an advisor win new trust clients or makes their lives easier in general” says Holtby to expand on these points.
And where do the firm’s core values of growth and selflessness come in? In the willingness of its disruptive problem-solvers to let advisors take credit for the solutions.
“We don’t need beneficiaries to know how we’ve solved a particular problem. Our personal and professional satisfaction comes from the results of our efforts, whether it’s helping an advisor establish a new trust or convincing a client to move their trust from somewhere else. We have the most fun in our job when we know what we’re doing results in a win-win for everybody. The advisor gets more “sticky” assets to manage and the opportunity to deepen client relationships. Beneficiaries get their distributions faster and with less frustration. And we benefit by being able to do what we love doing with greater speed and efficiency—and getting paid what we deserve for it!” says Holtby.
Perhaps the comment of a veteran trust officer Holtby was able to hire from a competitor says it all:
“After she had been here for a month, she said, ‘I always hoped that a company like Wealth Advisors Trust existed but I could never find it. Until now’.”