White Paper

"State of the Community Trust Indusrty"

ABSTRACT 

January 1, 2025

Prepared for: CEOs and Directors of Community Bank Trust Departments

Prepared by: FiPar Financial, Inc., HWA International, Inc., Wright Investors’ Service, Inc. and Alchemy Content Lab

Prefatory

The community bank trust industry faces pivotal challenges as well as opportunities. This White Paper provides actionable insights to help CEOs navigate the complexities and take advantage of the opportunities available for their Trust Departments. Whether you are contemplating expanding trust services, streamlining operations or reassessing the viability of your current model, this report offers practical strategies for achieving sustainable growth and mitigating risks. 

Introduction

Community bank Trust Departments and Independent Trust Companies operate under distinct regulatory frameworks, but both provide personal trust, estate settlement, investment management and retirement services. Despite their potential, nearly 75% of bank Trust Departments remain unprofitable, with many functioning as a mere "technicality" without significant operational activity. This report examines why these challenges persist and how CEOs can lead their Trust Departments to profitability and relevance. ________________________________________

Challenges in the Industry External Factors • Economic and Market Pressures: Weak and diminishing demand for traditional trust services coupled with increased competition from non-bank financial institutions • Regulatory Compliance: Escalating costs and complexities of adhering to regulatory standards • Technological Advancements: The need for digital solutions to meet evolving client expectations Internal Factors • Resource Allocation: Insufficient investment in organizational and operational infrastructure • Outdated Business Models: Many trust departments operate under antiquated frameworks that fail to address modern consumer preferences • Operational Inefficiencies: Compromised standards, increased fiduciary risks, and declining service quality • Declining Pool of Qualified Personnel: Tighter labor markets coupled with aging population ________________________________________ Opportunities for Reinvention Optimize Core Operations • Leverage leading-edge vendor solutions to promote operational excellence while fulfilling trust beneficiaries ever-expanding preferences and expectations • Implement cloud-based technologies to modernize operations and improve client experiences Realign Business Models • Focus on Scalable Services: Exploit niche opportunities in the marketplace by realigning organizational and operational infrastructure with client expectations and preferences • Acquire business lines and product lines: Capture more profitable market segments and divest from weaker lines Enhance Client Engagement • Adopt multi-channel communication strategies to meet the expectations of Gen X and Millennial clients, emphasizing transparency and responsiveness • Provide customized offerings that address shifting client needs, such as wealth preservation and estate planning ________________________________________ Evaluate Strategic Opportunities Acquisitions and Partnerships • Outsource—Select vendors to perform specific processes or functions • Flip—Convert trust organization to RIA • Acquisitions—Pursue strategic acquisitions to scale trust organization • Trust Referral Program—Earn finder’s fees for making referrals to competitors. • Acquire Books of Business: Acquire a book of business, a trust company or an RIA either to complement or initiate a wealth management offering • Develop Partnerships: Build partnerships that leverage complementary strengths and expand market reach Risk Management • Implement robust internal controls to mitigate fiduciary risks • Prioritize compliance with evolving regulatory requirements to avoid costly penalties ________________________________________ The Path Forward The trust industry’s landscape is rapidly evolving, driven by economic pressures, technological innovations, competition and shifting generational preferences. CEOs must adopt forward-thinking strategies to ensure their Trust Departments remain competitive and relevant. By modernizing operations, realigning business models and embracing innovative solutions, community banks can transform their Trust Departments into profitable, client-focused entities. Conclusion This White Paper underscores the urgent need for CEOs to reassess their Trust Departments’ strategies. With the right investments in technology, talent and partnerships, community bank Trust Departments can overcome challenges and unlock new opportunities and enhance profitability. By fostering a culture of innovation and client-centricity, CEOs can secure their institutions’ future and strengthen their position in the trust industry.   White Paper State of the Community Trust Industry January 1, 2025 Prepared for: Bank CEOs & Boards of Directors Prepared by: FiPar Financial, Inc. San Antonio, Texas Raymond R. (Bob) Fletcher, CTFA, CISP, CFMP—CEO Mark Clemons, JD—President & Executive Trust Consultant HWA International, Inc. Memphis, Tennessee Javier Jimenez, MBA, PhD—Chairman & CEO Eric Dunn—Vice President of Sales & Marketing Jerry Flynt—Vice President—Head of Operations Wright Investors’ Service, Inc. Shelton, Connecticut Amit Khandwala—Chairman, CEO & CIO Alchemy Content Lab Baltimore, Maryland Rob Jacomen—CEO All Rights Reserved State of the Community Trust Industry Prefatory With the state of the community bank trust industry serving as the focal point and back-drop, this White Paper purports to offer important information and actionable guidance relative to one’s Trust Department and, similarly, offer guidance to banks that might be contemplating adding trust services to augment their current business line offerings or, alternatively, proposing ideas and considerations about making decisions to close their Trust Departments. Introduction In describing common characteristics of community bank Trust Departments, it is important to draw a clear distinction between Trust Departments and Trust Companies—even though they traditionally both offer basically the same services: personal trust administration, estate settlement, investment management and retirement services. Although this Paper focuses on addressing issues and characteristics of community banks, the same or similar factors also apply to Trust Companies…and, often, they experience similar challenges. Trust Departments operate as a department or division of a bank, whereas Trust Companies operate on a stand-alone basis and function independently of banks. According to FDIC, nearly seventy-five percent (75%) of all Trust Departments are unprofitable. The actual number varies depending on who's doing the counting but nevertheless estimated at around 1,500 out of roughly 2,000. Probably as many as 500 of these Trust Departments exist merely as “legal technicalities”. Banks cannot just willy-nilly decide one day that they want to be in the trust business and open a Trust Department—it is not like other departments of the bank. They must apply for trust powers from their regulators and be issued a license to conduct business, primarily from the state banking commission, Federal Reserve or The Office of the Comptroller of the Currency. Banks characteristically are not required to capitalize their Trust Departments if their banks are well capitalized and, if the banks are not well capitalized, they are unlikely to be issued a license to operate. Trust Companies, estimated at 500 to 1,000 of various types—limited purpose and traditional full service—operate under a trust charter granted for the specific purpose of engaging in fiduciary activities. Unlike banks, the standard is much higher in terms of having to meet rigorous trust regulatory requirements, including capitalization and organizational costs generally ranging upwards of $1 million. Typically, Independent Trust Companies are organized by a team of qualified, experienced, former bank trust professionals that come equipped with a cache of skill sets across multiple disciplines and possess a keen understanding of the opportunity, the risk and the market. They must succeed on their own or they go out of business; they cannot rely on a bank to subsidize them. Inasmuch as Trust Company principals are often exceptionally savvy about their business, being their “core” business, they tend to be well organized, well run and often enjoy superior profitability. Irrespective of the percentage and notwithstanding the fact that they represent only a fraction of total trust assets, the industry is confronted with serious issues that must be rectified. Industry Dilemma Although the trust industry continues over the years to enjoy slow, steady growth in both assets and revenues, the same cannot be said for its subsector, the personal trust industry—representing the bread-and-butter and heart-and-soul of most community bank Trust Departments and Trust Companies. The trust industry consists of well over $100 trillion in assets held in custody by money center banks for corporate clients, whereas, community bank Trust Departments and Trust Companies primarily serve the retail market of families and individuals. Typically, custody fees are charged based on a percentage of market value and, thus, often track the performance of the stock market. Declining Asset Value Despite the enormous opportunity to capture intergenerational legacy wealth transfers, the personal trust industry continues to decline in asset value, number of accounts and profitability. Peeking in 2007 at $1.15 trillion in personal trust assets, representing less than one percent (1%) of the entire trust industry, and 789,950 personal trust accounts in 2009, the personal trust industry entered a steep decline losing billions of dollars in assets and several hundred thousand accounts going into the Great Recession of 2008 from which it has not recovered. Trust Industry Shifting from Control of Banks to Brokers Of significant importance is that the banking industry is losing control of the trust industry to the securities industry. Up until rather recently, the securities industry has only been interested in marketable securities. They have not wanted fiduciary management responsibility of non-traditional assets—farms and ranches, oil and gas, residential properties, mom-and-pop businesses, household and personal effects, art collections, cars and boats nor management of liabilities. But now specialty Trust Companies and specialty vendors routinely offer sophisticated solutions for these assets, enabling broker-owned Trust Companies to outsource hard to manage, non-traditional assets. The securities industry continues to step-up its end-around on the trust industry. Merrill Lynch and the like started positioning themselves thirty to forty years ago to capture intergenerational wealth transfers and take advantage of the twice-stickiness of trust relationships over investment management business. Then along came Schwab, Fidelity, LPL, Raymond James and other B/Ds with Trust Companies for their advisor clients. Now, we see advisors—representing over 350,000—cherry-picking the best trust accounts away from traditional trust organizations and moving them to B/D-owned Trust Companies and advisor-friendly Trust Companies. Change in Business Model Many traditional trust organizations have altered their traditional trust business model by bifurcating duties and responsibilities between themselves and advisors and, instead, providing trust administration-only via what is described as “Advisor-Friendly Trust Companies” which permits advisors to manage trust investments in their RIA (Registered Investment Advisors) firms. The bifurcation model has become very popular and successful due to adoption of modern trust laws among select jurisdictional leading trust states. Business models that are faster, more convenient, more informative, more customer-centric, more cost-effective, more timely and less risky greatly enhance success-opportunity. Bank Regulators Perspective Bank regulators have identified important factors that can, over the foreseeable future, adversely impact Trust Departments’ financial condition—and banks overall: 1. Economic instability and geopolitical conflicts 2. Enhanced regulatory compliance requirements and associated costs 3. Retaining and recruiting qualified trust personnel with major threats coming from non-banks 4. Succession planning relative to recruitment and retention of qualified staff and maintaining and achieving necessary skill requirements 5. Market threats for targeted clients 6. Modern electronic banking technology conveniences for customers raises cybersecurity, data privacy and data management threat detection and prevention requirements 7. Financial records and monetary transmission systems are targets for unauthorized access by sophisticated hackers, terrorists, and other cybercriminals. Characteristics of a “Trust Officer” There’s a whole lot more to being a Trust Officer than technical skills, which, in themselves, are quite extensive, ranging from estate planning to traditional personal trust administration and from operations to investments, oil and gas, real estate, employee benefits, corporate trusts and numerous others; and, furthermore, managing a Trust Department or Trust Company requires strong professional management skills as well. Just because a Trust Officer is an excellent trust administrator doesn’t mean that those skills are adequate to run their Trust Departments unless they also possess the necessary management proficiency. Trust Officers must maintain a strong working knowledge across multiple product and business lines—fiduciary law, investment management, real estate, oil & gas, tax (fiduciary, personal, estate and gift) and estate planning. Take “Personal Trust Administration”, the bread-and-butter of most Trust Departments; it requires different skill sets depending on the type of accounts, such as, Revocable Trusts, Irrevocable Trusts, Testamentary Trusts, Asset Protection Trusts, Charitable Trusts, Special Needs Trusts,, Generation-Skipping Trusts, Spendthrift Trusts, Custodianships, Life Insurance Trusts, Rabbi Trusts, Guardianships, Investment Management Agencies and Estate Settlement (testate and intestate) and on-and-on. Unlike an investment management firm that may require just one standardized agreement for all clients, a typical Trust Officer might administer 200 to 300 and sometimes 400 trust accounts with a need to possess a thorough understanding of trust and fiduciary law and be able to remember language depicting duties, responsibilities and prohibitions in each of those legal agreements. And, to further complicate matters, wills often include trusts which can greatly increase complexity. Furthermore, back-office trust operations is extremely complex and broad-based involving all matters of trust accounting and reporting, including safekeeping of assets, recording daily cash, securities and other transactions, account maintenance, recordkeeping, reconciliations, tax reporting and bill paying. And, that is to say nothing about the checks-and-balances provided by the compliance and audit teams necessary to keep such a complex business regulatory-compliant and in adherence with sound business principles. Turbulent times of confusion, uncertainty and fear represent one of those instances when Trust Officers visibly demonstrate their unique, comprehensive, genuine attitudes of personal care and compassion beyond their technical trust skills when it comes to offering a hand of hope, comfort and help, offering not only professional guidance but genuine peace of mind and comfort to their clients. Chaos and confusion among trust clients require Trust Officers to step-up to the challenge. No one in the financial services business goes the extra mile like a Trust Officer—shopping for nightgowns and toiletries on Christmas Eve for an elderly nursing home-bound trust client or making funeral arrangements, including selecting burial gown, casket and attending funeral services, because there was no family. Compromise With compromise comes risk. Anecdotal evidence based on actual Trust Department engagements pertaining to risk assessments, crisis management, re-engineering and divestitures has revealed important, common characteristics. When Trust Departments are unable to make a reasonable profit from their core business, they tend to expand away from their core offerings by adding ancillary products (special needs trusts, guardianships, funeral trusts, Rabii trusts); but if it is determined that the effort is still not achieving planned objectives…and that is often the case…they tend to expand business lines. And this expansion of product lines and business lines is usually done without the necessary additional systems, qualified personnel or market demand. Additionally, there is a tendency to expand the types of assets managed, accept substandard and ambiguous trust draftsmanship and, of course, reduce fees to either attract or retain business. Couple these compromises with an expansion of established service parameters to accommodate demanding beneficiaries and you can literally jeopardize the integrity of the organization to the point of wrecking systems, processes and procedures, bringing down the daily functionality of the organization. All these things lead to inefficiencies—greater costs, mistakes and errors, time delays, greater fiduciary risk, lower profit margins (if any) and diminished service quality. Issues of weak and collapsing internal organizational and operational infrastructure result from protracted compromises of standards and principles. And, in turn, these internal issues are a direct result of pressures from external sources—often weak demand and strong competition. To be successful at the community bank trust level requires exceptional understanding of trusts and the trust business, including the marketplace (consumers and competition) along with strict adherence to laws, regulations, policies and sound business principles. Over the years Congress has raised the federal estate exemption to the point that many wealthy families no longer seek corporate fiduciaries to save death taxes—a powerful magnet for attracting wealthy families to Trust Departments. But banks have now lost their hammerlock. Regarding internal issues, many smaller community Trust Departments suffer from weak and collapsing organizational and operational infrastructures as a result of protracted compromise of its standards and principles. Furthermore, these internal issues are a direct result of external issues. Changing Behavioral Profiles There is a good amount of shifting underway, shifting from employment to retirement, shifting from contributions to distributions, shifting from greater to lesser risk, shifting from equities to fixed income and so forth. Much of the generational wealth transfer (“shift”, if you will) from the Greatest Generation to Baby Boomers, representing upwards of $12 trillion, is nearing completion. Now, the shift from Baby Boomers to Generation Xers and Millennials, estimated at $30 trillion, begins. However, bankers will likely need to change their business model to meet the changing expectations of individuals and families of distinguished wealth; or, otherwise, risk putting their business in jeopardy. A study of behavioral profiles among Gen Xers and Millennials reveals significant differences compared to their parents. For instance, relative to wealth management, due, in part, to the adverse impact of the Great Recession on their parents' wealth, these two generation groups are more cautious, skeptical and conservative in their approach to investing, often being satisfied with a passive investment strategy instead of trying to out-perform benchmarks. Wherein, telephone calls, in-person meetings and written materials adequately fulfilled the needs of their parents, Gen Xers and Millennials expect optimal, digital communications—computer, mobile phone, tablet, X, Instagram and on and on—to say nothing of what might be ahead—smart-watches and high-tech glasses! And they expect services to be industry-leading, broad-based, economical and transparent coupled with multi-channel delivery options. They expect communications to be instant, accurate, useful and comprehensive and, of course, assurances of privacy, security and safety. When it is all said and done, consumers—in this case, owners of great wealth—drive change based on wealth manager's understanding of their behavioral profile relative to what they expect and desire. This results in a combination of changes needed in the service component, including technology which, in turn, causes the need for greater regulatory compliance to ensure adequate protection. Consequently, wealth managers must ensure that their corporate business models align with the needs of their shifting market; otherwise, risk their company's future by not keeping pace. According to a recent survey conducted by a leading consulting firm, wealth managers' biggest fear is the capital investment required to meet the needs of their new breed of client. And the areas requiring the greatest investment are expected to be in technology (cloud-based solutions) and compliance (cybersecurity, advertising and fiduciary duty). Accordingly, there are competitors seizing the opportunity to fill the void—whether it is a traditional investment manager lowering its fees to be more competitive or introduction of a completely new business model to serve a niche segment of the marketplace as with robo-advisors. Over time, traditional wealth managers that wish to compete and effectively serve the needs of wealthy clients must get in-step by realigning their business model which might include realigning their fee structure. If realignment threatens the existing fee structure, resulting in loss of fee revenue must be replaced to maintain acceptable and sustainable profitability. This could be accomplished by not just expanding product lines; but, more likely, by adding new, complementary business units—such as financial planning, insurance, accounting and similar offerings. Strategic Considerations Outsourcing—Outsourcing represents a common function among many businesses including the trust business that involves selection of vendors to perform specific processes or functions, including trust accounting, investment management, compliance, auditing and tax return preparation. Progressive trust organizations routinely rely on cutting-edge vendor services to support selected functions. Larger Trust Department vendors offer bundled outsource solutions to promote user simplicity, efficiencies, cost savings and even hands-on trust management support whereas non-bank vendors often specialize in narrowly defined product offerings such as trust accounting and investments. Flipping—Flipping represents a strategy whereby the bank creates or acquires an RIA, transfers all investment management accounts to the RIA, sells its trust book of business to a third-party while retaining investment management responsibilities which it manages in its RIA as an agent for the successor trustee. Upon transfer of all accounts, the trust department is then closed. Such a strategy can result in transitioning--often overnight—from a fixed loss in the Trust Department to a variable profit in the RIA. Acquisitions—Acquisitions represent an opportunity to acquire a book of trust business, a trust company or an RIA either to complement or initiate a wealth management offering. Books of business can often be a cumbersome and rather expensive strategy unless trust laws provide "bulk-transfer" provisions that enable transfers to occur with bank regulator approval but without beneficiary or court intervention. While acquiring a trust company can result in immediate and significant fee revenues, they generally require substantial investment and are often hard to come by—there is strong demand for trust company acquisitions industry-wide. Furthermore, owners are more interested in selling to a seasoned trust provider to better protect the integrity of the transaction that might be affected by customer run-off while simultaneously ensuring that customers continue to receive expected service levels. Trust Referral Programs—Trust Referral Programs represent a simple solution of referring trust prospects to a trust organization in exchange for payment of a finder's fee in amounts and for periods of time that vary by provider. Modern and Jurisdictional-Leading Trust Solutions Modern and jurisdictional-leading trust solutions are transforming the trust industry by driving automation, enhancing security, increasing compliance, and facilitating client expectations. These developments make trust services more efficient, cost-effective and accessible to a wider range of clients, while increasing transparency and trust. Additionally, these solutions may fostering greater competition among jurisdictions, which can lead to more tailored and flexible trust structures for clients. As these trends continue, they will likely contribute to a more dynamic, inclusive and client-focused trust industry. Proliferation of Advisor-Friendly Trust Companies As wealthy clients seek independent, fiduciary-based services, trust organizations that align with these standards have emerged. Advisor-Friendly Trust Companies are designed to serve financial advisors and their clients by providing trust and estate planning solutions with a focus on ease of use, flexibility and tailored services. These organizations aim to streamline the trust administration process and offer key benefits and value propositions for financial advisors. Advisor-Friendly Trust Companies offer financial advisors an extensive array of services, including customizable estate planning solutions, administrative support, expertise and technology that enhances efficiency. By partnering with these firms, advisors can provide their clients with robust wealth management and estate planning strategies while improving their own operational effectiveness. Ultimately, these trust companies enable financial advisors to strengthen client relationships, expand service offerings and manage complex trust administration with confidence, all while reducing risk and liability. The rise of RIAs and advisor-friendly trust companies is part of a broader trend in the financial services industry toward independence, transparency, and client-focused solutions. RIAs are growing rapidly due to the demand for fiduciary advice, fee-based models, and personalized wealth management. Trust companies that cater specifically to the needs of RIAs are flourishing because they provide specialized, fiduciary-compliant services that support holistic wealth management strategies, particularly in the realms of estate and trust planning. The combination of regulatory trends, technological innovations, and shifting consumer preferences has created fertile ground for these two sectors to grow in tandem. Community Trust Departments are generally not structured to compete with Advisor-Friendly Trust Companies. These organizations are often chartered in one of the five states with the most modern trust laws and to serve this market requires the most modern trust laws. Concluding Observations Community Trust Departments, not unlike other businesses, seek to optimize revenues, control costs and mitigate risk. However, Trust Departments are confronted with uncommon barriers to success: an inherently complex, expensive and risky business compounded by historical, industry-wide slow growth while bucking strong winds of often weak and diminishing demand coupled with an inherent inability to effectively sell. Although a host of stumbling blocks can offer challenges—pain-points—to operating Trust Departments, several options are worthy of bank management's careful perusal that could enable them to sidestep common barriers to success. With new, creative, regulatory-compliant solutions designed to optimize efficiencies, lower costs, enhance customer service levels and mitigate business and fiduciary risk, there is no longer a legitimate excuse or reason for banks not to be successful in the trust business...it just might require an open-minded assessment of its options. Initial considerations should include the appropriateness of a strong business model, including organizational and operational infrastructure, leveraging outside resources, whether it’s operations, investment or other important intellectual resources, technology and processes. Community bank Trust Departments can increase their growth and profitability by embracing a more strategic approach to marketing, expanding their service offerings and focusing on personalized, relationship-driven services. By leveraging technology, forming strategic partnerships and enhancing client experiences, Trust Departments can position themselves to compete more effectively. Additionally, adopting modern marketing strategies and cross-selling opportunities will help increase the visibility and attractiveness of trust services, enabling community banks to capture a larger share of the market. Leverage Leveraging vendor solutions can provide significant benefits to many organizations, including community bank Trust Departments, particularly in terms of operational efficiency, cost savings, scalability and access to specialized expertise. Scaling-up can be difficult and time consuming; however, leveraging someone else’s “scale” can be extremely advantageous as with trust outsourcing vendors. Key advantages include: • Vendor solutions often eliminate the need for large capital expenditures on software development, infrastructure and personnel. Instead of investing in building custom systems in-house, organizations can purchase a ready-made solution and pay a subscription or licensing fee, reducing upfront costs. • Many vendors specialize in particular areas, such as trust management, compliance, cybersecurity or financial services. By leveraging these solutions, Trust Departments can tap into the vendor's deep knowledge and experience without having to develop this expertise in-house. • Vendor solutions often include ongoing updates, improvements and best practices and are typically more agile in responding to industry changes and regulatory shifts, which allows businesses to stay current without expending internal resources. • Vendors provide solutions that are ready to implement, significantly reducing the time required to roll out new technology or services. This allows organizations to respond quickly to market demands, client needs or regulatory changes. • Whether expanding into new markets, increasing client volumes or diversifying product offerings, vendors often provide solutions that are designed to scale easily without requiring major internal infrastructure changes. • Vendor solutions are often tested and used by multiple organizations, which reduces the risk associated with new or unproven technology. These solutions are typically stable and reliable, minimizing the risk of disruptions or failures that could occur with in-house developed systems. • Vendors offer solutions that are designed to comply with current trust regulations, industry standards and best practices, thus helping reduce compliance risks. • By leveraging vendor solutions, Trust Departments can focus their resources and efforts on their core competencies, such as client relationships, strategic planning or product development. Non-core functions, such as IT management, software development and certain administrative tasks, can be outsourced to vendors. • Trust departments can focus on providing more personalized, client-centric services while relying on vendors for infrastructure, compliance tools or investment management systems. • Vendor solutions come with built-in automation features that streamline routine tasks like data entry, reporting and regulatory compliance. This can free up staff time to focus on higher-value activities. • Automation reduces the risk of human error in processes like trust administration, financial reporting and transaction processing. By using vendor solutions with built-in checks and balances, Trust Departments can improve accuracy and reliability in their operations. • Vendor solutions often incorporate the latest technological advancements without Trust Departments having to develop them internally or invest heavily in R&D. • Vendors regularly update their products to include the latest tools and features, such as data analytics dashboards, customer relationship management tools or advanced cybersecurity capabilities. This allows Trust Departments to stay competitive with cutting-edge technology without substantial investment. • Vendor solutions are often designed to be flexible and scalable, allowing organizations to adjust their use of the product based on changing needs, whether through increased user licenses, adding new features, or expanding into new geographies. • Many vendor solutions are cloud-based, providing enhanced scalability and flexibility. As the organization grows or faces new demands, the cloud allows easy expansion without the need for significant infrastructure investment. • Many vendors provide managed services as part of their offering, meaning that the vendor takes care of updates, maintenance, troubleshooting, and support. This reduces the internal IT team's burden, allowing them to focus on more strategic or critical initiatives. • Vendors typically include robust security measures, such as data encryption, multi-factor authentication, and regular security updates as part of their solution, relieving organizations of the ongoing responsibility for maintaining these protections in-house. • By leveraging modern vendor solutions, organizations can offer faster, more seamless services to clients. Trust Departments can offer clients access to online portals, mobile apps, or real-time tracking of their investments and trust assets. • Vendor solutions often include advanced reporting features, allowing organizations to deliver comprehensive and easy-to-understand reports to clients. This can improve client satisfaction and trust in the institution. • Vendor solutions come with built-in disaster recovery and business continuity plans. In the event of an IT failure, natural disaster, or cyberattack, organizations can rely on the vendor’s systems to minimize downtime and quickly restore services. • Vendor solutions often include tools that help maintain audit trails, which are vital for compliance in regulated industries. These features make it easier to track and verify transactions, reducing the risk of non-compliance. By leveraging vendor solutions, organizations can reduce costs, improve efficiency, enhance their technology infrastructure, and focus on their core competencies. These benefits not only help community bank trust departments stay competitive in an increasingly digital and regulated marketplace, but they also enable them to provide superior services to clients, mitigate risks, and grow their business more effectively. The strategic use of vendor solutions can ultimately create a more resilient, agile, and client-focused operation, which is crucial for long-term success. Business Model Fundamentally, CEOs and Directors have but a few options related to building or reengineering their Trust Departments. They can build everything in-house at considerable expense, leverage vendor solutions from vendors that have committed their careers to their success or merely initiate a trust referral program for a finder’s fee. Wealth management represents an important component of the bank's overall product offerings. Trust Officers’ high standard of fiduciary conduct complements a bank’s legacy service culture and represents an important financial solution for banks most elite customers. Although a host of stumbling blocks can offer challenges to operating Trust Departments, important options are worthy of bank management's careful perusal that could enable them to sidestep common barriers to success. With new, creative, regulatory-compliant solutions designed to optimize efficiencies, lower costs, enhance customer service levels and mitigate business and fiduciary risk, there is no longer a legitimate excuse or reason for banks not to be successful in the trust business...it just might require an open-minded assessment of its options. Contact Information FiPar Financial, Inc. San Antonio, Texas HWA International, Inc. Memphis, Tennessee Wright Investors’ Service, Inc. Shelton, Connecticut Alchemy Content Lab Baltimore, Maryland DISCLAIMER (Goes here)