Scott Martin, WealthAdvisor Contributor, February 19, 2019
Billionaire tax proposals are only the excuse wealthy families were waiting for to review their relationships after a rough quarter. The assets are rolling. Do you have what it takes to grab your share?
When I caught up with National Advisors Trust CEO Jim Combs at this year’s TDA LINC conference, he was already six weeks into what looks like a blockbuster year.
Normally the first quarter is a welcome break for trust companies after the rush to lock in asset transfers before the calendar deadline. This time, the “break” was more like a breakout.
Combs tells me a whopping $165 million in fresh assets have poured into the firm since the year started. Even for a company that’s grown at an exponential rate in recent years, that’s a tidal wave of account creation activity. We can speculate about the causes. Last quarter was rough enough to motivate a lot of high-net-worth families to reevaluate their personal exposure to the market and follow through on on any big moves they’ve been putting off.
And the drumbeat of noise around higher taxes for the rich doesn’t hurt. The time to shift assets away from the personal balance sheet into one or more trusts is now. If your clients snooze, their heirs could lose big.
However, Combs shrugs off the headlines as simply noise around the long-term National Advisors trajectory.
There’s no special reason the firm is now attracting more wealth in six weeks than it could bring in for the entire year of 2013, he says. It’s really just momentum and rising awareness that trusts are an essential part of the overall financial planning process.
As he points out, the days of making a fixed plan and passively adjusting it when the tax code changes are over. The modern state of the art revolves around the estate plan as living document, as ironic as that sounds. As long as your clients are alive, their legacy is always in flux.
Are new heirs being born and growing as people? Do their educational and lifestyle needs change? What about philanthropy? It takes a truly trusted advisor to ask these questions and keep up with the answers, but that’s okay. Every conversation around the ultimate role your clients’ money will play creates opportunities to capture a larger share of their overall assets and, just as importantly, their loyalty.
That’s the message Combs and his team — Chief Client Officer John Abbuhl and Estate Attorney Kurt Koehler — were in San Diego to spread.
Move up the food chain fast
If you aren’t actively in front of clients, they’re open to pitches from your rival advisors. Even if most stay, there’s no reason to even leave the competitive window open.
After all, you want to be the one expanding your role in their financial lives, not giving up leadership to other people with a professional relationship with the family. The closer you are to liquidity events and other transitions, the better your strategic position will be when assets are in play.
And if you can confidently lay out the benefits of rolling that money into the right kind of trust, you can lock in the account for decades or even generations to come. Very few of your fellow advisors can do that. It’s a natural competitive advantage.
Of course you need the right trust company partner to administer the account. National Advisors is growing so fast because a lot of advisors recognize that this is the place.
It’s working. There’s actual organic growth here. Referrals have tripled every year since 2016. The average account size has doubled. And the trend is accelerating as awareness spreads. Last year it took three months to book more incoming assets than they once needed a year to attract. Now that timeframe has been cut in half again.
That’s not a walled garden for insiders only. That’s an institutional network, a new kind of enterprise with the ability to scale all the way to world domination.
It’s a new kind of advisor-centered trust company. Combs transformed National Advisors into a business. The elite service that legacy advisors demand is still there on the front end, but now it scales a lot bigger.
In theory it scales to the moon. While commodity players in the trust industry have multiplied in the last decade, they’re still just chasing slivers of a deeply fragmented market. I’ve compared it to disruptors like Uber in the past. Like the next-generation cab company, National Advisors has zero interest in reinventing the wheel. They’re not hiring a lot of portfolio managers to run client money any more than Uber wants to operate its own cars.
Making the investment calls is up to the advisors who refer the accounts. They move up the industry food chain with services that can withstand a bad quarter in the market without straining the long-term relationship one bit.
If anything the trust documents can even lock in that relationship for the foreseeable future. The trust becomes the client, less capricious than any number of human investors you’d otherwise need to mollify when asset prices go south. When the trust is your client, it’s a lot easier to keep everyone happy. And because you’re demonstrating value beyond what the market rollercoaster provides, you justify your fees.
Combs and his team are passionate about helping their advisor affiliates demonstrate value independent from investment performance. It works.
Trust-linked accounts are incredibly sticky by conventional standards and resist brute automation nicely. After all, that front end of the trust business is all about human contact, anticipating the beneficiaries and interpreting the grantors. It’s about being able to deal with exotic assets without swallowing too much fiduciary risk.
Right now the money is moving. A lot of it is moving in National Advisors’ direction. Whatever Jim Combs and team are doing, it’s working.
And if you want your share of those funds on the move, now’s your chance to actively reach for it. Maybe your clients are depressed by all the market chatter. Maybe they want to shield their assets from the changing winds out of Washington.
Reach out. Find out. Seize the day.
That’s the National Advisors message. And from the numbers, it’s the hottest thing around.