Reprinted from Detroit Legal News
By Christine L. Mobley
Making their way into the spotlight on the stage of today's marketplace are an increasing number of non-traditional financial service providers. While these companies are similar to traditional banks in structure and regulation, they have banking power that have been limited to trust and investment services. That, coupled with their dedication to personal service and their ability to focus on one specific area of service, it's no wonder that these "non-traditional banks" are on the rise.
Take for example Plante Moran Trust, an independent trust company, which opened in February of last year. Their focus is trust accounts and making these portfolios grow for their clientele. "Trusts are the only business we're in," Gary E. Johnson, president and CEO of Plante Moran Trust, said. "Our focus is on personal trust and our mission is really to provide it at the highest level that can be found.
"The trust business is a unique business. It's somewhat related to banking, but not necessarily, and is certainly its own discipline, its own specialization," Johnson said. “To have specialization is a dominating requirement for being good in this business and having the resources that are available to you to be able to manage all those kinds of assets,” Johnson said. Plante Moran Trust serves their clients as asset advisors rather than asset managers, according to Johnson. This type of approach enables the client to have as much of an active role in their finances as they wish.
Plante Moran Trust is an extension of Plante Moran’s Family Wealth Advisors. The Family Wealth Advisors offers such services as investment consulting and advisory, estate planning, business succession planning, and tax planning strategies. This extension of Plante Moran was created due in part to the overwhelming number of clients that were requesting to appoint Plante Moran to be their trust's trustee, or the person or institution entrusted with the duty of managing property placed in the trust.
The growing need for companies to provide financial investment services has caused companies that wouldn't normally be thought of as financial institutions to branch out to offer these desired services.
When AAA comes to mind, one immediately thinks "insurance," however, this is not necessarily the case. They too have developed financial services. AAA Trust & Investment Services are offered through Auto Club Trust F.S.B., which is a federally chartered savings bank affiliated with The Auto Club Group, which includes AAA Michigan, AAA Wisconsin, AAA Chicago Motor Club, and AAA Nebraska.
The financial services available through Auto Club Trust are financial planning, trust services, investment management, life insurance, home mortgages, auto loans, and credit cards. Auto Club Trust President Donald E. Schuster sees the trend of non-traditionals growing more than ever before. “I think a reason you see non-traditional entities getting into the trust business is a result of the boom in financial planning and the concept that people like to be able to go to one place to get all of their financial planning needs,” Schuster said.
“Numerically and percentage wise, we have a far greater number of people in the market and financially involved then we have ever had before in history," Schuster said. "Far more people are planning their financial future through far more financial vehicles than ever before, largely brought about by the idea of the 40I K. We're all looking at the market."
The climate for financial planning is changing, making it very lucrative for non-traditional banks to come forth and help with the aging population's financial needs.
"It's both (a trend) that is growing and will continue to grow at a faster rate in the years ahead," Johnson said. “The reason is simple demographics. We have an aging population; we have, in spite of recent trends in the stock market, wealthier generations that are aging; and as those generations age they’ll find a need for both trust services during their lifetime and they are using trusts to plan their estates.”
From the wealthy to the not-so-wealthy, it's necessary for people to examine their finances and they need to be concerned about planning for the future, whether it's for retirement or for tax purposes. “Now everybody has an interest in their financial future, everybody is or should be planning their financial future and a tremendous number of people are having it done almost for them through their company 40I K," Schuster said.
Education about financial planning will help those getting started make an informed decision about their financial future: where they should go and what path to follow to get there. AAA hosts free financial planning seminars throughout the state. For more information about these seminars, visit www.autoclubgroup.com/michigan/financial_services/planning_seminars.asp or call 1-877-238-2488.
[People need education] because a tremendous number of people are in the market and have no concept of the risks and consequences of being in the market or how they're really managing the money that's being put aside for the future," Schuster said. "The dynamic has changed and the need for education has become much more important. The average individual today needs first and foremost to decide to get involved in their own financial future. That's a critical decision that so many people don't ever bother to make."
Both Plante Moran Trust and Auto Club Trust are able to serve the legal community in the area of financial planning and trusts. "There are two other markets that we as an independent trust company intend to focus on that aren't focused on by traditional bank trusts," Johnson said. "The first would be serving lawyers and law firms with professional trust services where they have been appointed trustee in their clients' estate plans.
"The second one is that we know that there are a number of individual asset managers out there all across Michigan, most of them do an outstanding, wonderful job for their client, but most importantly they have a great relationship with that customer," Johnson explained. "What they don't want to do is lose that business once the client has a need for professional trustee services, either during their lifetime or after they pass away. "We can work with independent asset managers with offering them our professional trust services," Johnson said.
"For a variety of reasons the legal community has traditionally, and will consider in the future, appointing a corporate trustee," Schuster pointed out. "What we have found is that a lot of these trusts are sitting around requiring corporate trustees and the beneficiaries, when the grantor dies, can't find a corporate fiduciary that is willing to act because the amount involved is too small. "The legal community should know that there is now a bank in the marketplace that is willing to administer trusts and estates where the amount involved may not be sufficient to attract the attention of more traditional banks."