U.S. Trust seeks to add hundreds of wealth managers with West Coast-facing poaching campaign

Brilliant but uncharacteristic move by US Trust.

If the entrepeneurial motivation of individual advisers were ever matched with world class advisory services support which is not available in the brokerafe/custody worlds, US Trust has a winning strategy. Brokerage/custodian competitors do not have the advisory services DNA to compete.

The question is whether US Trust knows how to manage highly entrapreneurial advisers who will push them to be even more competitive year after year. As employees, advisers loose their perogerative to express an opinion. When US Trust stops listening and starts pushing back and dictating what they will or will not do, is when the strategy fails. Proprietary money management, client pricing, adviser compensation and who owns the client will be the big issues. US Trust is quite sucessful in trust services but trust officers with inherited accounts are not nearly effective as the industry’s best RIAs. Don’t be surprised if Wells Fargo, CitiBank and Bank of America decide that properly resourcing independent established RIAs with world class trust services, so the adviser retains ownership of the client relationship, is far more effective in building assets than captured trust officers, as the trust officer’s incentive of winning clients is lost. RIAs who work with large trust companies repeatedly find the trust company trying to steal the client, striping them of any value associated with the client relationship. Client acquisition and personal service, the weakness of trust companies, are the stregnth of RIAs. Trust companies just do not know how to manage and earn the trust of independent advisers. It truely is cultural fit consideration which makes even our largest firms like US Trust vulnerable to a first rate RIA model. If access to non-conflicted world class trust services were ever to be available to independent RIAs, USTrust would find its strategy increasingly difficult to execute.

SCW