2016 GBA Banking School Trust Services May 3, 2016

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Kelley Cole
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1 2016 GBA Banking School Trust Services May 3, 2016

2 Trust Services Why do I need Trust? What is a Trust? Trust Services Trust and Brokerage

3 Why do I need Trust? Potential managerial responsibility Board responsibilities Manage the CEO Provide direction for the organization Establish governance through policy Act as fiduciary to shareholders Monitor and control

4 Why do I need Trust? Potential managerial responsibility Executive officer responsibilities Carry out the direction of the board Serve in the capacity as directed by the board Manage the business model Report to the board Run the compliance program Remediate Audit and Compliance Findings

5 Why do I need Trust? Potential managerial responsibility Risks: Legal liability of discretionary decisions Regulatory risk Market risk Rewards: Non-interest income Sticky services that retain customers Relationship-oriented vs Transaction-oriented

6 Why do I need Trust? Bankers referring to Trust will: More completely help customers Bring in new customers Build customer relationships Reduce customer attrition Potentially earn referral incentives

7 Trust Services What is a Trust? A fiduciary relationship in which one person is the holder of the title to property subject to an equitable obligation to keep or use the property for the benefit of another. Source: Trusts, 6 th edition, George Bogert, West Publishing Co., p. 1

8 Trust Services What is a Trust? Example 1: Dad leaves money to Trustee for the benefit of Son and Daughter. Example 2: Mom leaves money to Trustee with income to Dad, then remainder to Son. Example 3: You and your employer contribute to your 401k for your future benefit.

9 Trust Services Other Trust Jargon Fiduciary the duty to act solely in the best interest of the beneficiary. Settlor/Grantor/Trustor creator of trust Trust Document tells Trustee what to do Trustee holder of title to property Beneficiary recipient of the benefit Source: Trusts, 6th edition, George Bogert, West Publishing Co., p. 1-2

10 Trust Services The Fiduciary Business Model Problem-Solving Asset-Gathering Revenues are a product of size Expenses are a product of administration Margins can be attractive

11 Trust Services Types of Services Financial Planning Services Personal Trust Services Estate Services Investment Management Retirement Plans Corporate Trust

12 Financial Planning Services New addition to Trust Services Discover problems Solve problems Cross-selling opportunities

13 Personal Trust Trust Revocable, Inter vivos, Living Irrevocable Special Needs Testamentary Standby Agency Conservatorship

14 Estate Services Estate Planning Wills Trusts Beneficiary designations Estate Administration Collect assets Disburse assets according to will

15 Investment Management Capacity Trust Agency Custodial Portfolio Management Model Portfolios Individual Securities

16 Retirement Plans Defined Benefit/Pension Defined Contribution 401(k)s Profit sharing ESOP Hybrid Cash Balance

17 Corporate Trust Institutional bond trustee Corporate Municipal Stock transfer agent

18 Trust and Brokerage Services Standards The Suitability Standard - Brokerage Regulated by FINRA Suitable recommendation to client Duty to the Firm Compensation Conflict No requirement to put client s interest above B/D

19 Trust and Brokerage Services Standards The Fiduciary Standard Trust and RIAs SEC Investment Advisors Act of 1940 (RIAs) Trust Code Duties and Powers of Trustee The Standard client s best interest prudence avoid conflicts of interest disclose material facts

20 Trust and Brokerage Services Standards The New Retirement Account Fiduciary Standard from the Dept of Labor Will it save billions of dollars in fees? Will it reduce the ability of advisors to provide advice? Will anything change?

21 Trust Services Important Takeaways Risks/Benefits of Trust to Bank (slide 5) Definition of a Trust (slide 7) Six Trust Services (slide 11)

22 Trust Services Questions? Kemp Gaskill, CFP, CTFA First American Bank & Trust Co

NASSAU COUNTY AHRC FOUNDATION, INC. COMMUNITY TRUST I. Sponsor Agreement

NASSAU COUNTY AHRC FOUNDATION, INC. COMMUNITY TRUST I Sponsor Agreement The undersigned hereby establishes a Trust Account under the Nassau County AHRC Foundation, Inc. Community Trust I dated, in the