March 20, 2020

On Feb 23-25, I attended the ABA Wealth Management and Trust Conference in Orlando and thought I would share some observations and critical points from some of the sessions I attended:

On the regulatory side, it was fascinating to hear the core areas of focus for decision-makers.  The most significant focal point on the horizon was cannabis legislation as it relates to banks and trustees.  There is legislation on the horizon to ease the burden for banks to conduct business with cannabis businesses, with solutions such as reducing regulatory constraints and standardizing requirements. Secondary focus revolved around the SEC Best Interest Rule going into effect in June 2020 and the proposed changes to the Accredited Investor Rule.   Another potential change on the horizon is the removal of LIBOR as a critical benchmark. Keep an eye on these changes on the horizon.

Another impressive session was on the implications of ESG investing inside trusts, charitable foundations, and ERISA plans.  Take time to learn the difference between collateral benefits ESG and risk-adjusted ESG. Collateral benefits ESG is an updated take on “socially responsible investing” for the exclusive purpose of providing benefits to a third-party through moral or ethical decision-making. Risk-adjusted ESG is an active investing philosophy based around the theory that above-average returns generate through ESG factors.  Federated Investors will be releasing a white paper on this subject, and we’ll be publishing a follow-up post to elaborate on the specifics.  Keep an eye out for this.

Concerning wealth generation, by 2025, there will be five different generations creating wealth at the same time.  Now is the time to prepare for this unique time in financial services history and to prepare for the most significant wealth transfer in history.  Advisors who are fee-focused can’t gather assets, so differentiation is essential.  One size doesn’t fit all, and each generation has different goals and objectives. Advisors must focus on the “segment of one.”  To be successful in the future, advisors need to start establishing multi-generational relationships now.

For trusts and estates, understanding the digital assets inside is critically important.  It is essential to review the Revised Uniform Fiduciary Access to Digital Access Act (RUFADAA) and the Uniform Electronics Wills Act (UEWA) to ensure our responsibilities of digital assets. Understanding digital assets are essential for a variety of reasons. In essence, digital assets are becoming less and less transferable, email accounts can expire at the owner’s death, and trustees need to make sure they acquire full release and indemnification for distributing the digital contents.

Lastly, client satisfaction will be the differentiator in the coming years.  Follow a few simple rules: 1) communicate, 2) build the relationship, and 3) know the value of your product or service.  Following these guidelines will allow you to connect with the client and let them know why you care and resolve problems as they arise. The future of wealth management will revolve around the “segment of one.”  

Les Eisel, MBA

Assistant Vice President

leisel@fs-trust.com

The posts expressed are views of FSTC and are not intended as advice or recommendations. For informational purposes only. FSTC does not offer tax or legal advice, professional counsel should be sought for tax or legal advice.