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What are the Benefits of Using a Trust Company for Money Management?

by Caldwell Trust


Trust companies use financial tools such as trusts, foundations, and other wealth structures to help manage complex wealth scenarios. They protect assets, manage investments, and provide continuity, so that wealth is properly transferred to the next generation. This is the benefit of using a trust company rather than doing it all on your own.

Many people use trust companies to manage trust funds for their retirement and their beneficiaries. They do this by using a wide variety of investments to achieve various investment goals, such as income or growth. Clients with high-net-worth may require alternative investments. The trust company uses customized management taking into account a client's time frame and risk tolerance. 

Related Blog: What Is the Role of a Fiduciary?



Why is Wealth Management Important?

For someone with substantial assets, banks, insurance companies, brokerage firms, and financial planners all become involved. Consequently, clients may end up with their assets scattered among a number of financial institutions. Each of these institutions focuses on its particular piece of the financial pie. However, a trust company can include all parts of a client's financial needs. One of the biggest benefits of working with a trust company is that they work with the bigger picture by providing a variety of services, including investment, tax, and estate planning. 


Every client has specific financial objectives. Good wealth management tailors solutions for each client, to maintain a client's assets and help them attain their financial objectives.  Individualized solutions work with a client's current financial situation and future goals. Life is a constant process of change. So a wealth manager can take financial and personal changes into account, regularly meet with clients, and make any necessary adjustments. Wealth management also means estate planning. A wealth manager can make sure a client's wealth is passed down in accordance with the client's wishes while minimizing taxes and fees. 


What is Trust Management?

A trust is a legal relationship in which property is held by one party for the benefit of another party. The trustee holds the property for the beneficiaries of the trust. The trustee is a fiduciary and must act with care in administering the trust. 


Trusts are set up for all kinds of reasons. Often they are set up to allocate funds to beneficiaries. Sometimes they are used to shelter assets from adverse financial situations, or taxes. Many people use trust companies to set up and manage trust funds for their retirement and their beneficiaries. The trustee must manage and protect the assets as set forth with the terms and goals of the trust.


How Does a Trust Company Benefit Your Retirement Planning?

Many clients set up retirement plans, such as IRAs, with trust companies. The company manages retirement funds, monitors investments and disbursing funds, makes changes as needed, and ensures compliance with government reporting for contributions, withdrawals, and rollovers. 


What Does Low-Risk High Reward Really Mean?

Many people are familiar with the phrase, "high-risk, high-return,"  which means that the potential return on investment increases along with increased risk. Therefore, individuals often assume that low-risk levels mean low returns. However, individuals sometimes fail to consider that when someone invests in a high-risk asset, expecting high returns, the returns may fluctuate over time. Therefore, he or she may get lower returns overall than someone with a lower-risk investment. A trust adviser will recommend the right amount of risk to help a client achieve the return that is best for the client's goals. 


Are Investment Goals Based Solely on Performance?

The purpose of a portfolio is usually not just to grow for the sake of growing, but to grow to achieve a goal. Therefore, product and performance benchmarks are short term goals. Ultimately, the focus should be on the client's progress towards their life goals. 


How Can a Trust Company Benefit You?

Trust companies perform a variety of services related to asset management and investment. However, along with financial management skills and experience, a trust company gives you peace of mind. They fulfill their fiduciary responsibility by always considering the client's best interests. They use their knowledge and experience for the safekeeping and financial planning of a client's wealth, as well as estate planning. 


At Caldwell Trust, our team will create a wealth management plan tailored for your needs. For more information, contact us.


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Trusts & Estate Planning