Filling the Trust Gap

By Charles Keenan

While banks face a looming shortage of trust 
officers in the coming years, a mix of recruiting, grooming, networking and politicking will go a long way to close the gap. All of those strategies will be needed, as the shortage could become acute. Banks over the next five to 10 years will encounter a retirement wave of trust officers as baby boomers, many of whom have been working in the field since the 1980s, leave their careers for other pursuits.

“It’s a legitimate concern industry-wide,” says R. Jeffrey Peyton, SVP and group fiduciary executive at $184 billion-asset SunTrust Banks in Atlanta. As much as 25 percent to 45 percent of the trust workforce will retire, Peyton estimates, including those in his own unit of 25 trust officers for high-net-worth clients in Georgia, north Florida, Tennessee and the Carolinas. The exact percentage will depend on when these officers decide to retire.

The task of filling empty positions has become all the more challenging by the growth of the trust industry itself. Not only will the retiring baby boomers need trust work done for their collective amount of vast wealth, but banks will also continue to need extra staff to help fill the demand. Banks are eager to ramp up trust services. Ever since the financial crisis, years of declining interest margins have led financial institutions to increasingly rely on noninterest income as way to boost earnings, with fiduciary activities a vital part of the strategy. Commercial banks made $30.9 billion in 2014 from fiduciary activities, up 21 percent from 2010, according to the FDIC. Yet interest income fell by 11 percent over the same time period to $429 billion.

What also makes the search for trust officers difficult is how the career path competes with other financial positions. Younger professionals often choose wealth management, investment banking, or other career tracks. “It’s not an area that new recruits focus on when joining the banking industry,” notes Tariq Mirza, principal of the bank advisory and regulatory services practice at Grant Thornton.

In this competition for talent, trust officer positions might be a tougher sell at times versus other financial career tracks. For example, the median pay for trust officers in the United States is about $64,000, with a low of $46,000 and high of $113,000, according to PayScale. That compares with a lower median of $55,000 for a financial advisor, but that position comes with a much greater income potential, with a high of $192,000 in total pay, according to another survey.

Kaleidoscopic combination of skills

The skills a trust officer needs depend on the bank. These days, trust officers often need to be jacks of all trades, especially at smaller financial institutions. They must have experience in financial planning, tax law, fiduciary law and investment management. They also need strong people skills to work with clients and sales experience if they’re expected to grow a customer base, says Jessica Beavers, president of Bankers Trust Company of South Dakota, a subsidiary of $3.3 billion-asset Bankers Trust Co., based in Des Moines, Iowa. “It’s the hodgepodge of knowledge that we’re asking trust officers to have,” Beavers says. “The trust officer just can’t be defined by one discipline. It’s this overall knowledge base of the industry you 
have to have.”

Yet while trust workers tend to be generalists at smaller institutions, at larger banks the work is more specialized. Due to bank consolidation over the past 30 years, much of trust work—especially at larger institutions—has become more centralized. Digital innovations over the past 10 years have also made centralization much easier. All of the consolidation means that much of the administration of trusts is now handled from one location, meaning the trust officer now is either expected to spend more time in planning and client meetings, or work more behind the scenes on the administration part. “Some folks thrive working with clients, others say ‘I really like the internal administration,’” says John Elliott, SVP and trust director for Wells Fargo Private Bank. “You’ve had an evolution of the trust officer job.”

Uncovering every stone

To meet the potential shortage of trust personnel, banks need to get creative. “You have to be innovative and try different things,” Scott Trumbower, SVP and managing director at the $2.2 billion-asset Canandaigua National Bank and Trust Co. in Canandaigua, N.Y. “Groom your own. Look for trust and estate attorneys. Maybe even look at a commercial loan officer. There’s opportunity looming for lots of things.”

Often, favoring talent over trust experience is better. “It can be beneficial to go outside the box, because they are higher-potential candidates in the long run,” says Jeanne E. Branthover, head of the global financial services practice at executive search firm Boyden. Expanding the pool beyond trust makes it easier to find intangibles such as aggressiveness needed in sales and happiness in dealing with customers, things in the past the trust officer didn’t do as much, she says.

For Trumbower, looking outside Canandaigua has paid off for a bank viewed as a leader in trust and estate administration in the Rochester, N.Y., area. One tactic he has found particularly effective is to recruit local attorneys already specialized in trust and estate work. His last three hires for trust and estate officers have come from this approach. “That has been very fruitful,” Trumbower says.

He finds that simply trying to find highly qualified trust personnel at other banks isn’t effective. “You can’t really steal great talent from somebody else,” he says. “They have generally been there, they are seasoned and they are paid well.”

SunTrust’s Peyton uses a similar approach, looking for experience on the financial planning side. “We’re looking to expand the pond,” he says. “There are more areas we can look at—people who may not have direct trust experience, but they really have got that experience on the wealth planning and trust planning. Through our training and through our mentorship, we’ll help them on the direct day-to-day trust experience piece.”

That day-to-day experience can be augmented through continuing education, with trust schools acting as an effective way to get employees up to speed. For example, ABA’s National and Graduate Trust Schools help students work toward a Certified Trust and Financial Advisor designation. The program uses a three-year cycle with a one-week intensive session each fall. In the first year, students learn the fundamentals of estate planning, estate taxes, trust account administration and fiduciary law. The two subsequent years build on that foundation with more advanced concepts.

It’s clear that schools can help fill the trust knowledge gap when recruiting from outside banking. About one-third of students in the 2015 session of ABA’s National Trust School have worked less than a year in banking. Only 10 percent came from within their banks’ trust departments, another 10 percent had experience in estate administration. The majority of students come from elsewhere in the banking organization, such as those working in compliance, auditors and wealth management support staff.

Look to college campuses

While mining other professions and bank departments is effective, senior trust officers should also take steps to groom the young talent by recruiting at college campuses. For example, SunTrust has recently struck a partnership with Campbell University. It’s viewed as the only undergraduate program of its kind that offers a major in trust and wealth management. Peyton has hired four interns for a program that started in January.

Elliott of Wells Fargo also uses Campbell as a feeder. His regional department of 160 trust officers each year hires 12 interns for the summer out of Campbell, which has a curriculum very specific to the needs of a trust professional, including trust administration, employee benefits and retirement planning. Wells Fargo also ends up hiring 12 employees a year, then continues to develop them with continuing education. “Our best source of talent has been to develop our talent internally, relying on the graduates of wealth management and trust management program from Campbell,” Elliott says.

Networking and going grassroots

There’s also good old-fashioned networking as a way to nurture the trust pipeline. It could be through working with human resources to reaching out to potential candidates through LinkedIn, or striking up conversations at industry conferences, Peyton says. “We are always talking to different people out there,” he says. “Part of recruiting, whether it’s in trust or any industry, is you want to go out there and continue to have discussions, even if you don’t have an immediate need. You have to build for what happens when you have that need down the road.”

Trust executives also encourage forming a local association dedicated to advancing the interests of trust. For example, South Dakota faces a shortage of young talent since many of its college graduates leave the state for jobs elsewhere. That leaves trust companies in a pinch, since the state has a large trust industry due to its tax-friendly trust laws. Beavers has worked over the past year with two other trust executives to create the South Dakota Trust Association, which started inviting members in the fall of last year. One of the group’s missions is education, and it has reached out to the governor’s office of economic development to engage with university leaders, with one end goal being fostering talent. “How can we make sure that South Dakota always has a pool of qualified candidates?” Beavers says. “I would encourage others to work with their local trust associations and economic development partners to see if there are ways to continue to cultivate trust officers in their states and regions.”

Whatever the methods, the shortage of trust personnel really represents a golden opportunity, Elliott says: “You have an aging population and a concentration of wealth. So the need for competent and caring trust professionals is going to be fairly relentless. People will find their way to this profession because it is going to be needed.”

Charles Keenan, a regular ABA Banking Journal contributor, is a freelance writer in California.