Trust Company of America has long been a bit of an oddball among RIA custodians.
The Denver, Colo.-based asset custodian has a name that sounds like a bank, a majority of its $9.5 billion of assets come from RIAs that serve as turnkey asset managers and — until recently — it was staffed by executives that hadn’t played in the big leagues of custody.
Yet despite the fact that it has been tremendously successful [more on that later] in its nonconforming business model, it is starting to look to take a more mainstream approach to future growth.
One obvious move in that direction was when the firm put a Schwab Institutional veteran, Frank Maiorano, in the CEO seat when Terry Reitan retired in January. See: CEO Terry Reitan retires from Trust Company of America. It also shortened its name for marketing purposes to “Trust” and it has a plan to grow without relying on the success of a handful of high-producing turnkey asset management programs.
In its most recent move to give itself a sleeker aura, it hired Dennis Noto, as its new chief information officer. Part of his job is to make Trust an Apple-friendly company. It has acquired some Macs and iPads for its employees, Maiorano says. “I believe we should be in an Apple environment right now and we’re mostly in a PC environment.”
All of these initiatives by Trust are aimed at keeping up remarkable growth and momentum.
The Denver, Colo.-based RIA custodian saw its assets under custody surpass the $9 billion mark on Dec. 1, after starting 2009 at $7.1 billion. The company’s total RIA assets in custody at the end of the first quarter of 2005 were just $2.3 billion.
That means that Trust has enjoyed a 35.7% compounded annual growth rate for four years, even accounting for the collapse in late 2008. See: How a small custodian is making big waves.
Maiorano, who came to Trust after a two-year hiatus, is off to a good start after joining in mid-January. See: Frank Maiorano takes the helm at Trust Company of America. Trust is growing its accounts 22% faster than last year and its assets under custody 42% faster.
Here’s the data download on Trust Company of America:
|Name of custodian:||Trust Company of America|
|Address:||7103 South Revere Parkway, Centennial, Colorado|
|Parent company:||TCA Financial Corporation|
|Total assets in custody:||$9.5 Billion|
|Number of RIAs using platform:||120|
|Head of RIA custody business and executive’s starting year with the company:||Frank Maiorano, 2010|
|Head of RIA sales and starting year:||Al Leary, 2008|
|Date of last major update on tech platform:||May 2010|
|Minimum assets for advisors:||$25 million|
|Fees for RIAs that fall under the minimum:||n/a|
When Maiorano came aboard Trust, he knew he faced an interesting challenge of making a good thing better.
“It’s very rare to join a custodian with a full-fledged platform but (one where) I still have the chance to move the needle,” Maiorano said in an earlier interview.
One of Trust’s strengths is its position as a TAMP custodian. The company has about $6 billion of these assets in custody. The assets are managed by an RIA on Trust’s platform, and the client relationship is managed by a third-party firm.
The third-party firms include independent broker-dealers, CPA firms and other RIA firms that focus on gathering assets.
One client who has succeeded with Trust’s custodial and technology services is Isaac Braley, president of BTS Asset Management of Lexington, Mass. His firm had $500 million of assets in 2007 but he was able to quadruple assets under advisement to $2 billion as of January.
He gives some of the credit to Trust.
“Our ability to distribute became much easier” than through a standard brokerage platform, Braley said in an earlier interview. “Trust Company of America gave us the ability to manage all our clients in one model.”
Being more Schwab-like
But Maiorano’s strategy for growth depends not only on growing firm like BTS, but growing as a mainstream custodian, as well.
“People may look at us as a niche player but we’re not just a niche player,” he says. “I hope to be on the [list of] top five searches” for advisors seeking an asset custodian, he adds.
Competing with the big custodians — Schwab, Fidelity, TD Ameritrade and Pershing — however, means coming out of the bulrushes.
Maiorano says he is determined to become a more familiar presence to customers of Trust. He is about to go on the road and meet as many RIAs as he can. He plans to tell them to call him directly when they want to.
He’s also beginning to talk to some of his old RIA contacts from his career at Nuveen and Schwab. He’s hoping to be able to report positive results from those conversations in six or eight months – a period of time he considers a minimum sales cycle for winning custodial business from advisors.
Trust has two tools with which to continue growing as a mainstream custodian: technology and service.
Trust supplies its advisors with technology that automates the process of trading and rebalancing across multiple accounts.
Service is the elephant
Service is rated as the top concern of advisors in virtually every survey of RIA about custodians. Trust’s service model is undeniably attractive.
“Maybe the elephant in the room is the service model,” Maiorano says. “Everyone says that but our ratio [of service reps to RIA firms] is extremely high. When you call, it’ll certainly be someone who knows your business.”
Of his company’s 180 employees, 70 of them are assigned to service the 115 RIA firms in the customer base.
There are actually a number of small custodians providing big service to RIAs these days including: Shareholders Service Group of San Diego, Scottrade Advisor Services of St. Louis and Trade-PMR of Florida.
But Maiorano says that his company doesn’t really compete with these small custodians because its technology positions it to service bigger RIAs. I asked him about Shareholder Services Group.
“Shareholders Service Group’s model is very different than ours,” he says. “They’re bringing in [advisors with $1 million to $2 million of assets under management]. Our model is more similar to the larger custodians. We tend to be attractive to larger advisors – ones with $50 million to $100 million mostly.”