Spectrem's Personal Trust Update details the drop in personal trust accounts, even as American wealth increases.
There is a stark contrast between the number of wealthy Americans today and the number of personal trust accounts, which is where wealthy investors previously placed their funds in search of long-term safety and control over their assets.
Spectrem’s annual Perspective, the 2015 Personal Trust Update, provides the most detailed look at the personal trust industry in the United States. Using Spectrem insights and data from FDIC surveys of member trust institutions, the 2015 Personal Trust Update includes information on the companies who hold the most personal trust accounts, common and collective funds and fiduciary income.
For the fourth year in a row, personal trust assets grew in 2014, reaching $978.4 billion, an increase of almost $30 billion from 2013. The total has increased almost $130 billion since 2011, and continues to approach the record amount of $1.149 trillion in 2007, just before the stock market crash and recession.
However, what continues to drop is the number of personal trust accounts. For the sixth consecutive year, the total number of accounts dropped, this time to only 614,172. The decrease was slight, just over 600, but the market has lost 175,000 accounts since 2008.
The decrease in the number of personal trust accounts is surprising given the rise in the number of affluent people in the United States today. The number of wealthy households increased across the board in 2014, continuing a six-year increase, with more than 10 million households in the United States with more than $1 million or more in net worth. There are now more than 1.25 million investors with more than $5 million of net worth.
The distribution of trusts has changed slightly from last year. Whereas more than 60 percent of trusts were held by the top 10 companies, the 2014 figure showed that only 58.5 percent were held by those largest companies. Likewise, the percentage held by the top 26 companies has dropped from almost exactly 80 percent to just 77.2 percent.
According to Spectrem’s quarterly wealth segmentation series report Asset Allocation, Portfolios and Primary Providers, 49 percent of Ultra High Net Worth investors with a net worth between $5 million and $25 million have assets in a trust.
Interestingly, only 6 percent of UHNW investors have their trust assets using a financial institution as trustee. Of the others, 28 percent said their primary financial advisor told them to self-trustee, and 27 percent said using a financial institution as trustee was too expensive.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.