2016 america’s besthosted.thetrustadvisor.com/rs/804-xkt-668/images/america... · 2017-01-09 ·...

IRA CUSTODIANS

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AMERICA’S BEST

THE WINNERS LIST

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2016 AMERICA’S BEST IRA CUSTODIANS

Introduction: Beyond Custody as CommodityEvery IRA needs a custodian and practically every financial institution with custody powers wants your account. That’s actually less of a compliment than a simple admission of how fierce the competition for every dollar of retirement assets has become. Even the Office of the Comptroller of the Currency, which regulates the custody industry, admits that a handful of big banks have used their scale to starve would-be rivals even if it means profit margins for many key players have raced to the bottom.

The more their margins contract, the more assets they have to chase in order to keep their shareholders happy. Technology helps them fill the gap, but all in all they’ve compensated by cutting service back to the minimum, automating once-rich relationships and kick-ing back any account that deviates from the generic or otherwise requires special handling. If you’re looking for a commoditized, cookie-cutter solution, it’s the best of all worlds.

But say your details don’t match the cookie cutter. You might bring investments to the table that present administrative complications that the giants don’t want to work around. Maybe you simply want the freedom to follow your financial interest wherever it takes you, even if that path leads off the map. You need truly open architecture around your investment strategy. You deserve it.

The good news is that while the giants have forced so many accounts into a generic mold, the technology they built to service those accounts opens the door to a new and more nimble generation of custody provid-ers. These custodians aren’t trying to do one thing cheaply. They pride themselves on handling every detail of their business extremely well. Their account holders feel like stars. And they’re confident that the custodian won’t miss a beat.

The ideal custodial relationship should be invisible ex-cept when you start hitting the walls of what the insti-tution can handle. With some custodians, that moment will never come, making the experience as seamless as it is unbounded. We’ll focus on how to find them.

Back to Basics: What the Custodian Should (And Shouldn’t) DoYour search for greatness begins with a deeper under-standing of the adequate. In order to set up an IRA, you’ll need to sign up with an institution to accept of-ficial responsibility for the assets. That’s the custodian. There’s no getting around that basic requirement. You can’t do it yourself.

The primary services the custodian provides revolve around keeping track of the assets in your account – generally electronically, but physical custody can be an option in special circumstances – and making sure all transactions settle properly. With IRAs, there are also specialized reporting and compliance requirements that ensure that your account obeys IRS and Labor Department rules. If you need to take a distribution or contribute too much in a given tax year, the custodian should catch the error.

And if you’re rolling or converting another retirement account into the IRA, the custodian should be able to guide you through the transaction to avoid expen-sive mistakes. Throughout the cycle, the custodian prepares and distributes tax statements, making sure

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to attribute every transaction to the proper year. This quiet support is critical because if your IRA is self-directed, you’re literally on your own – an an estimated 50% of self-directed investors get the details wrong.

At a minimum, the custodian you pick should be able to handle all these tasks, humming along silently in the background until it’s necessary to intervene. They remain behind the curtain, invisible and doing their job while you manage the investments on your own.

Banks are traditionally great at running the day-to-day processes in the background, and the bigger the institution, the smoother the ride tends to be. However, when an account becomes an exception – the prover-bial square peg in a world of round holes – the ride of-ten lurches to an immediate stop, forcing the account holder to either change course or go elsewhere.

Independent custodians can be less invasive, but much of the experience depends on the provider. Some independent custody platforms harbor ambi-tions of becoming de facto investment advisors,

whether it’s to satisfy their interpretation of the Labor Department’s new fiduciary requirements or simply out of a misguided effort to show account holders that they know best. Others simply create arbitrary restrictions to hide their lack of in-house expertise when it comes to esoteric or even common types of investment vehicles. Either way, if you welcome unso-licited advice and intrusive policies, you’ll find plenty of partners eager to provide.

Here’s the only thing you need to know about the impact of the fiduciary rule on your self-directed IRA: the custodian was never providing advice anyway, so their relationship to your investment strategy does not change. If a custodian tells you they’re worried about what you’re doing, they’re already straying from the lines. Tell them to mind their own business – perhaps by thanking them for the “advice” – and they should back down. Otherwise, it’s time to start looking for a new custodian.

The new fiduciary rules have had a cooling impact on the industry, shaking out marginal players that weren’t confident enough in their own institutional capabili-ties to get a firm ruling from DOL that their processes were up to speed. We’ve heard a lot about custodians that used to pride themselves on an open invest-ment platform pulling away from everything but vanilla stocks, bonds and the mutual funds that hold them. It’s for their comfort, not your protection.

To be honest, watching people who weren’t serious about providing world-class reliability isn’t a bad thing at all. These are the types of custodians who were either too quiet when they needed to speak up or too noisy when you wanted to be left alone. In the past, when those institutions consented to leave you alone, the silence often meant that they’re paying more at-tention to their own corporate goals than what’s going on in your account. And when they started communi-cating, it was often because you were getting in the way of that corporate agenda.

BANKS ARE TRADITIONALLY

GREAT AT RUNNING THE

DAY-TO-DAY PROCESSES

IN THE BACKGROUND,

AND THE BIGGER THE

INSTITUTION, THE

SMOOTHER THE RIDE

TENDS TO BE.

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Most self-directed investors want the relationship to move along exact opposite lines, with guidance when they need it and freedom the rest of the time. Lucky for them, there are seasoned custodians that know exactly where to draw the line.

Provident Trust Group: The Extra 2%In a commoditized industry, most solutions look super-ficially similar because there’s not a lot of point in rein-venting a lot of wheels. Custody is like that: everyone who can accept the assets and record the transitions will do the job a lot like everyone else does. And as a result, most of the people who work with custodians have a very similar experience most of the time.

This makes it both tricky to identify truly excellent custodians and deeply rewarding when even one name rises above the sea of lookalikes and copycats. Not a lot of financial professionals can even name three self-directed IRS custodians, let alone rank the leaders. We managed to coax them into filling a slate of ten, but even then, the gap between the top name and the lowest wasn’t even a third of a point. Only a hundredth of a point separated the top two contend-ers, which shows you how thin the distinctions are at this rarefied level.

Nonetheless, that 2% spread reveals consistent out-performance across the people we surveyed. Across thousands, maybe even millions of lifetime transac-tions, the smallest fluctuation in satisfaction added up

to a tangible edge. People are incrementally happier with one firm than the other. That’s actually an amaz-ing thing to say in this business.

“When we asked our readers why they prefer Provident in Nevada to every other player they could name in the world of self-directed IRA custody, the answers were equally surprising. No single factor or theme stood out. Yes, Provident hit all the usual dif-ferentiators: it allows physical gold and silver bullion on its platform, has in-house experts who can facili-tate investments in working real estate and stock in non-traded companies, rises to the challenge when a customer comes to them looking for a new custodian to hold alternative assets. And yes, they’re consistently praised for reliability, flawless execution and simply getting it right every time.”

What was shocking about the response was how diverse it was. Just about every happy customer had a different story to tell about the Provident experience. It was like they were all talking about their own private custodian, a company that only existed to serve their needs and nobody else.

That’s when the Provident edge crystallized. The company seems to present a different profile to every customer because it meets that customer’s needs with such intensity of focus that there don’t seem to be any other accounts on the platform. Everything feels personal, bespoke, tailored. Customer after customer

1. PROVIDENT (57%)

2. MAINSTAR TRUST COMPANY (55%)

3. PENSCO TRUST (55%)

4. 54%)

5. EQUITY TRUST (54%)

6. (54%)

7. GOLDSTAR (53%)

8. PREFERRED TRUST (52%)

9. MADISON (52%)

10. KINGDOM (52%)

IRA CUSTODIANS RANKINGS FOR 2016

PENSCO TRUST

MILLENIUM EQUITY TRUST

IRA SERVICES

TRUST

GOLDSTARMAINSTAR TRUST

COMPANY

PREFERRED TRUST

MADISON KINGDOMPROVIDENT TRUSTGROUP

57% 55% 55% 54% 54% 54%53% 52% 52% 52%

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feels like the center of the Provident universe, even if the nuts and bolts of their experience all boil down to commodity processes.

In a commodity industry, Provident manages to feel like a boutique. That’s abso-lutely extraordinary, and it’s the infinitesimal gap between the company and its closest competitor.

One theme did come upmultiple times: mutual independence. Provident has no close ties to any of the sprawling money management complexes, so there’s no imbedded interest in favoring one invest-ment product over another. Whatever the customers want, the firm will provide. And Provident impresses those customers by letting them call the shots every time. They take the “self-directed” label extremely seri-ously. There are no “helpful” in-house monitors to point you toward proprietary products or away from your chosen course as an investor. There’s no self-serving mandate to stretch fiduciary responsibility to what’s in your portfolio. If the IRS says you can do it and there’s a realistic way to make it happen, Provident won’t get in the way.

That sounds simple, but in the world of IRA custody, you’ll quickly find that not many firms actually back up the words with action. As long as none of the regulatory flags go up, Provident is practically invisible: operating in the background while you run the account the way you like.

Provident combines the institutional scale and resourc-es to take on the giants on something like a head-to-head basis, while beating the boutiques for breadth as well as depth of service. The others have their follow-ings, but tend to veer too far from the sweet spot in terms of size (a little too small to keep up, a little too large to treat retail investors right) or platform (support-ing gold, for example, but not real estate).

Odds are good that if Provident can’t make a deal on your account that compares to what the trillion-dollar companies are charging, you’ve got so much money that it doesn’t really matter. Their cost structure is low and they’re happy to pass on the benefits of that institutional-grade scale if it means winning you as a customer.

And unlike the fringe specialists, Provident covers the known universe of alternative asset classes and even goes beyond what each of the boutiques can offer individually. Over the years I’ve watched them create and structure new instruments to let their customers go wherever the market winds take them: bundled pension income products, real estate, limited liability company (LLC) holdings, precious metals, and much more.

YOU NEED TRULY

OPEN ARCHITECTURE

AROUND YOUR

INVESTMENT STRATEGY.

YOU DESERVE IT.


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Provident will rise to the challenge is you want some-thing exotic, provided of course that there’s a way to structure it in a way that keeps the IRA on track and the regulators happy. Over and over, we heard that the IRA holders are happy. They’re not just content or satisfied: that’s the 2% advantage at work.

The Self-Directed AdvantageIn theory, every IRA is a self-directed account in the sense that you’re calling the shots on what goes in and what goes out. However, because about 98% of investors are content to rely on whatever’s on the cus-todian’s shelf, the options are generally limited a fairly wide selection of mutual funds -- maybe better than the menu you’d get in a 401(k) but still only a fraction of what’s really available even within the asset class.

Banks will limit your selection even further, trying to stuff interest-bearing products into the account. That’s probably a non-starter. You want the ability to expand your horizon and create wealth. You don’t really need a tax-deferred vehicle to hold your CDs and let them compound at market rates for decades.

On the other side of the coin, you can bring your financial advisor into the calculations. “Self-directed” here doesn’t exclude situations where someone else is helping you call the shots – it simply refers to the range of investments that the account can include. (See below for a discussion of whether your advisor will need to live up to fiduciary standards to oversee a self-directed IRA.)

Either way, as you move up the scale, other custodians will add stocks and ETFs to the mix. Individual bonds are tricky, especially when you start moving away from vanilla Treasury debt. Many IRA investors actually end up having to make do with bond mutual funds, which are actually a completely different animal. (For one thing, they never pay back the principal on maturity.)

If you like stocks and mutual funds, these platforms can be a candy store. But for investors who can squeeze higher returns out of private enterprise – pri-vate equity or a working farm, for example – or simply want a more diversified footprint, stocks and mutual funds all start to taste alike after awhile.

There’s well over $100 billion in alternative assets already parked in true self-directed IRAs. Mitt Romney’s famous multi-million-dollar nest egg has more money than most Americans will ever see, allocated to just one Caribbean hedge fund, and other masters of the universe have adopted similar strategies that let their richest hold-ings accumulate value on a tax-deferred basis.

Slightly more humble strategies revolve around real estate, a private business or gold and silver as a vital hedge against inflation or a crashing dollar. You can always buy into a precious metals ETF in a conven-tional IRA, but at the end of the day you’ll only be holding shares of paper. A self-directed IRA gives you the power to hold tangible bullion in the same account, all under the approval of the IRS itself.

YOU CAN ALWAYS BUY

INTO A PRECIOUS

METALS ETF IN A

CONVENTIONAL IRA,

BUT AT THE END OF

THE DAY YOU’LL

ONLY BE HOLDING

SHARES OF PAPER.

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As long as you obey the IRS rules, the only thing you need to put any of these market tactics into practice is a custodian that will actually admit the assets onto its platform. We’ve already discussed that this can be harder than it sounds.

From a conventional custodian’s perspective, alterna-tive assets are a little trickier to manage because they don’t fit into a standardized box – you can exchange any single share of Apple for billions of identical shares, but every parcel of real estate and every privately held family business is unique – and that translates into operational drag.

In plain terms, most of them don’t want to deal with the headaches. If you come to them with an IRA hold-ing anything out of the ordinary, they’ll make you sell it before they let you in the door.

The Limits on Self-Directed IRA HoldingsThat said, it’s not a completely open playing field. Any custodian that works with alternative assets will under-stand and enforce the IRS restrictions on IRA portfolios.

Every IRA starts with cash. You can’t contribute real assets directly. To move the assets into your self-direct-ed IRA, you need to load the account with cash and then direct it to purchase them at a fair market price. A good custodian will be familiar with the process of evaluating the assets and smoothing the transaction.

You can’t buy and sell from yourself. No IRA transaction will hold up if you’re simply using it as a way to move your own property into a tax-deferred structure or otherwise using the assets to benefit yourself. You can’t direct your IRA to buy your own business and keep drawing a paycheck, for example. And your IRA can’t buy the family home and keep liv-ing there rent-free. There are ways to get around a lot of the restrictions, but once again, a good self-directed IRA custodian will know how they work.

Family is off limits, too. If your IRA bought stock from a relative, it would simply amount to a statisti-cal fluke of the market, but buying a business or an investment property from your parents looks fishy.

Moreover, using the assets for the benefit of any fam-ily member is right out. Your IRA can’t hire your kids or “invest” in their educations without taking the tax penalties of a normal distribution.


TWO TIPS: THE ROLLOVER AND THE ROTH

You’re allowed to roll 401(k) assets over into a self-directed IRA under just about any sce-

nario where a normal rollover would be an option. This is a great way to amass a lot more than the relatively stingy $5,500 per year the government allows you to contribute directly as of 2015.

What’s more, the unlimited investment universe of the self-directed IRA will probably give you a lot more room to move than any 401(k) invest-ment menu, no matter how well constructed your employer plan may be or how many choices it provides. Nearly all 401(k) sponsors focus on mutual funds and some form of constant-value alternative, broadening out to individual stocks at best. If you want more freedom, move the money into an IRA whenever you can.

And of course, self-employed people get a lot more leeway with contributions in general. A SIMPLE IRA can accept $12,500 per year and a SEP can theoretically take $54,000 per year if the underlying income stream is big enough. As with conventional IRA investing, the goal is always to move as much money as possible into the tax-deferred vehicle where it can grow without IRS intervention for years or even generations.

Either way, there’s nothing stopping you from roll-ing a 401(k) into a self-directed Roth vehicle or converting a traditional IRA to get the Roth ben-efits. You’ll have to pay the tax up front, but once you’re working with post-tax dollars, this account will grow free from IRS drag forever.

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Distributions are a fact of life. Remember, when you hit age 70-1/2 you have to start winding your IRA down, and for your heirs the timetable can compress by decades. Cash and securities can be sold off to meet annual distribution requirements, but a single farm is hard to split up. If the assets generate signifi-cant cash, you might be all right. Otherwise, consider leaving some cash or marketable securities in the account to cover the RMD, structuring the illiquid holdings on a multiple-share basis to allow gradual conversion into cash, or both. If your custodian can’t help you here, consider finding one that can.

Steer clear of the shysters. Dubious “invest-ment” vehicles have brought down banks, brokerage networks and even whole governments. While the cus-todian isn’t responsible for keeping you from making bad calls – that would defeat the purpose – the odds are good they’ve seen most of the common scams already. If they don’t want something on your platform, they should be able to justify the refusal or, better, give you an alternative that measures up.

Collectibles don’t count. While you can hold antiques, fine wines, classic cars and other personal property in an IRA, every dollar you use to buy the stuff counts as a fully taxable distribution. This may not wholly defeat the purpose of having these investments in the retirement account, but the initial drag can be substantial. Knowing the technicalities is critical.Life insurance is tricky. While no IRA can buy life insurance – on yourself or anyone else – the argu-ments for pooled “viatical” products that buy multiple policies are more complex. If this approach to generat-ing income interests you, make sure your custodian can work with you to find the vehicles that have the best prospects for meeting IRS and SEC requirements.

What About Gold?Any self-directed IRA that holds physical precious metals is often described as a “gold IRA,” but this is more a marketing term than a hard-and-fast clas-sification. The same account can theoretically contain bullion as well as real estate, cash and securities, or any combination of other allowed assets.

Where the “gold IRA” differs from conventional ac-counts is of course the fact that bullion and coins need to be stored in a secure place whereas cash and fund shares can exist in a purely electronic format. Once again, a veteran self-directed IRA custodian should have relationships with bonded storage compa-nies that can meet your needs – generally the “vault” in these cases is a commingled facility where multiple investors share space, but other arrangements are feasible for the right price.

As usual, you can’t simply move your existing gold or silver into an IRA, no matter how familiar the custodian may be with the self-directed approach. The account will need to be started with cash rolled in from another qualified account or deposited as part of an annual contribution. The custodian will then spend the cash to buy the metal and pay storage fees. Any required distributions will then liquidate the metal, paying back out in cash.

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Picking the Right Self-Directed IRA CustodianIn the commodity world of giant institutions, the choice of custodian revolves around price. If a big mutual fund manager gets a 0.01% bargain on the fees, it’s all the incentive required to go with that platform. But IRA investors in particular can feel trapped by the relatively limited number of institutions willing to sup-port an esoteric or exotic investment plan, so they’re not going to get a lot of discounts even if they ask. Quite a few end up with the first firm that says “yes,” regardless of fee structure or reputation.

The real secret to finding the right custodian is pa-tience. Unless you find the right match right away, it’s all right to keep interviewing custodians until your con-tribution deadline or rollover clock starts ticking down.

Most conversations revolve around a few perennial topics. Over the years we’ve asked Trust Advisor read-ers – a few hundred thousand professional wealth managers and estate planners – what they look for in a custodian, and a combination of three factors has usually been what it takes to seal the deal:

* Reputation and length of time in the busi-ness. This is essential to about 77% of our audience. If a company has a less-than-glowing track record or hasn’t been around long enough to develop any indus-try footprint at all, there’s no need to take a chance on an unknown. Let other people work through the growing pains for you.

* Quality of service based on testimonials and referrals. Maybe 65% of our audience insists on first-person accounts. Happy customers are willing and eager to talk. A confident custodian will freely share a list of people you can contact. Ask them to tell you about the times the custodian exceeded expec-tations and how problems were resolved when they emerged. While you’re at it, see if the customers giving the testimonials know anyone you can contact who isn’t on the list: the goal here is to raise your confi-dence that you’re getting the real ground-floor view.

* Availability of in-house experts sways a little more than 50% of our audience. You probably don’t want to be lectured at, but it’s nice to be able to consult lawyers, accountants or people with special-ized knowledge of the investments you may be investi-gating on your own. A second (or third) opinion can help make the difference between a great portfolio experience and dead money.

Price is not even an issue at this level. Instead, start with the basic homework, making sure each prospective partner’s regulatory and business profiles are clear of complaints that can’t be addressed to your satisfaction. Management should be able to explain any historical disputes or even grey areas. Be at least as demanding as you would be when interviewing a potential employ-ee to work with your clients face to face.

Ask any prospective custodian if it can handle all of the asset classes you are contemplating. Get concrete examples of how this has worked out in practice. Were there additional fees? Did difficulties arise from a tax or regulatory perspective? How did the company respond to challenges in these areas and put stronger practices in place? For that matter, this is your chance to ask if other IRA investors have used similar instru-

THE NEW LABOR DEPART-

MENT RULES LAYING OUT

THE STANDARD FOR

INVESTMENT ADVICE IN

RETIREMENT ACCOUNTS

HAVE GENERATED PLENTY

OF CONFUSION IN THE

SELF-DIRECTED IRA

UNIVERSE AND BEYOND.

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ments in the past and how well they performed under various market conditions – “education” is not the same as active investment advice!

Investigate operational risk. You want a partner with the scale to keep going if things get bad in the markets or if mistakes are made. Check error-and-omissions insurance, FDIC coverage (if applicable) and audit status. You may not need to see the balance sheet, but it’s good to see that someone is giving the books a check-up and certifying the results.

Ultimately, while references and testimonials are always helpful, it’s far more important to establish a rapport with the personnel who will be directly respon-sible for your account. If you trust them, it will go a long way. Otherwise, third-party commentary will help you take the conversation to the next level.

This is when to start talking price. Odds are good that the overall cost of the relationship will be fairly low, maybe even surprisingly low. Remember, margins throughout the custody space have come down enor-mously over the last few decades. Ask about break-points – you might qualify for a better deal depending on the amount of assets you are willing to transfer. And naturally, you’ll want to identify any hidden or contingent fees.

Fiduciary or “Fiduciary?” The new Labor Department rules laying out the standard for investment advice in retirement accounts have generated plenty of confusion in the self-direct-ed IRA universe and beyond. The controversy begins with the appropriation of the term “fiduciary” – a word with an established meaning in the financial ser-vices industry – for an entirely new set of duties and responsibilities.

Every custodian was already a fiduciary in the sense that it needed to protect your interests within the limits of the custodial relationship. That’s it. The level of observation and, if needed, interference with your account will vary from firm to firm, depending on the principals’ sense of what it will take to manage their own liability if for some reason things go wrong.

Some firms take a strict “hands off” approach, declin-ing all responsibility if an investment goes wrong or was fraudulent to begin with. The custodians that handled accounts that dealt with Bernard Madoff fall into this group.

Other firms will at least passively check to make sure that the investments are on track. This is more onerous for them and some investors are not enthusiastic about having someone watching over their shoulders, but others find it comforting to know that the custodian is on duty.

Either way, by definition, a self-directed IRA releases the custodian from all responsibility for watching the investments. They can check in, but their fiduciary duty really ends with custody. There’s no expectation of “investment advice” and no obligation to interfere with your sense of where your best interests really lie.

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That’s a very different proposition from the investment advisor who now needs to comply with extra layers of regulation in order to weigh in on the mix of hold-ings in an IRA. The DOL’s new definition of “fidicuary” means that anyone who provides advice on what’s in your retirement account needs to be able to prove that they’re picking the best investments for you that they can. It’s not enough to find suitable investments. They need to be the best choice available. And that’s a hard standard that not every advisor wants to accept.

If you do let an advisor look at the assets (possibly through an aggregation system that shows all your accounts together on one screen), the relationship will trigger the fiduciary rule the minute you receive any recommendations on how you personally should modify your portfolio. General hypothetical scenarios and education about how various assets historically perform is okay.

Maybe you want your advisor to look at the account as part of a broader analysis of your finances or simply to compensate him or her for evaluating your work. Some “self-directed” investors even let the advisor pick the as-sets, but in this case, DOL will definitely require For a true self-directed IRA, the custodian should never tell you what to do without having a convincing reason. They don’t have agency over the account and

so have no mandate from the IRS, the Labor Depart-ment or anyone to monitor “suitability,” best fit, pricing or performance. Their job is to keep the account running between IRS filing deadlines and regulatory audits. As long as that burden of bookkeeping is being served, the firm is complying with its duties and can hold title to assets in your name as a custodian and not an advisor.

Insist on the first type of fiduciary. The financial mar-ketplace is also full of administrators and promoters who cannot act as pure custodians. These entities perform data entry, market products and handle other peripheral tasks, but do not actually hold your assets. If you are ever in doubt where a firm or individual stands in these terms, make sure to ask. Get verifica-tion if necessary.

You Can Always MoveIf you’re unhappy with a custodian, simply transfer the account to someone who gives you the service and flexibility you need. While it may be convenient to liquidate the first IRA, move the cash and then buy the assets back into the new account, the logistics of such a move can get complex. Instead, your custodian will probably suggest a transfer of the assets in kind, simply moving the title from platform to platform.

You don’t have to transfer an entire IRA. Part of the money may move to a new custodian in order to invest in assets that your current account is not allowed to touch. This happens all the time.

The important consideration here is that you never accept ownership of the assets while the process is ongoing. You don’t want to trigger a taxable distribu-tion, much less roll a tax-diminished account balance into the new IRA. In most scenarios, all you’ll need to do is open the new account – the custodian will help you with everything that follows.

THEIR ACCOUNT

HOLDERS FEEL LIKE

STARS. AND THEY’RE

CONFIDENT THAT THE

CUSTODIAN WON’T

MISS A BEAT.

12


Asset Protection Trust: Any trust designed to protect property frompotential creditors, court judgement or other legal liability.

Beneficiary: Person or entity entitled to receive benefits from a will, insurance policy, trust agreement or employee benefit plan.

Charitable Remainder Trust: An irrevocable trust with both incomeand remainder interest. Income is paid to designated beneficiaries for a term or lifetime. The remainder interest is paid to qualified organizations as specified in the trust when the trust terminates.

Corporate Trustee: A trust institution serving as trustee.

Delegated Trust: A delegated trust is an arrangement that allows the trustee to assign responsibility for manag-ing the trust’s assets to an outside advisor. (See also: Directed Trust.)

Directed Trust: A directed trust is an arrangement that allows the advisor to hand off the responsibility and burden of administering a trust to an outside corpo-rate trustee but retain control over how the assets are invested. (See also: Delegated Trust.)

Directed Trust Company: Any corporate trustee that supports and encourages directed trust relationships. These companies are generally not interested in manag-ing the assets themselves and so have little or no motive to replace existing advisors.

Durable Power of Attorney: A power of attorney that will come into effect and remain in effect and valid if the person who grants the power becomes incapacitated.

Dynastic Trust: While some states force trusts to terminate after a few generations, others allow trusts to operate for centuries or even, theoretically, forever. These long-lasting arrangements are known as dynastic or “perpetual” trusts.

Estate: The real and personal property of a decedent; a specific interest in property.

Fiduciary: An individual or entity in position of trust who has accepted the duty of acting for the benefit of another.

Grantor/Settlor: A person who transfers property, the creator of a trust.

Generation Skipping Tax (GST): A tax levied on gifts to people separated by the donor by more than one gen-eration: grandparent to grandchild, for example.

Irrevocable Life Insurance Trust: Typically used to shelter an insurance death benefit from estate taxes and may provide liquidity to pay estate taxes and settlement costs. A trust is created, then the trust purchases a life insurance policy.

Irrevocable Trust: A trust that, by its terms, cannot be revoked or changed by the grantor.

Living Trust: A trust that is operative during the lifetime of the grantor; as opposed to a trust under will or a testa-mentary trust. Also known as an inter vivos trust.

Power of Attorney: A legal document appointing someone to act asone’s agent with legal authority to sign your name, on your behalf,in your absence. Power of At-torney ends at incapacity (unless it isa durable power of attorney) or death.

Remainderman: The person who is entitled to an estate after the prior estate has expired.

Revocable Trust: A trust that by its terms may be termi-nated by the settlor or by another person.

Successor Trustee: Person or institution named in the trust document who will take over should the first trustee die, resign or otherwise become unable to act.

Trust: An entity that holds assets for the benefit of cer-tain other persons or entities.

Trustee: Person or institution who manages and distrib-utes another’s assets according to the instructions in the trust document.

Uniform Trust Code States: Many states have at-tempted to streamline and standardize their trust rules by adopting these provisions as their model.

Will: A written document with instructions for the distri-bution of an individual’s assets after death.

GLOSSARY OF TERMS

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Equity Trust Company

GoldStar Trust Company

IRA Services Trust Company

Kingdom Trust Company

Madison Trust Company

1 Equity WayWestlake, OH

44145www.trustetc.com

1401 4th AvenueCanyon, TX 79015www.goldstartrust.

com/

1160 Industrial Rd, Ste 1

San Carlos, CA 94070

www.iraservices.com/

PO Box 870Murray, KY 42071

www.KingdomTrust.com/

401 East 8th Street, Suite 200P

Sioux Falls, SD 57103

www.madisontrust.com/

HIGHLIGHTS

New Business Contact Kent KinzerNational Business

Development Manager

1-888-ETC-IRAS (382-4727)

Josh Duckworth, Director of Marketing

806.354.3814jduckworth@

goldstartrust.com

Michael McNair, Trust Officer

[email protected]

Tara BogardBusiness

Development Officer888-753-6972

[email protected]

Charles Knopf VP, Business Development

[email protected]

(845) 947-1000 x 339

Is your company a trust company? Yes Yes Yes Yes Yes

Total Assets Under Administration

$12 billion $1.9 billion $4 billion $8.5 billion Over $500 million

Number of IRA custodian accounts

130,000 37,000 40,000 78,000 Over 3000

Fee range $195 + $65+ $96+ $75+ $180 +

Phone support Yes Yes Yes Yes Yes

Number of employees 350 50 NA 40-49 15

Support qualified plans? Yes Yes Yes Yes No

Quality of Website Excellent Excellent Excellent Excellent Very good

14


Mainstar Trust (formerly First Trust Company of Onaga)

Millennium Trust Company

PENSCO Trust Company

Preferred Trust Company

Provident Trust Group

214 W. 9th StreetOnaga, KS 66521

www.mainstartrust.com/

2001 Spring Road, Suite 700

Oak Brook, IL 60523

www.mtrustcom-pany.com

P.O. Box 173859 Denver, CO 80217-

3859www.pensco.com

866-818-4472

2471 W. Horizon Ridge Pkwy, Ste. 100

Henderson, NV 89052Phone: (702) 990-7892

Toll Free: (888) 990-7892preferredtrustcompany.

com/

8880 W. Sunset Rd., Ste 250

Las Vegas, NV 89148

trustprovident.com/

HIGHLIGHTS

New Business Contact Marleen Holthaus, VP [email protected]

Jackie Barnett Alternative Solutions

Group Project Manager

630.472.5943jbarnett@

mtrustcompany.com

Business DevelopmentEast: Bill Papp

[email protected],303.658.3705

West: Matt Holschermatt.holscher@pensco.

com415-248-1466

Carrie Cook, CEO702.998.5881

[email protected]

James Heidenjames@

trustprovident.com888-855-9856

Is your company a trust company? Yes Yes Yes Yes Yes

Total Assets Under Administration

$9.7 billion $19.5 Billion $12+ billion $275 million $4 billion

Number of IRA custodian accounts

120,000 470,496 48,000 3,500 30,000

Fee range $95-125 plus transaction fees $350+ $200+ $300+ $395

Phone support Yes Yes Yes Yes Yes

Number of employees 44 258 180 15 48

Support qualified plans? Yes Yes Yes Yes Yes

Quality of Website Very Good Excellent Excellent Very Good Excellent

15


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