Bruce Raine, Founder and President of IPBS said, âOur review of this market shows that the trust industry really needs to catch up with the standards set by the rest of the wealth management industry by using modern and up to date technology solutions. The latest private banking and wealth management systems can deliver integrated functionality to meet all of the financial record keeping of a trust company from double entry,multi-currency General Ledger accounting to forecasting income streams and management of the collection process. The trustees mandate is not simply to record external events, e.g. a dividend collection but to know that that event should happen and to take appropriate action if it does not.â
The use of Excel and paper based record keeping for basic reporting such as preparing financial statements, fee management and administration means that key information resides in multiple information silos, often only existing in hard copy. This manual record keeping and accounting is expensive and it is difficult to produce effective reports, and facilities for audit and compliance purposes are limited. For example, the production of year end reports requires the analysis and inspection of many months of manual records which is a laborious process that is time consuming and prone to risk of error. The trustee will ultimately be held accountable for any mistakes or omissions that take place, however long ago they may have happened.
Without effective automation, the manual effort required to maintain records, access data and management of regulatory disbursements of various fees and licenses can be enormous. In turn, this impacts on the trustees ability to carry out essential financial inventory and it can be problematic to establish an accurate or timely financial position which could ultimately result in conflict between trustees and beneficiaries
Trust companies therefore need to look at investing in automated systems to address these issues. An additional factor that will drive demand for new automated systems is the requirement to meet the latest Anti-money Laundering (AML) and Know Your Customer (KYC) legislation which in many instances extends beyond the relationship with the settler to each of the beneficiaries. Without effective technology, many trustees may have difficulty in answering basic questions from beneficiaries about the trust assets and the income derived from them.
Raine concludes, âWhilst organisations are under pressure to reduce costs, it is important that this is done without impacting on the performance of the core business. Therefore I strongly encourage trust companies to invest in appropriate technology which will leave them well positioned when the worldwide market recovery occurs. It will also ensure that business expansion can be accommodated using existing systems without the need to increase staffing overheads.â