Hightower lands conditional approval for national trust charter

Establishing a national trust charter has been a priority since CEO Bob Oros took over in January 2019. The new Hightower Trust Company is expected to be open for business later this year.

Hightower is stepping up to the big leagues of wealth management with the addition of the Hightower Trust Company that expands a Texas-chartered trust business to the national-charter level.

The original Texas trust company that became part of Hightower through an acquisition a few years ago has received conditional approval from the U.S. Office of the Comptroller of the Currency, and Hightower chief executive officer Bob Oros expects the national charter to be approved by the end of the year.

“This is a really important strategic capability we can make available to all our advisers,” he said. “Trust services is a critical part of most complex estate planning.”

Oros said establishing a national trust charter has been one of his priorities since taking over as CEO of Hightower in January 2019.

“The minute I walked in the door it was one of the first things I started to look at,” he said. “We pretty much decided we wanted to do this, and our advisers were telling us it would be valuable and that they would use it, but getting an OCC-approved national trust charter is not something that happens lightly.”

In conjunction with the announcement of the pending national trust charter, Hightower announced that Tanya Simpson, a former managing director at Charles Schwab Trust, is the president of the Hightower Trust Company.

The trust company will offer a traditional mix of personal trust investment management and custody and safekeeping of products, including discretionary investment management services for managed accounts and non-managed accounts, custody and escrow services, as well as agency services.

Hightower has financial advisers based in 33 states with $97.7 billion in total assets under management.

“As we looked at and made the decision [to establish a national trust business], we considered whether to rent, use trust services from elsewhere or make it a core capability,” Oros said. “We started working with OCC a year and a half ago.”

Based on the feedback from financial advisers who are not affiliated with Hightower, the appeal of trust services is real and growing.

“Working within a bank that offers local trust services certainly gives more opportunity for wallet share of clients with more in-depth planning needs, and it tends to help secure long-term relationships since the successor trustee of many of clients’ trusts is the bank,” said Dennis Nolte, vice president at Seacoast Investment Services.

“Thus, the institution tends to maintain these relationships for generations to come,” he added.

Michael Holt, managing director at Beacon Trust, recalls the contrast between working for 20 years at a firm before it was acquired by a firm that provides trust services.

“I have observed firsthand how the additional breadth of the services we can offer clients has been beneficial,” he said. “Because Beacon Trust is a subsidiary of a bank, we can also offer our clients collateralized lines of credit, and we have an in-house tax compliance department that further tightens the integration of the services we offer.”

Gregory Giardino, financial adviser at J.M. Franklin & Company, said trust services is a way for firms to stand out from the raft of other commoditized services.

“With investment management becoming commoditized and the increasing desire for more sophisticated and integrated financial planning advice, the addition of in-house trust services can greatly enhance the overall client experience,” he said. “In-house trust services can be a big value-add and help to maintain client retention by creating a touch point with the next generation.”