Financial Institutions
Advantages of Outsourcing Investment & Trust Services with Security Capital Management
• Fee sharing
- Predictable
- Recurring revenue stream
• No additional bank personnel needed
- Increases revenues without increasing Efficiency Ratio
- Requires no additional staffing or staff training
• No additional Bank capital required
- Keeps more bank capital at work to enhance earnings
- Avoids corporate liability
• Prevents disintermediation: bank customers are provided "one-stop-shopping" at your bank
• Control over bank customers' investment assets ensures retention of other banking relationships
• Customized investment portfolios provided for each bank customer
• Flexibility and scalability to keep pace with bank's asset growth - you use only the services you need
• Immediate customer accessibility to personal investment manager
• Assistance to your bank in marketing investment services to expand your community presence
• On-line access to customer accounts
• Trust services provided through The Northern Trust Company
- Trust/Rite trust administration, recordkeeping and reporting
• Facilitates cross-selling of all bank products and services
• Superior customer relationship
- On-demand On-line access to investment account portfolio
- Dividends and interest sweep into bank money market account or checking account
- Continuous tracking and reporting of individual portfolio performance
- Easy-to-read monthly statements
The following is a Question-and-Answer dialogue with the Principals of SCM that discusses in greater detail the financial advantages for a local bank to outsource its investment and trust management services to SCM:
Q: What are the financial advantages for us as a local bank to outsource our investment management/trust services to Security Capital Management?
A: Depending on the state in which you operate, the amount of capital required by regulators for a bank to start an investment management/trust department can be substantial. As an example, the Commonwealth of Virginia may require $1 million to $2 million in capital. By partnering with SCM as an investment advisor, your bank shares in the management fee while having access to a full range of trust and investment services without investing the bank's capital and hiring additional personnel. Using SCM helps keep your bank's capital position strong and its efficiency ratio low. And we can private-label customer statements and information to feature your bank's name to assure that SCM is you "invisible" partner.
• How can SCM work with our bank's existing brokerage and/or mutual fund services?
• The professionals of SCM are dedicated to accommodating the needs of all of your bank's customers, large or small. For larger size accounts SCM offers individual account management, personally tailored to your customers' needs, investment goals and tolerance for risk - for one low management fee. For smaller size accounts SCM will determine if funds may be the best alternative for your customers. If so, SCM can provide objective selections of exchange-traded funds and mutual funds using our advisor-based system to find the right match of funds to fit your customers' needs. SCM is also pleased to work with your bank's existing brokerage and mutual fund providers to strengthen and coordinate your financial services team. We offer a full range of investment choices because we believe that an all-inclusive investment program is the strongest way to build lasting customer relationships.
• Why should we empliy SCM over other investment advisors?
• SCM's investment selections are made on the basis of what's best for the client, and are not tied to proprietary investment products. Our investment decisions are based on a wide range of objective research from many different souyrces, not just on any single opinion. SCM's investment management process begins with in-depth conversations with each client to understand their unique situation and tax sensitivities. We then use this information to develop a strategy that is consistent with the client's objectives and tolerance for risk so that each separately managed portfolio is tailored to fit. That structure may include tax-efficient arrangements to hold and preserve the client's assets to pass on to future generations. Your customers will benefit from our professional staff's extensive legal knowledge and training, and some 50 years of combined trust, tax and investment experience with major bank trust departments. SCM believes in the value of balanced portfolios. Many investment managers claim to have expertise in choosing equities (stocks), but few are skilled in managing fixed income assets, too. Too many advisors "manage" the fixed income portion of a balanced account by merely purchasing and passively holding U.S. Treasury securities with a mix of laddered maturities. SCM actively manages their clients' fixed income securities, blending high quality government and corporate issues with selective higher yielding preferred stocks, income trusts and bonds. SCM's portfolio managers have extensive experience in finding overlooked, safe income investments which may offer superior yield and capital appreciation.
How will we as a bank benefit if we employ SCM as a local investment advisor?
• The loyalty of current banking customers depends upon hands-on local service and familiarity only a community bank can offer. Large regional or national banks cannot provide such a warm and caring banking environment. For those same reasons your customers will appreciate your offering the financial services of a local investment advisor, with global expetise, who will develop with them a personal relationship, working to know, and be responsive to, their investment needs under your bank's corporate umbrella. Partnering with SCM gives your bank expanded service capabilities and a continuing opportunity to keep more of your customers' assets within your control.
Moreover, SCM has the investment flexibility and scalability to grow with your bank's commitment to investment services. SCM's fees are a set percentage of customer assets under management so as we grow, your share of the fees grows with us. Furthermore, we can expand your customer base by helping you cross-sell multiple services to prospective investment clients under your bank's direction.
• If we employ SCM, how can we provide trust powers and services for bank customers needing these services?
SCM has established an affiliation to provide fiduciary services to our clients through the venerable Northern Trust Company of Chicago, with $2.6 trillion under administration. This means that clients will have their accounts administered on Northern's Trust/Rite operational platform, considered one of the best and most user friendly in the industry. Founded in 1889, Northern Trust's size enables them to provide fiduciary services to SCM at some of the lowest fees in the industry while assuring your customers unparalleled safety, integrity and dedication to service. • In summary, what are the benefits of outsourcing our investment management/trust services to Security Capital Management (SCM)?
Your customers will enjoy: • Personal local service
• Tailored investment portfolios and separately managed accounts
• Portfolio management backed by decades of investment experience
• On-demand access to their money managers
• Trust and Estate Planning services
• Comprehensive Retirement Planning services:
• 401(k) Plans, Roth 401(k) Plans, Defined Contribution Plans, 403(b) Plans
• Defined Benefit Plans, 457 and 412(i) Plans
• IRAs and Roth IRA
• Reasonable and fully disclosed management fees
Your bank will profit from:
• Fee-sharing for increased recurring income
• Growing your customer base through cross-selling multiple services
• Expert investment talent provided to your customers with no additional expense, thereby conserving your bank's capital and enhancing your Efficiency Ratio
• Expanded service offerings and capabilities for all bank customers
Retaining control over your customer relationships
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