Founder Theresa Fette’s marketing machine seems to be generating income faster than the federal government can spend money. Her institution’s rags-to-riches story will inspire big and small trust firms alike.
Three years ago, tax lawyer and entrepreneur Theresa Fette was not expecting to become the CEO of one of the most successful trust firms in Nevada.
Today, she’s running Las Vegas-based Provident Trust Group, which has evolved into a $750 million trust company. The average trust account is in the $50 million range, the company is inking huge 1031 exchange deals and high-end lawyers from around the country keep calling in to place assets.
All of this comes from an opportunity that fell into place two years ago when Trust Company of the Pacific (TCP) lost its trust license after getting on the wrong side of the Nevada banking regulator.
When TCP’s owner P. Sterling Kerr, a prominent Las Vegas attorney, saw the writing on the wall, he contacted Fette and made a deal to sell all 7,000 of his company’s now-refugee accounts—crown jewels valued at nearly $300 million—to her group.
The problem was that Fette had no immediate home for the accounts. As a tax lawyer, she could not just pull a trust charter out of her hat, but after lining up a holding company and support from the Nevada banking regulator, within a few months Provident Trust was up and running.
With some of the best and the brightest people in the industry on her team and 7,000 accounts already in place, there was no question the day the operation opened its doors, it was pulling a handsome profit.
Today, Fette is not too shy about discussing the enormous success her trust firm has experienced after that jump start. Having more than doubled its assets under administration, Provident has also expanded its trust product offering to include retirement accounts, alternative assets and the highly sought-after Nevada asset protection trusts.
The Trust Advisor Blog asked Steve Oshins, one of Nevada’s best-known estate planning attorneys, if he had ever heard of Fette and Provident. He said no.
“In a small community of Las Vegas, you’d think we’d know each other, considering that we’re both in the same industry,” he says. “But she’s obviously smart because she contacted you to gain attention for her trust firm’s success story.”
Networking is key
Provident has kept a fairly low profile because just keeping up with word of mouth has kept the team busy.
“There really hasn’t been any advertising,” Fette says. “We network with members of the legal and financial advisory community and that’s our biggest source of referrals.”
One big plus with the advisors: As a strictly directed trust operation, Provident Trust doesn’t offer in-house wealth management services, so there’s no worry that it will try to poach client assets.
“We see all the trouble come when people try to dip their hands in too many buckets,” she says. “And how truly independent can a trustee be if you’re also managing money?”
Good point! And for many trust firms wrestling with conflicts of interest and unbundling trust fees to comply with Knight vs Commissioner, she might be right on the money.
Speaking of networking, Fette is one of the younger members of the trust community. A few months ago, the M&A Advisor Network flew her to Los Angeles for a black tie gala to honor her and other under-40 movers and shakers in the advisory world.
Flat fee for small accounts
We found one aspect of Provident’s business model especially intriguing. Under their self-directed IRA banner, they take relatively small-sized accounts ranging from $50,000 to $100,000.
This is not the norm for most trust firms, which tend to prospect for accounts north of $5 million. Provident’s key to success is charging these relatively low-maintenance IRA customers a flat $395 a year for providing custody service no matter how much—or how little—money is in the account.
Naturally, for a $50 million dynasty trust, $395 per year wouldn’t work, but Provident’s normal basis point billing structure ensures that taking care of those larger accounts remains a profitable enterprise.
When you work the math out, 8,000 accounts times $395 means you’re billing over $3 million a year. And in a world where retirement accounts are relatively dormant most of the time, both risk and turnover are comparatively low.
With ideas like that, coupled with the team’s stellar reputation, it’s clear that Provident will be well over $1 billion in assets shortly.
Scott Martin, contributing editor, The Trust Advisor Blog. Jerry Cooper and Steven Maimes contributed to the research and reporting.
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