Advisors expanding into the trust arena need look no further than AccuTech’s “AccuTrust Gold” Trust Accounting System.  It delivers the biggest bang for the buck.

Five years ago I joined a technology web demo, presented to one of my clients, the newly chartered Summit Trust Company of Nevada.  The demo was presented by Ray Unger, President of AccuTech Systems based in Muncie, Indiana.

This was not the first time the president of the technology company hosted a web demo.  But it did leave a lasting impression on Summit execs.  They were sold on the slick features of the AccuTrust Gold system within the first five minutes.

Unger’s 2004 demo moved quickly and seamlessly from one screen to another — from trading to reconciliation to reporting to exporting.  The impressive tech speech left my clients wide eyed.

Here we are, five years later, and my client Summit Trust and Ray Unger have built a strong relationship together.  Since then AccuTrust Gold has gone through many revisions and updates but their relationship with Summit remains strong.

Given that what I was doing five years ago is remarkably similar to what I’m doing today, I worked with my staff to evaluate every one of the trust accounting systems in the industry.  I wanted to challenge Ray Unger’s Gold product to ensure my clients would be getting technology produced by the best and brightest minds in the country.

To this day, I am convinced that the decision my clients made five years ago is the decision that all trust companies should make today when it comes to selecting the best trust accounting software.

No, this is not a paid commercial for AccuTech systems.  In my opinion, based on what the software does and how it does it, simply gives the user and the trust company it supports the best internet-based accounting system available today.  But many of you may prefer to evaluate and decide for yourself.

So The Trust Advisor this week has focused on the top seven trust accounting system providers, and provided you with a brief outline of the major capabilities of each.  That way, you can judge for yourself which system is best for you.

Les Revzon, an officer of Summit Trust, says that Summit Trust considered many other options during the five years that it has hosted the Gold system.  While so many institutions go off software because of poor service or lack of performance, Revzon says “we never had any reason to change”.

The chart below entitled trust accounting systems, describes the major features of the systems available.  Of major importance these days are two features which we cover in our discussion.

First whether or not the trust accounting system hosts STP Trading which is an acronym for straight through processing.  This is a feature that permits the trust accounting system to enter a trade order and show the trade in the trust accounting system the next morning.  If one trades through the system module, the trades show up in real time, since most systems are based on where the software data center is located.

In the event that straight through processing is not available, then a method called “shadow processing” allows the trade to be booked from the custodian, which then posts the trade directly into the trust accounting system that evening. The trades thus show up the next morning on line.

Either way the category known at STP trading is an important feature to consider when selecting trust software.

A report released this week by Gartner titled US Trust Accounting Applications by David Schehr, suggests that what technology systems trust companies needed five or ten years ago has changed.

The report goes on to say that trust accounting systems have been built to meet client needs and organizational requirements.  Given that there’s little synergy between the systems, Schehr refers to this as “siloed” .  Which may be an accurate description of many different systems being created, but none of them seem to work together.

In addition, the report states that outsourcing is in high demand in the trust industry these days due to cost-saving measures and cutbacks caused by the economic slump.  Outsourcing occurs when providers host the trust accounting system on their system while third party servicing agents do the inputting and outputting on behalf of the client.

In addition, clients now prefer vendors who provide application service providers or ASP based systems as referred to in the chart. This permits the carrying of custody of data to be done offsite to SAS 70 compliant locations, rather than the firm’s back offices.

Here are the seven firms which host software solutions:

ACCUTRUST

AccuTrust Gold is available for community based, independent trust companies, law firms and non‑profit and government agencies.  AccuTech has over 300 clients on its systems and 90 percent of them are banks.

AccuTech claims that their Gold systems is the fastest growing trust accounting system in the industry.  It is available either on a hosted basis where it operates ASP, or on an in‑house base where it works in your own office.  There are also providers that host AccuTech on a full outsourced arrangement basis, which permits everything to take place including the hosting of the software, the printing of the statements and the coordination with the custodian.

AccuTrust Gold’s advantages include its intuitive ease of operation.  In addition to this, AccuTech’s ASP version hosts common trust funds and permits those trust funds to be reconciled on a daily basis which most of its peers cannot handle.

AccuTrust Gold has interfaces with Schwab, Fidelity, TD and Pershing.

TRUSTNET

TrustNet is HWA International’s product that runs on stand-alone PCs or on PC-based networks. It is not available as an ASP solution. A menu-based system, TrustNet utilizes relational databases. TrustNet has handled up to 210 users, 40,000 accounts, and US$14 billion in assets on a single system.

TrustNet is entirely code-based so that operations people can either enter the transaction code or click on the code itself on the appropriate screen. There are also pull-down menus showing both the code and the activity, plus an online manual with codes and activity descriptions.

Furthermore, the current activity code screens are always displayed so operators will always know where they are in the system. Variations of TrustNet have existed for over 20 years, and clients are very attached to this method of processing.

TrustNet is built to be highly customized. In fact, most clients request some level of customization based on their particular lines of business. The system is based on the fact that everything is tied to either an account or an asset, and transactions are simply the interaction between the two.

INNOVEST

Innovest’s InnoTrust system is built exclusively on newer technologies. Innovest, which began selling InnoTrust in 2001, is a privately owned firm with approximately 25 clients on its trust system. Seventy percent of InnoTrust’s clients have under $1 billion in assets, though some substantial relationships do exist.

The largest of these may soon be Schwab Institutional Services, where InnoTrust has been added as the point systems trust accounting solution to the SIS RIA platform. Other substantial client groups consist of not-for-profits and startups.

InnoTrust currently hosts over $110 billion in assets and 100,000 accounts on the system. InnoTrust reports its largest customer is running 120,000 transactions per day on the system. The system is both multi-currency and multi-custodian based.  Interfaces are easy to build utilizing the .NET technology.  All data is real time.  Existing interfaces come with a variety of custodians, FINCEN and OFAC, SWIFT, FIX, Investment Scorecard, Green Hill, and DTC.  Pricing data comes from Interactive Data (IDC). Multiple tax interfaces, including the IRS and FastTax, are available.

METAVANTE

Metavante’s trust system offering is TrustDesk, a highly capable system which has recently undergone extensive updating. Metavante Technologies Inc. was spun off from Marshall & Ilsley Corp. (M&I) into a separate corporation in November 2007. Metavante has 5,500 employees and 8,250 clients located in all 50 states and 32 countries. In addition to trust systems, Metavante also offers a variety of payment and core banking solutions.

Metavante has invested almost US$2 billion in upgrading its products in the last five years. A share of that reinvestment has been spent on the updated TrustDesk product. TrustDesk, available as either an ASP or fully outsourced solution, runs $1.2 trillion in assets in 900,000 accounts for 200 clients, with approximately one-fifth of the clients running in the full operations outsource mode. When clients run in outsource mode, they are utilizing TrustDesk, with the assets being custodied and securities operations being performed by M&I Trust.

TrustDesk provides operations, account administration, and investment management support. Tools include InvestDesk for portfolio management, ReturnTrack for performance reporting, and RDMS for retirement systems planning and distribution. Trust Exchange provides extended capability through over 100 third party providers such as Petrodata (PDS) for oil, gas, and real estate management.

TrustDesk is aimed at trust organizations from US$1 billion to $50 billion in client assets with 1,000 to 3,000 client accounts. The largest TrustDesk installation outside M&I Trust has handled 40,000 accounts. A large number of new accounts are coming from de novo organizations and non-traditional firms (such as family offices) where the account management capabilities are valued. Conversions to TrustDesk take six to eight months for the typical trust organization, with up to 18 months for the very biggest clients.

TrustDesk offers real time access for trust operations via a mainframe system combined with a Windows and browser-based programs. “Metavante Portfolio Online (MPO),” released in late 2007, represents the latest iteration of TrustWeb and Admin Web, the web access tools of TrustDesk, and features enhanced web-enabled client reporting, presentation, and data access tools. MPO can also serve as a traveling administrators’ client access system.

NORTHERN TRUST

Northern Trust is one of the pre-eminent wealth managers in the US. It handles asset management and custody for individuals and organizations. Northern Trust has over US$4 trillion in assets under custody and $765 billion in assets under management.

Northern Trust partners with a financial technology firm, Fi-Tek (maker of the Hedge-Tek accounting system for partnerships and family office used by many large financial organizations) to continuously enhance and develop the Trust/Rite and  Trust/Portal systems. Technically, the systems are owned by Fi-Tek and leased back to Northern Trust on an exclusive basis. Northern Trust is responsible for sales, clients, assets, and custody. Because Fi-Tek is behind the scenes as far as most users are concerned, it is still more common in the industry to refer to this as Northern Trust’s trust systems solution.

Trust/Portal is aimed at organizations with US$2 billion to $15 billion in client assets with 4,000 to 6,000 accounts. The largest Trust/Rite installation currently has approximately 13,000 accounts. These are larger organizations than Trust/Rite was originally targeting, and the difference reflects the inclusion of electronic trading features. Organizations smaller than $250 million in assets are advised to consider alternative trust system offerings more appropriate for their size. Fees for the Trust/Rite and Trust/Portal systems are based on annual license fees, not per-account fees.

Northern Trust is in the process of transitioning its Trust/Rite system to a fuller offering known as Trust/Portal. Trust/Portal is an integrated solution that combines trust accounting, investment management, reporting, and account review into a single system.

Trust/Portal is available as both an in-house solution and a hosted solution. Trust/Rite was previously only available as an in-house solution. The first hosted client went live in October 2007. The hosted solution, which is SAS 70 compliant, is backed up by extensive redundancies and is actually hosted by three separate firms.

Conversions to Trust/Portal from Trust/Rite can be accomplished in a short time (one to two weeks) as long as the IT support is available and there is sufficient bandwidth for the new system. Conversions from other trust systems are planned over a six-month cycle.

When a user first signs on to Trust/Portal, he comes to a customizable and configurable home page designed for the individual user, whether he is an administrator, investment officer, or operations person. This dashboard contains alerts, news, and securities prices. Access is based on predefined entitlements dependent on roles, work groups, or specific individuals. Account types are also customized, and drop-down menus are set by the user.

SEI

SEI is one of the pioneers of the trust automation business. SEI provides investment processing solutions including investment management, securities trading, global investment processing, investment accounting, and mutual and pooled fund accounting. SEI is proud of the tenure of its clients, with over 60% of customers having remained clients for more than 10 years. SEI currently serves 127 bank and trust institutions, including eight of the 15 largest North American banks.

SEI also is a global leader in asset management. SEI currently has $420 billion of assets under administration, over $200 billion of which are under active management.

Investment products provided to the wealth management industry include hedge funds, mutual funds, separately managed accounts, and wrap products.

SEI supports two distinct ASP trust business models.  SEI’s “application services” solution (39 clients, primarily large institutions) is for clients that wish to outsource software and processing services but maintain their own back office. The “business services” solution (88 relationships) includes software, processing, and a completely outsourced back office. SEI sees the services provided as the core of the relationship with their customer, with technology being the enabler of those services.

Currently, SEI’s Trust 3000 is both the trust accounting system and the gateway device for trust organizations to utilize SEI’s investments. Like the other large providers, SEI is developing its next-generation product, Global Wealth Services (GWS), to be facilitated on a new Global Wealth Platform (GWP).

SUNGARD CHARLOTTE

Charlotte is offered only as a North American ASP solution hosted at SunGard’s data centers. Charlotte provides a lot of sophisticated tools for the smaller organization. Over 500 clients are running Charlotte, with another 400 using it solely for custody services.

Seventy percent of Charlotte customers are banks, with the others being private trust companies and not-for-profit organizations. Capabilities of the Charlotte system include bundled custody, electronic process routing, and electronic STP trading. Access to over 650 product providers is through STN, and mutual funds are processed through a joint STN-Fidelity platform. Positions and cash balances on Charlotte are real time, though the transaction processing is updated during the nightly processing run.

In addition to trading, Charlotte processes settlements, corporate actions, fee calculations, and real property management. Charlotte can support over 200 concurrent users and has been tested up to 21,000 accounts and 50,000 daily transactions. All asset classes, including common trust funds, commodities, hedge funds, private equity, and real estate are supported on the Charlotte system. Also supported are open architecture product solutions such as SMAs, wrap products, and overlay management.

Charlotte maintains over 40 interfaces with AML and KYC firms, investment advisory firms, custody providers, investment management systems, proxy services, performance measurement tools, and tax processing. Ad hoc and standardized reporting is supported throughout the system by a proprietary report writing tool, Automated File Search (AFS). All reports can be exported to Excel or saved as a PDF.

As a hosted solution, SunGard is responsible for SAS 70 data centers that provide redundancy, disaster recovery, and business continuity. Charlotte’s front end is web based, while other Windows-based technologies are used for the back office functionalities.

Jerry Cooper, senior editor, The Trust Advisor Blog. Steve Maimes contributed to the reporting.