Workflow Commentary – Trust Administration Collaborative Workflow (TACW)

OVERVIEW 

Trust & Wealth Management firms in 2023 are looking for ways to improve  productivity and increase operational efficiency at scale. At the heart of these  business needs is a firm’s ability to complete day-to-day processes efficiently,  compliantly, and cost effectively. A modern workflow platform reduces the  operational burden on trust administrators and gives peace of mind to compliance  officers and management. With both fiduciary revenues and asset growth down  sharply year-over-year from 2021 through 2022, now is the time for technology to  help recalibrate internal processes, policies, and procedures to ensure business  objectives are achieved going forward. 

Failed compliance resulting in fines, losses, reputational damage, charge-offs and  turnover can cost a trust organization millions of dollars a year. It is not uncommon  to see seven figure charge-offs for fee coding errors, related to just a single  account. A minor error years later can create significant losses, and this type of risk  can and should be mitigated with compliance enforced through technology.  Whether a small up and coming trust organization, or a large established firm,  growing responsibly is key to long-term success. 

With fiduciary litigation overall on the rise, the cost to litigate even basic individual  trustee disputes can easily exceed $100,000. Larger disputes, or those vigorously  prosecuted, can cost much more to defend. Litigation is more common and  settlement increasingly difficult in cases where familial tensions are involved.  Insurance premiums for fiduciary liability can be at a minimum several thousands of  dollars per year per individual trust. 

Traditionally, technological innovation has benefited the RIA space, as well as the  wealth and retirement functions of an organization. However, the riskiest, most  litigious, and heavily regulated piece of your business should not be the most  underserved. An enterprise workflow tool can bring countless benefits to a bank  trust department, independent trust company, or family office. 

Increased operational efficiency, improved collaboration, enhanced transparency,  standardization, and embedded compliance are all byproducts of a best-practice  workflow platform. A modern trust administration system can be leveraged to  bridge gaps in existing tech stack investments. 

WORKFLOWS VS. TASKS MANAGEMENT 

Task management is the process of tracking and organizing individual tasks, from  start to finish. It involves creating a list of tasks, assigning them to team members,  setting deadlines, and monitoring progress. Essentially just a checklist, the goal of  task management is to ensure that all tasks are completed on time and to a certain  standard. 

Workflows differ from task management in a number of ways. The two most  important being that if done properly, workflows can force compliance and  improved efficiency, whereas task management cannot necessarily empower the  user to do either one. Automated workflows take complex fiduciary business  processes and simplify them, ensuring one best practice way of doing each fiduciary  activity. With task management, two people could complete a task two different  ways and they could both be wrong, while checking the same boxes. Rather than  simply managing tasks, overwhelmed trust administrators can quickly and intuitively  complete processes via workflows confidently without making mistakes. Automated  fiduciary workflows can be done in one place, without having to juggle between  different windows, modules, and systems to complete a process and search for data.  Trust leaders and compliance personnel can focus on growing revenue and  increasing margins while having assurance that risk mitigation is continuously  embedded and proper oversight practiced across the organization.  

Emailing back and forth, filling out excel spreadsheets, word documents and PDFs,  signing documents to approve processes, and uploading documents to Sharepoint  are all common fiduciary practices today. Another trend is to use a CRM or trust  accounting vendor to manage tasks. Claims of seamless integrations, unified  solutions, all-in-one or end-to-end platforms often come up short. Additionally,  avoiding open architecture results in closed systems where customers can only  access a vendor’s front-end tools if they use their back-end tools as well. By  deferring to task management checklists, rather than truly having the domain  expertise to understand the fiduciary activities and responsibilities of a corporate  trustee, vendors leave end users with incomplete solutions that don’t necessarily  address their needs and improve their outcomes. 

BEST PRACTICES AND FORWARD-THINKING 

Now consider what makes a Trust Administrative Collaborative Workflow different, and what does it offer? It is transparent, accessible to all necessary role-specific parties and automated specifically for each business process that is being completed. Once a user determines which trust and which task needs to be addressed, whether from a client or internal request, the workflow is initiated. Each step in the workflow is digital, automated and streamlined to create a direct line of steps based on preferences, policies, and procedures. The steps themselves take the user through the specific data points, fiduciary decisions and hardwired fiduciary best practices to effectuate the desired outcome. The workflows are documented, tracked and stored for internal users to be able to view historical business processes on each account. Additionally, these audit trails enable internal and external auditors to easily view how and why each business process was completed and the exact information that went into completing them. 

Automated approval processes, based on the trust company’s policies, allow for multiple levels of approval on each workflow. The ability to collaborate within the same workflow between stakeholders across the firm, as well as link multiple workflows that are interrelated to one another, provides an extra layer of visualization and efficiency. Organized status updates of the workflows in a firm’s database, as well as in each particular account and each user’s relative book of business, provides invaluable insight into the current state of every step in the process. For example, having a searchable list of all workflows in the entire database is helpful for covering people that are out of the office, or have left the company. It is also easy for reports to be generated for auditors, managers and anyone else who might need access. 

In addition to a firm-wide database, each user has their own workflow status based on their position within the company’s framework. Each status shows where the workflow is from initiation to completion, how many approvals it requires verses how many it has, when it was initiated and which team member was the last to engage, as well as what type of business process it covers. Trust associates also know which workflows are in their queue for approval, which ones are outstanding under their responsibility, or if there is an action item that needs addressing. At the account level, all of these same conditions apply specifically to the account and reports can be easily generated. By providing transparency, collaboration, audit trails, and helping users complete workflows efficiently while minimizing mistakes, TACWs (Trust Administrative Collaborative Workflows) allow trust companies to capture growth and scale AUM with improved margins. Increased value for all stakeholders across a trust firm is the ultimate outcome of implementing best-in breed software for cloud-based fiduciary workflows and compliance.