Mutual Fund Companies / Pooled Asset Firms
Why should a mutual fund / pooled asset firms set up a trust company?
The reason that Eaton Vance, Fidelity, and Franklin Templeton own their own trust companies is to ensure that the assets do not leave the firm. As an umbrella mutual fund provider it is important to provide all the solutions needed in order to maintain ERISA accounts and other forms of accounts that will require trust company intermediation. This requirement extends to pooled investments such as GIC funds, collective investment funds, etc.
Therefore, for the mutual fund / pooled asset firms here are the important benefits to consider for owning a trust company:
Provide full services to your mutual fund clients to forestall their investing directly or through a broker dealer. There's no need to outsource the finding of a custodian or trustee someplace else. Simply provide it in house.
Keep control of your captured assets. As a mutual fund company it makes better economic sense to keep all your assets under one roof. To refer your business to an outside trust company for the accounts that require this form of intermediation poses risk of loss of accounts.
New profit centers. By owning your own trust company you can gain profits from charging trustee fees and other fees to your clients, thus creating a new profit center for your mutual fund.
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