3 min read April 2023 — Invest: interviewed Austin Shapard, president & CEO of Fiduciary Trust Company, a 138-year-old wealth management firm serving individuals, families and non-profits. He spoke about firm milestones, understanding client psychology and his outlook for the future of Fiduciary and the wealth management industry. He also discussed the importance of talent, saying, “Our goal is to attract and retain amazing players that can solve complex client puzzles— smart, capable, and empathetic individuals with great people skills who can tackle any economic environment.”
What have been some major highlights or milestones for Fiduciary Trust Company this year?
Fiduciary Trust has been in business for 138 years and this past year we completed our 94th consecutive year of profitability — which is unique among financial services firms. We differentiate ourselves not just quarter-to-quarter, but over years and decades. The past three years have been very active across the wealth management industry because of the pandemic. As a result, it was an important time for firms like Fiduciary to demonstrate the benefits of being a stable and permanent advisor to clients during such global turmoil. Additionally, COVID was an accelerant to ideas that were already in place before 2020. Before the pandemic, clients generally did not meet through Zoom. Now, all types of clients have embraced new technologies, and that has changed how we work and interact with them. At Fiduciary, we want to continue to learn from the insights of the pandemic so that we can continue to enhance our value proposition and service to clients.
What opportunities does the Boston area present for your firm?
From a wealth management standpoint, Boston is one of the most dynamic cities in America. It has a historically affluent population, with numerous national competitors and local independent players. It is a highly competitive market with many business models providing financial advice, and over the last two to three decades we have been home to key growth industries, such as biotech and real estate. As a result, there are significant levels of new wealth, and these wealth generators need to think about how they are managing their savings and investments for decades to come.
How is Fiduciary Trust advising clients in this challenging economic climate?
In any challenging economic climate, we focus on two value propositions. The first is with our clients and the way we tailor our services to their specific needs. We think of portfolios over a long time frame, and we consider what purpose the money is meant to serve. We spend substantial time focusing on wealth planning with distinct goals in mind while factoring in buying power and liquidity. Our second value proposition is for our professionals who serve our clients. This is a people-focused business, so we invest in attracting and retaining amazing players that can craft tailored client solutions for any economic environment.
How are you investing in understanding client psychology?
We have been focusing on client psychology for 138 years because families change. Our specialists understand the competing dynamics and goals within families. In our role, we need to understand how our clients think about wealth across generations so we can make certain that wealth is a positive force in their lives. We are structured for this purpose, and we are very conscious to have the right resources and quality professionals. Our hands-on approach has maintained a 98% average annual client retention rate over the past decade and beyond. That means parents and grandparents choose us, and then their children and grandchildren choose us. This allows us to understand them and to become a trusted advisor over a much longer time frame.
How are you navigating the talent aspect of your business? How would you characterize the talent pool in the greater Boston area?
Boston is a wonderful market for talent and a dynamic place to practice this profession. It is an attractive environment with many personal and professional opportunities, which is very important to us. At the moment, across the wealth management industry there is a “war for talent,” which is linked to changing demographic macro trends. As baby boomer retirements were accelerated by COVID, we are actively focusing on the next generation of professionals. Given what we do, the business is largely about people: it isn’t about a product, but about maintaining and nurturing a dynamic culture. We want the best of the best to be excited about Fiduciary and want to be a part of it. They want to do work that is meaningful and of which they are proud, and we want to build the environment to achieve that.
How has recent legislation or regulation impacted your business and clients?
We are staying apprised of how the recent failings of SVB and Signature Bank are ushering in new conversations around the extension of appropriate measures for regulating banks and wealth management companies. More generally, the recent changes in state and federal income tax rules are impacting our clients’ investment strategies and we pride ourselves in remaining nimble to adapt to such changes.
What is your outlook for the next two to three years for Fiduciary Trust, and for the industry as a whole?
I see two phases in the future. In the medium term, we will continue to refine our hybrid operating mode in the post-pandemic world. Most professional services firms spent decades optimizing their in-person operations, and in one weekend, we all went remote. We are still learning how to optimize the new protocols and norms of a new flexible, remote system, which we embrace and support.
Longer term, we are in a constantly evolving industry. As such, it is realistic to assume that as time marches on, three things will impact the industry. The first is the change in demographics, as it relates to the newer and older generations. The second is technology, which is crucial to wealth management operations and helps us to scale efficiently. The third area is regulation, as it is a tightly regulated industry that will continue to evolve. We are the right size to tackle these challenges because we are a private company that is focused on our clients and professionals. This has served us well in the past, and it will continue to in the future.
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