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Placed in trust

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  • | 7:40 a.m. April 5, 2013
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News of a dividend increase isn't common from the banking industry these days.

But one small corner of the financial world is doing particularly well: non-deposit trust companies. One such company, Investors' Security Trust in Fort Myers, boosted its shareholder dividend by 33% recently.

At the helm of Investors' Security is Charles Idelson, a veteran banker and former president and CEO of SunTrust Bank of Lee County. Years ago, Idelson oversaw a staff of 60 trust officers at SunTrust, spread between Lee and Collier counties.

Institutional trustees such as banks manage assets such as stock and bond investments for beneficiaries of trusts, often established for tax and administrative reasons after a person dies. But bank trust departments were easy targets for consolidation in recent decades and their staffs shrank to centralized operations. “The big banks aren't doing this at all,” says Idelson.

This vacuum gave opportunities to companies such as Investors' Security to provide this service. Idelson started the company in 2004, benefiting from improvements in money management software to efficiently run what is a highly personalized business.

Today, Idelson says Investors' Security manages about $400 million in assets and those have been growing about 10% a year with a staff of 16 people. In 2012, the firm's net income rose 72% to $650,000 compared with 2011, according to the Florida Office of Financial Regulation.

Investors' Security charges 2% of total assets to settle an estate after someone dies, below the statutory limit of 3%, Idelson notes. On the money management side, the company charges 1.25% annually of the first $1 million in assets and that fee falls gradually to 0.50% for larger sums. The minimum to invest is $750,000.

But Idelson says there are opportunities to expand the business further. For example, Investors' Security has started a service that targets young professionals such as doctors, lawyers and accountants, with a lower minimum sized account of $250,000. “There are a lot of professionals who don't have $1 million, but they will eventually,” says Idelson. “We're catering to the young professional.”

Idelson says he's already seen the benefits of lowering the minimum. One customer opened a $250,000 account and doubled it within a year. Over the next two years, Idelson says this successful young professional will likely have a $1 million account.

Another source of new business is from clients rolling over the assets of a 401(k) accounts to an Individual Retirement Account at Investors' Security while they're still employed. Their plan has to allow this transfer and they have to be at least 59 ½ years old, but they can continue to contribute to their 401(k) and make unlimited transfers to the IRA. “We just moved a $2.9 million account last month,” Idelson says.

Another niche opportunity is for trust assets managed by stockbrokers. Often, when a person dies, assets such as a stock portfolio in a trust get taken over by a stock brokerage firm's trust division and the broker loses the account and the opportunities for future commissions. Under a program recently permitted by state law, Investors' Security Trust can be appointed the trustee and allow the broker to retain the account and the future commissions it generates. “Brokers keep their clients they've been dealing with for years,” Idelson says. “It's a real door opener.”

Looking back, Idelson is one of the few veteran bankers not lured by the siren of starting a community bank during the boom years. His reasoning: “You can only do one thing well.”

Smart move, because Investors' Security grew during the downturn while community banks struggled or failed.


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