Trust in tough times.

PositionMarketing News

Your trust department, perhaps more than any other aspect of your business, is vulnerable to outside pressures. How do you keep it profitable when the world and the economy seem to be conspiring against it?

John Muell and John Hurlock, both senior consultants for Alex Sheshunoff Management Services, Austin, Texas, say there are several steps you can take to ensure profitability.

For example:

* Know what your target is, says Muell. Many trust departments don't, but knowing the target helps you to maintain the necessary financial discipline.

* Know your fixed costs: Make sure they're covered. And it doesn't hurt to try to reduce them.

"Numerous times we have worked with banks that consider their data processing costs to be fixed, only to discover that when they perform a vendor selection, these supposedly fixed costs were suddenly reduced, sometimes by as much as 40 percent," says Hurlock.

If you can't cover those costs, he says, consider outsourcing some or all of them. In other words, get out of the business.

* Manage your variable costs. In good times, you add staff. In bad times, you should reduce staff. Muell admits this may be a "harsh prescription," but it may be essential in order to maintain profitability. If you outsource a function, you should reduce your in-house staff accordingly.

* Review your fee structure. Move your fees from the lower quartile to the upper quartile of competitive fees. Your customers stay with you because of your service, your location and your reputation--not your price.

* Know...

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