Why Independence Matters

Why Independence Matters

I have been around the trust industry most of my adult life and am very familiar with the dynamics of different business models. Many providers are a trust department of a large bank, while others are connected to a wirehouse broker-dealer and a few are independent of other business activities. Having grown up in a pastor’s home, issues of ethics – particularly avoiding conflicts of interest in a business model, have been an unavoidable focus point for me.

When I have asked leaders of other companies why, as fiduciaries, they allow conflicts of interest in their business structures, I typically receive a lecture about “responsibility to the client,” without a satisfactory explanation to the question. I know there are good people that do a good job working in a business model that includes conflicts. With that said, the evidence of the conflict always leaves the door open to questions. Are you benefiting the client, or your firm?

• Does it matter that a trustee held to the standard of “doing what is in the client’s best interest” also has a product to sell?
• Is someone genuinely acting as a fiduciary if they are not considering the tax impact on how they manage your investments?
• Does it matter if a trustee is packaging, modelling, and selling products such as mutual funds or proprietary investments that they may also benefit from?
• Can giving up control over when and which securities are bought or sold be the best option for the client?

We believe the answers to these questions and many others matter. As a truly independent trust company, we have chosen to avoid these conflicts, and it is a big part of what makes us unique. We believe we should always act as a fiduciary, not just sometimes. We believe that the factors most important to your account performance should be our focus, without conflict. We are on the same side of the table as you. If you do well, so do we. We believe that unbiased, expert advice should be grounded in a relationship with our client and personalized to help you solve problems and achieve the milestones that matter most to you. Rather than putting you in a model designed for the masses, we take the time to get to know you and your individual needs and personal goals. We build portfolios that are customized to each client, constructed primarily with individual securities to reduce expenses, provide more control, and diminish the tax impact to investment management.

When building the business model for Missouri Trust, I thought about the lessons I have gathered in my life along the way, and many learned from my father. In World War II, my dad was a drill sergeant in the last platoon of Rough Riders in the U.S. Cavalry. We shared a love of horses, and he often imparted wisdom that was connected to a horse. I remember him saying in a conversation earlier in my career about some challenges at work specific to this topic, that “Riders like to think they are independent, but in truth, they depend heavily on their horse.” He added that, “When two people ride a horse, one must ride behind.”

At Missouri Trust and Investment Company, we have taken the approach that conflicts of interest should not exist in our business model. Being a privately owned and independently managed trust company with a focus on our client, all we have to sell here is service. We are serving our clients, not selling them something.

For some, this service includes managing their financial life by paying their bills, handling household employee payroll, managing tax withholdings, tax payments, tax returns, investment management, financial and retirement planning, as well as assistance with estate planning and much more. Others may only need our support in a single area. Whatever the need, we welcome the opportunity to serve you.

—J. Timothy Parrish, President