First Security Bank grows trust, wealth management team

There was a time when many financial institutions in Arkansas called themselves “bank and trust.” It’s rare now, but that hasn’t stopped the proliferation of banks expanding their trust and wealth management divisions.

First Security Bank in Northwest Arkansas is growing in this space. Recently, the Searcy-based firm hired its 11th trust employee, Sonya Hall. An attorney, Hall brings a new skill set to First Security in the NWA market after working for First National Bank of Fort Smith for 24 years.

“I think we were just a perfect fit for each other, and more than anything, it was perfect timing to be able to make the move up here,” she said. “There are so many new people and opportunities up here. It just couldn’t have worked out any better.”

Nathan Nailling, a CPA, has been with First Security’s trust and wealth management division for 12 years after a stint in public accounting. His family has banked with First Security dating back to the 1930s, and when he was a kid, it’s where he opened his first checking account.

With over $3 billion in assets under management, Nailling said trust and wealth management has grown increasingly complex.

“We’re seeing the complexity of transactions step up. I think that’s a product of market volatility, but also recent tax law changes and regulatory changes on retirement plans,” he said. “With us, we try to customize our advice to every person or a company situation, but generally, we want everything to be risk-appropriate.”

Both agree that the Northwest Arkansas market is highly competitive and likely to get more so in the coming years, partly due to rival firms and partly due to demographics.

“Right now, you’re seeing an unprecedented transfer of wealth from baby boomers to the next generation, and I think that’s going to be the case for the next several years,” Hall said. “Not only do our investment services compete with other banks and brokerage houses nowadays, accountants have gotten into investment advising and some of your insurance companies. So that part of the market is extremely competitive.”

Bank trust departments typically offer two services: trust administration and investment management. Trust administration involves distributing funds and any trust assets in a manner that adheres to the terms of the trust. Investment management services invest and divest assets according to the trust documents.

In the U.S., bank trusts are a $221.4 billion industry, with more than 4 million businesses managing trusts and employing around 27,000 people. A trust can set up provisions for handling the assets of a deceased person to avoid probate, settle estates more quickly and efficiently, and ensure that a person’s wishes are followed in specific detail.

Global wealth management is an even bigger booming business. The wealth management market currently involves more than $1.25 trillion in funds and is expected to reach $3.43 trillion by 2030, according to recent projections from Allied Market Research.

“We are very fortunate to have been able to build a team of Trust and Wealth Management professionals with advanced degrees, including attorneys and a certified public accountant,” said Adam Rutledge, Northwest Arkansas regional president for First Security Bank. “We are even more fortunate to have the ability to develop deep relationships all across Arkansas where customers fully trust us to help build and protect their wealth.”

To underscore the expanding services of trusts, Hall noted that a bank trust department can handle a variety of services for older clients, especially those whose children are busy raising their kids and may have a tough time juggling two generations.

“In a trust department, we can pay bills for people. I can pay their real estate tax or house insurance. I can send someone to mow the grass,” she said. “Nowadays, with Zoom, we can easily connect with their children to update them.”

Nailling sees technology playing a more prominent role as the industry grows, including the likelihood that smaller firms that are good at it will be acquisition targets.

“AI and ChatGPT are all getting a lot of emphasis, and I think there’s an opportunity to get some efficiencies and economies of scale with that,” he said. “As far as the marketplace and competition, I think you’ll see more consolidation of smaller firms just as technology gives them the ability to have more capacity. You’ll see more banks and community banks enter this field. They see the value, as we have for years, of servicing your clients beyond traditional banking deposits.”

“I’m curious about technology and how it will impact the younger generation. They like mobile banking; they don’t like to come into the bank like older generations,” Hall said. “I wonder how that will affect our business where we are so relationship-oriented. I’m not sure what to predict on that.”