Reputation Risk Posed By Sundry Assets

HTVAs are a pathwayto the wealthy, and the institution doing a good job managing its clients’ HTVAs will win market share from competing institutions doing a poor job of it. That is the HTVA opportunity. But HTVAs also represent a potentially catastrophic threat. Let’s spend some time getting to understand the threat.

HTVAs pose a risk to a trust institution primarily when they are mispriced. By following two simple rules any trust institution can insure its clients’ HTVAs are accurately priced (whether using in-house expertise or by outsourcing to a pricing vendor like SPARDATA). Nevertheless, today many institutions – perhaps most – misprice them.

Mispriced HTVAs can give rise to negative publicity, lawsuits and other damaging outcomes. For example in Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp. a trust institution valued a life insurance policy within a small ESOP at $1 when in fact it was worth much more. When properly valued it was discovered the plan had been ‘top heavy’ for nine years and the trust institution was obliged to pay over $500,000 in penalties, interest and associated costs.

	1. How many sundry assets does your institution hold (approximately)? 10-99 100-999 1,000+ 2. What types of accounts are they held in? ERISA IRA Trust Other (Specify) 3. How are they being valued now (e.g cost, $1, book value)? 4. How did you hear about SPARDATA?  Contact Information First Name: Last Name: Company: Address: City: State: Zip: Company Website : Phone: Email: I have read, understand and agree to SPARDATA's privacy policy.