2015 Annual Report Letter

To Our Shareholders, Clients and Friends,

Important corporate capital allocation decisions may be the most defining characteristic of Fiduciary Trust’s 130th year of operation. During 2015, the Company initiated many strategic growth programs while maintaining our distinctive client service to clients and fulfilling our ongoing responsibility to generate attractive long-term risk-adjusted returns to shareholders.

BUSINESS ACCOMPLISHMENTS

In 2015, we had several important business accomplishments that were not only reflective of significant effort within the year, but also of the beginning of future efforts.

The Company maintained its long-standing commitment to helping clients achieve their individual goals. This achievement was manifested in our 98% client retention rate, our risk-adjusted investment returns and our success in both attracting new clients—many of whom were referrals—and expanding services for existing clients.

In keeping with an important component of our responsibility to clients—permanence—the Company began a multi-year reinvestment program to ensure Fiduciary’s distinctiveness and relevance for years to come. This program will span all aspects of our operations and client activities; it is based on the same foundational beliefs regarding integrity, performance and stewardship that have guided the Company for the last 130 years. Highlights of these efforts this past year include:

  • Creation of the Chief Fiduciary Officer position to oversee all trust and estate services
  • Recruitment of an experienced General Counsel to manage our increasingly complex regulatory and compliance requirements
  • Addition of a senior institutional trader leading a specialized portfolio construction group to ensure efficient execution of investment ideas in client accounts
  • Addition of our first New Hampshire-based officer to expand our geographic presence
  • Addition of a new Head of Custody to enhance our offering with respect to serving the custody needs of family offices and registered investment advisors
  • Formalization of our client and prospect marketing activities with the creation of both the Chief Marketing Officer and Head of Client Development positions
  • Recruitment of new professionals across the firm to expand our breadth and depth

One or two of these initiatives would have made for a productive year, but we are most excited with the collective effort across these many fronts. 

Within the context of launching these various change initiatives in 2015, we were encouraged by early market validation of these choices and the strength of our value proposition. This was demonstrated by the fact that 2015 was the best new and additional business year in seven years and represented a noticeable improvement over the prior year. While there will be many bumps along the way, we are encouraged by these early signals and have confidence in the investments that are being made and in our ability to pursue this path while continuing to provide exceptional service to existing clients.

REMEMBERANCE

Sadly, during 2015 the Company experienced the passing of an excellent professional and colleague with the death of Susanne Englert Coyne on April 5, 2015. Susanne joined Fiduciary in 2007 and was respected for her compassion, dedication to clients and professionalism. In honor of Susanne, the Company established a fund at Brigham Women’s Hospital to research cures for lung cancer that strikes women who are non-smokers—which was the disease Susanne fought valiantly. She is both missed and fondly remembered by all who had the pleasure of working with her.

FORWARD PERSPECTIVES

As CEO, I spend a significant amount of my time articulating both internally and externally a shared vision for Fiduciary’s future. My perspective is informed by my own experiences, our professionals’ points-of-views, the competitive landscape, and most importantly, the evolving needs and expectations of our clients and shareholders.

At the core of this vision is a fundamental belief in the importance of Fiduciary’s work. There are few careers in which an individual has the opportunity to directly help others. Medicine, public service and educators are examples of such professions. However, the role of the individual who not only safeguards and grows a family’s or charity’s savings, but also provides valuable, honest counsel is special. This is a noble profession and I and my colleagues approach it as such. Unfortunately, many within our industry have forgotten the unique role our profession has and can play. While many competitors purport to be the honest counselors, several have instead prioritized “product distribution” or become conflicted “asset gatherers.” This focus is in contrast with my own beliefs and those of Fiduciary Trust.

I believe these industry changes have not been malicious or intentional. Rather, they are the unintended consequences of misaligned corporate structures and strategies. Thirty years ago, Fiduciary’s primary competitors were private companies or partnerships with similar relationship-based approaches to serving clients. Today, roughly three quarters of financial advisors with whom Fiduciary competes are employed by large, publicly-traded financial conglomerates. Industry maturation as evidenced by increased competition, commoditization and declining pricing has driven scale requirements and changes in corporate structures.

Fortunately, amidst these industry changes, Fiduciary has stayed true to its original mission: to help clients with their most material financial needs.  Three reasons for this continuity have been 1) the beneficial balance—and interconnectivity—of shareholders, clients and professionals throughout the Company’s history, 2) the Company’s cultural focus on client service, and 3) our strong professionals.

As we look to our future, I believe our structure, strategy and people will continue to be our competitive advantage. Given industry dynamics, Fiduciary is in the minority of firms that predicates its strategy on the belief that this is a “people business” based on the ongoing engagement between high-quality professionals and clients. As a result, our success will continue to be defined in terms of distinctiveness, rather than scale. Our path forward will be dependent upon the identification, attraction and retention of great professionals.

The Fiduciary of the future should look similar to the Company we know today. Our foundational beliefs regarding the importance of the role we play, the substantive services we provide, and the quality of client engagement we deliver will continue to be the same.   However—as the multi-year growth investments that we have started in 2015 demonstrate—the way in which we fulfill these objectives, our growing differentiation from competitors and our ongoing sustainability, should further define our enhanced future position.

I continue to be grateful to be at Fiduciary and want to recognize the entire professional staff for its dedication and hard work in providing excellent client service this past year. We are proud of the accomplishments of 2015 and look forward to the work ahead. 

Best, 

Austin V. Shapard

President & CEO