A trust accounting system tracks and manages funds held in trust to ensure accurate recordkeeping, regulatory compliance, and operational efficiency. It records all funds received, transferred, and returned as well as income and expenses, and is an essential tool for any trust company, wealth management firm, law firm, or financial institution handling fiduciary accounts.
A modern trust accounting system is more than bookkeeping software and can improve efficiency, reduce risk, and support organizational growth through:
- Accurate account reconciliation and financial reporting
- Regulatory compliance
- Seamless integration with investment platforms, compliance tools, and CRM systems
- Efficient transaction processing, including disbursements, fees, and client distributions
Outdated Trust Accounting Systems Increase Risk
Legacy trust accounting systems can’t keep pace with current operational demands and regulatory requirements. Many require manual reconciliation, increasing risks created through simple data input errors. Manual reconciliation is also slow, requiring careful data entry and validation, driving inefficiency.
Older trust accounting systems have limited integration capabilities, making it difficult to share data with compliance, investment, and tax reporting software. Time spent coordinating data between systems decreases efficiency, and manually managing compliance risks regulatory penalties, reputational damage, and increased audit scrutiny.
Legacy accounting systems lack modern cybersecurity features, essential tools to combat increasingly sophisticated cyberthreats. Modern trust accounting systems have built-in security and data protection to ensure the trust’s assets remain safe.
These older accounting systems were not designed to handle modern, more complex trust structures and evolving client needs, including access to real-time information. Modern trust management requires more flexible, dynamic accounting systems.
Essential Trust Accounting Features
A good trust accounting system should make managing the trust more efficient and secure. Automation is key for increased efficiency, seamless tracking and reconciliation, and improved accuracy.
It should automatically track and reconcile all trust activity – including transactions, bank statements, and trust ledgers – and seamlessly integrate with portfolio management systems, CRM, regulatory reporting platforms, and tax preparation software. Automation and real-time integration across all financial platforms ensure data consistency across financial operations, increasing efficiency.
A good trust accounting system should have built-in compliance monitoring and reporting tools to help meet trust accounting standards and fiduciary responsibilities, including automated audit trails and transaction monitoring, regulatory reporting tools that streamline trust examinations, and integrated risk management tools to prevent compliance breaches.
The trust accounting system must be able to scale with the firm when it enters new markets, adds clients, and hires additional employees. It should also be flexible enough to adapt to changes in the trust, market, and regulatory environment.
Finally, the most impressive features are rendered useless if the user interface is too difficult to learn and use. The trust accounting system must be easy to use, with robust training and onboarding support to ensure adoption and success. It should also provide customizable dashboards to match each client’s workflow needs. 24/7 remote access is critical for the best customer service, ensuring real-time access to trust information at all times.
Pohl Can Help You Choose the Right Trust Accounting System
Pohl Consulting specializes in helping financial institutions choose the best trust accounting system for their business and compliance needs. Our multi-step process involves:
- Assessing your operational needs and evaluating current processes, inefficiencies, and compliance challenges.
- Researching and analyzing market-leading trust accounting software and determining the best fit for your firm.
- Performing a regulatory compliance review to ensure the selected system aligns with fiduciary standards and financial regulations.
- Providing implementation planning and execution to ensure seamless adoption.
- Onboarding teams and optimizing workflows to help maximize efficiency.
Throughout the process, we provide expert guidance, helping firms avoid costly mistakes and ensuring their chosen trust accounting system aligns perfectly with their long-term goals.
Are You Looking to Upgrade Your Trust Accounting System?
If your firm is struggling with inefficiency, compliance challenges, or outdated technology, it may be time to assess new trust accounting system options.
Contact us today to discuss how we can help your firm navigate the trust accounting system selection process.
For more information on how Pohl Consulting supports organizational development and trust system selection, visit our Organizational Development page.
