Safety and Soundness Above All
The hallmarks of a strong financial services company include several critical components. Notably, the 1031 exchange qualified intermediary industry operates without any licensing requirements, regulatory oversight, or mandated audit and exam capabilities—a situation that underscores the importance of due diligence when selecting a service provider.
Regulatory Oversight is Crucial
In such an environment, regulatory oversight is critical, as is a firm’s reputation, particularly where financial misconduct in the industry is a concern. Minimum regulatory required bonding, insurance, and equity capital reserves provide additional layers of safety for clients, protecting them from errors, omissions, and potential misappropriation of funds.
Multilayered internal process controls ensure accuracy and compliance. The experience and expertise required to properly process transactions signify security and soundness. A strong financial services company prioritizes its clients’ best interests and will often guide them toward making wise choices to protect their funds. Protecting clients’ interests should be paramount for any financial services organization.
The Exeter Group of Companies
The Exeter Group of Companies places the protection of its clients’ interests above all else. We strongly endorse and encourage regulatory oversight by a government agency to ensure the organization operates in a safe, sound, and secure manner. To better protect our clients’ funds, investments, and accounts, Exeter chose to undergo a rigorous, multi-year regulatory review and approval process to obtain our own trust company charter and become a regulated entity.
The result was Exeter Trust Company (ExeterTrust™), based in Cheyenne, Wyoming. ExeterTrust™ is a non-depository trust company that is licensed, regulated, and audited by the Wyoming Division of Banking. Accordingly, it is held to a much higher standard than non-regulated financial services firms. ExeterTrust™ is required to undergo three different audits: (1) a regulatory exam by the Wyoming Division of Banking; (2) a financial statement audit by a certified public accounting firm; and (3) a procedural audit by a certified public accounting firm.
This means that Exeter 1031 Exchange Services, LLC (Exeter1031™) is one of the few 1031 exchange qualified intermediaries with any kind of regulatory oversight, making it one of the safest and most secure in the industry. Exeter1031™ deposits, holds, and safeguards its clients’ 1031 exchange funds in separate, segregated, dual-signature qualified trust accounts through ExeterTrust™. See our article entitled Qualified Intermediaries Are Not Created Equal and a related article entitled IRA Custodians Are Not Created Equal.
Bonding, Insurance, and Equity Capital Create a Safety Net
The Exeter Group of Companies, including The Exeter Group, LLC, Exeter 1031 Exchange Services, LLC, Exeter Trust Company, and Exeter Asset Services Corporation, have always maintained significant financial protection for our clients. These protections include $10.0 million in fidelity bond coverage, $10.0 million in errors & omissions insurance, $10.0 million in cyber and wire fraud insurance, and a $10.0 million financial institution blanket bond. In addition, we hold more than $8.0 million in equity capital reserves to protect clients’ funds, assets, and accounts. These amounts are all well above the minimum regulatory required amounts
Qualified Trust Accounts Protect 1031 Exchange Funds
Exeter1031™ deposits, holds and safeguards its clients’ 1031 exchange funds in separate, segregated, dual-signature qualified trust accounts with ExeterTrust™. These separate, segregated, dual-signature qualified trust accounts clearly classify 1031 exchange funds as client trust funds and not corporate funds, protecting clients from losses in the unlikely event of a bankruptcy filing.
FDIC Insurance Coverage
ExeterTrust™ automatically spreads clients’ idle funds held in its accounts, including 1031 exchange qualified trust accounts, self-directed IRAs and individual 401(k) plans, custody accounts for qualified retirement plans, custody accounts for private funds, directed or administrative trustee accounts, and specialty holding escrows, across numerous commercial banking relationships to provide significantly more than the standard $250,000 in FDIC insurance coverage. ExeterTrust™ also maintains an Insured Cash Sweep or “ICS” vehicle for those accounts with significant cash positions so that they can also be 100% covered by FDIC insurance.
Process Controls and Risk Management Practices to Safeguard Funds
We have established multi-layered processes that incorporate internal controls, validations, daily reconciliations, audits, and reviews to ensure we deliver on our promises and meet our obligations. Every aspect of a transaction is subject to oversight, including regulatory oversight.
We utilize a sophisticated trust accounting system that allows us to accurately track, monitor, and account for our clients’ funds, investments, and accounts in real time. We reconcile our entire funds position to the penny daily and have implemented stringent internal controls and checks and balances to ensure the safety of our clients’ funds.
Transparency in How We Operate
The Exeter Group of Companies are more than transaction processors. Our clients, along with their legal, tax, and financial advisors, turn to us for guidance on best practices in structuring and administering their transactions and investments. We support and encourage our clients to perform due diligence on our business and qualify us for our technical depth, experience, and expertise. In turn, we routinely leverage our expertise to provide consultative assistance to our clients and their professional advisors.
Guided By an Experienced Executive Leadership Team
Our executive leadership team consists of recognized leaders in the industries they serve, with more than 150 years of collective experience with just the leadership team. Clients and their advisors always have direct access to the executive leadership team.
William L. “Bill” Exeter, Founder, Chair and Chief Executive Officer, is celebrating his 42nd year in the financial services industry and enjoys a long history and solid reputation among his peers. He is frequently called on to lead seminars and panel discussions on a wide range of financial subjects, especially 1031 exchanges, 1033 exchanges, and self-directed IRAs and individual 401(k) plans. He is one of a handful of founders of the Federation of Exchange Accommodators in the late 1980’s.
Maureen H. Brown, Founder, Vice-Chair, President, Chief Operating Officer, and member of the Board of Directors of ExeterTrust™, is celebrating her 52nd year in financial services with over 25 years in 1031 exchange and trust services. She has significant experience in strategic planning, workflows, system design, development, implementation and training.
Brett L. Davis, Senior Vice President and Chief Trust Officer, has over 35 years of experience in the financial services space with an emphasis on self-directed IRAs and individual 401(k) plans, private fund custody and administrative services, directed and administrative trustee services, and qualified retirement account custody services. In each of his roles, Brett’s responsibilities have always involved oversight of non-traditional investments, often referred to as alternative investments, at various levels of focus.
Hiba I. Exeter, Vice President, Treasurer and Business Development Officer, has just entered her 11th year in the financial services industry. She has earned the respect of escrow and closing professionals and can assist clients and their advisors with various financial services, including 1031 exchanges, 1033 exchanges, and self-directed IRAs and individual 401(k) plans.
Amanda J. Brynoff, Vice President and Controller, has more than a decade of accounting and finance experience in real estate related fields, including trust company and 1031 exchange qualified intermediary management and oversight and real estate development.
David M. Peterson, Vice President, Compliance Officer and BSA/AML Compliance Officer, and member of the Board of Directors of ExeterTrust™, has over 15 years of experience in the areas of trust company oversight, management, administration, and trust operations.
Phuong T. Tran, Assistant Vice President, Chief of Staff, and Assistant Corporate Secretary, has over 25 years of experience in supporting executive level administrative, operational and strategic support.
Advising clients on taking steps to protect their funds and investments
Protecting funds and assets held in client accounts requires client vigilance. As part of our safety and soundness initiative, we encourage clients to regularly change passwords for their hardware, software, and email accounts, and to enable two-factor authentication when available. We also advise them to install security software to prevent system breaches and to verbally confirm all wire transfer instructions before sending funds. We offer this counsel as a component of our safety and soundness initiative.
Diligence affords protection
We believe that safety and soundness are not a function of size, but rather a result of the rigor with which clients’ funds, investments, and accounts are administered. Understanding the importance of regulatory oversight, equity capitalization, bonding, insurance, experience, internal controls, and quality control measures will expand your appreciation for what constitutes a strong financial services company.
State of Washington Required Notice
Washington state law, RCW 19.310.040, requires an exchange facilitator to either maintain a fidelity bond in an amount of not less than one million dollars that protects clients against losses caused by criminal acts of the exchange facilitator, or to hold all client funds in a qualified escrow account or qualified trust that requires your consent for withdrawals. All exchange funds must be deposited in a separately identified account using your taxpayer identification number. You must receive written notification of how your exchange funds have been deposited. Your exchange facilitator is required to provide you with written directions of how to independently verify the deposit of the exchange funds. Exchange facilitation services are not regulated by any agency of the state of Washington or of the United States government. It is your responsibility to determine that your exchange funds will be held in a safe manner.