Front & Center: For Steve Trefts, integrity, diligence and compassion are musts in his asset management realm

Steve Trefts loves solving puzzles.

Not the jigsaw variety.

Rather, the kind of puzzles that pit siblings against one another after Mom and Dad die, leaving behind a complicated estate and no one to manage it properly or equitably.

“We’re peacemakers,” said Trefts, founder and co-owner of Northwest Trustee and Management with his wife, Carole. “We manage assets for 300 to 400 clients, including heirs who are fighting and spending tens of thousands of dollars on attorney fees. Most corporate fiduciaries would not touch those cases with a 10-foot pole.”

Trefts’ niche is relatively narrow. “We are state-chartered noncustodial trustees, meaning we hire outside investment advisers so there is no conflict of interest. The advisers report to us, and we monitor their performance.”

One trust Trefts manages is worth $55 million, and includes timberland and mills. Another trust owns an interest in a Bering Sea fishing fleet.

“But our sweet spot is between $500,000 and $1.5 million,” he said. “By comparison, Seattle and Bellevue corporate trustees typically don’t take estates worth less than $5 million.”

During a recent interview, Trefts discussed boxcars, bucket lists and baby boomers’ multitrillion-dollar legacy.

S-R: Where did you grow up?

Trefts: Southern California.

S-R: What were your interests?

Trefts: Tennis. I played competitively throughout my youth, and was No. 1 on the men’s tennis team at Colorado College in Colorado Springs.

S-R: What was your first job?

Trefts: I taught tennis during the summer while I was in college, then taught tennis full time after I graduated.

S-R: How long did that last?

Trefts: A couple of years. Afterward, my wife and I backpacked around the world for six months, spending most of our time in India and Nepal. When we returned home, I enrolled in Gonzaga Law School.

S-R: What career did you envision?

Trefts: I wanted to be an environmental lawyer. After graduation in 1975, I interviewed with several environmental organizations – Friends of the Earth, Sierra Club – but discovered I couldn’t raise a young family on what the mountains and lakes were paying.

S-R: What was Plan B?

Trefts: I became a trust officer at Seafirst. I managed a lot of trusts for the bank, but my primary focus was probates – going through the legal steps when people would name the bank as executor of their estate. And I found I liked that very much.

S-R: How long were you there?

Trefts: Four years. Eventually I was doing marketing and new business for four of our Eastern Washington branches. My next step would have been moving to Seattle. But we had a young family and liked the quality of life here, so I became executive vice president of the Whitworth Foundation. I was there from ’81 to ’89, working with alums and donors, and their advisers. I also oversaw management of the university’s endowment fund and life insurance program. During that time, we brought in between $25 million and $30 million to the foundation.

S-R: And then you started your own company. What was that like?

Trefts: Exhilarating and very scary. It was just me. We moved a phone line down to the basement of our house, where I could hear the footfalls of three little kiddies over my head. After six months, I rented an office and hired my first employee.

S-R: Did you have a mentor?

Trefts: Yes. When I started my company, I met with Craig Korthase, who managed U.S. Bank’s trust department. Instead of viewing me as a potential competitor, Craig graciously took me under his wing and gave me helpful advice about structure and how to operate.

S-R: Do you remember your first client?

Trefts: I do. His name was Conrad, and he rode the rails. Conrad wanted me to handle his Social Security, so I drafted a simple agreement. But Conrad had to sign it, and I couldn’t find him. I heard he was living in a boxcar somewhere. When I finally found him, he agreed to meet me at the Union Gospel Mission. My company’s first legal document was signed beneath a notice that read, “Check your guns at the front desk.”

S-R: How long before your business gained traction?

Trefts: If you mean how long did it take to support my family, I’d say five years, and another five to become comfortable. It was a slow go.

S-R: What did those lean years teach you?

Trefts: The importance of hard work and perseverance.

S-R: What factors beyond your control affect your business?

Trefts: Part of our fees are based on assets under management. So if the stock market takes a big hit, that affects our bottom line.

S-R: What do you like most about your job?

Trefts: I love putting puzzles together. The puzzle pieces are complex assets and families that have experienced difficulties. About 60 percent of our new business comes from prior trustees who failed.

S-R: Do all the heirs have to agree to accept you as trustee?

Trefts: Yes. And normally they do, because they’re fed up with each other and they’ve spent so much money on lawyers.

S-R: How do situations get to that point?

Trefts: People name an unqualified individual – usually one of their children – to be their fiduciary when there are family conflicts. Or parents assume their kids know everything they know themselves about the management and use of wealth.

S-R: Do you propose a solution or impose one?

Trefts: We don’t impose anything. But often times we work with the Superior Court of Washington, and the court makes the ultimate decision. Or the attorneys get together and offer a compromise settlement that includes us. One reason we’re peacemakers is that we’ve been down this road so many times we can anticipate and avoid the potholes.

S-R: Looking back, what’s been the biggest surprise?

Trefts: I never imaged we’d be where we are today. We’re the largest noncustodial, private professional trustees in Idaho, Oregon and Alaska, as well as Washington east of the Cascades, with hundreds of millions of dollars under management. Even so, our piece of the pie is small. Banks handle the vast majority of trustee business.

S-R: What has this job taught you about yourself?

Trefts: That I’m dependent upon others – especially my wife of 46 years, and our excellent staff.

S-R: What are you most proud of?

Trefts: Probably helping to preserve 170 acres of gorgeous Dishman Hills land that clients of mine were eager to sell. By working with the Dishman Hills Conservancy and the Spokane County Conservation Futures Program, I was able to get fair market value for my clients while also saving what is now the centerpiece of the Dishman Hills Natural Area.

S-R: What challenges do you face?

Trefts: One challenge is trying to work with unethical people who manage huge assets that our clients have an interest in.

S-R: Anything else?

Trefts: We work with the mentally handicapped, the physically handicapped, the emotionally scarred, the abused, the elderly. We work with drug addicts. We have several beneficiaries who are in jail and will never get out. So we can’t be judgmental.

S-R: Are there misperceptions about your industry?

Trefts: Yes. One is that trusts are expensive. People think it’s cheaper to have their son or daughter handle everything. But often times when you have amateurs handing complex estates, it costs much more in the long run.

S-R: What’s the career outlook in this field?

Trefts: As trillions of dollars of wealth transition from the baby boomers to younger generations, there’s going to be a huge need for people with integrity, compassion, diligence and professionalism to manage those assets.

S-R: You spent a lot of time on tennis courts. Did any of that experience transfer to this career?

Trefts: You bet! Strategy – thinking ahead.

S-R: Speaking of which, do you have an exit strategy?

Trefts: I love what I do and am not planning on retiring anytime soon. But eventually my wife and I will transfer ownership to our daughter, Lisa, and our son-in-law, Greg Bowman.

S-R: What’s on your bucket list?

Trefts: I want to kayak in the Galapagos Islands, hike across northern England and ski the Wapta Icefield in the Canadian Rockies.

Writer Michael Guilfoil can be contacted at mguilfoil@comcast.net.