The trust industry is one of the largest delivery vehicles for professional investment management services. With trillions of dollars of investable assets, trusts require a wide range of revenue-generating services. Moreover, trusts are recognized as a flexible vehicle for long-term wealth management. This makes it a great opportunity for professional investment managers, who can establish relatively long-term service relationships with clients.
The trust industry has undergone several changes over the past several decades. In the 1970s, when interest rates were high and financial markets were deregulated, many trust departments began investing in new instruments. This resulted in trust funds, certificates of deposit, and variable-rate notes. The strong economy generated a large influx of investment dollars, and the amount of money invested in trusts more than doubled between 1980 and 1986.
In the United States, banks provide the majority of trust services. However, the non-bank trust industry is made up of many small businesses. In 1992, 94 percent of the 4,283 firms in the industry employed fewer than 20 people. In contrast, there were only five companies with more than 250 employees. The largest trust company, Continental Auxiliary Company in San Francisco, had less than 100 employees and more than $90 million in assets.
In the following five-year forecast, the revenue of the trust industry is expected to grow at an annual rate of X.X% to $XX.X billion. This is due to rising equity and bond markets, which will increase overall asset values of existing trusts. In addition, the long-term expansion of the economy will increase the number of households with high net worth. This will help the trust industry grow.
