Traditionally, large banks have provided professional trust services. However, non-bank institutions are now creating trust companies of their own. This allows them to offer full-service fiduciary and investment management services without having to hire a third party trustee. This trend has also created new opportunities for banks, who are consolidating their trust operations.
The trust industry is composed of companies that administer trust funds and foundations. It excludes charities, educational institutions, and religious organizations. As of the late 1990s, there were about 6,000 companies that provided trust administration services. However, the vast majority of these firms were banks. Because of this, the industry is growing at a fast pace.
The trust industry has been enjoying robust performance in recent years, largely due to the 11-year bull market. However, the current market environment is one of tremendous uncertainty, and the outlook for the industry is expected to change rapidly in the months to come. In this series of blog posts, we will take a look at how this market environment affects the industry.
The trust industry has seen many changes over the past several decades. As the world economy became more complex and wealthy, trustees needed to expand their investment strategies. They were required to study the latest financial regulations and invest in new instruments. These investments included money market funds, variable-rate notes, and certificates of deposit. These changes resulted in a huge increase in investment dollars. From 1980 to 1986, the amount of money invested in trusts jumped from $571 billion to $1 trillion.
