The trust industry has changed dramatically over the last two decades. Now, most trust companies are one-stop shops and can perform brokerage services. They have a fiduciary duty to act in their clients’ best interest. In return, trust companies typically charge a fee based on the value of the assets they manage.
The trust industry is comprised of two main types of entities: agency accounts and personal trusts. Revenue comes from the value of assets that the trust company holds on behalf of its clients and then distributes to beneficiaries. This revenue does not include fees for estate planning or drafting wills. Knowing the size of the trust industry can assist companies with strategic decisions.
In addition to the growing number of trust companies, the industry has seen some challenges as well. However, the recent events have led to increased demand for professionals. For instance, the recent election of President-elect Biden created a lot of tension. Likewise, the impact of COVID-19 on the trust industry caused more urgency for Americans to set up their estates. Additionally, the Democrats in Congress preserved many of the Trump-era tax policies, a major benefit for trust companies.
During the late 1980s and early 1990s, the trust industry suffered from a recession. Investment returns were low and competition among financial institutions became fierce. Moreover, rising management costs put the trust industry under pressure. Further, new federal tax laws could have a negative impact on the benefits of trust funds.