Trust Company Outsourcing: Assessing Opportunities and Profits in Utilizing Investment Management and Operations Outsourcing

August 15, 2008


New York, NY, USA August 15, 2008

Trust Outsourcing: Assessing Opportunities and Profits in Investment Management and Operations Outsourcing

The trust industry has been a fixture of the US banking and wealth management scene for over a century. However, in the last 20 years, profitability has proven difficult. To increase profitability and improve the client value proposition of their trust departments, banks have turned to two types of outsourcing: investment management and operations.

In a new report, Trust Outsourcing: Assessing Profits and Opportunities in Investment Management and Operations Outsourcing, Celent discusses the underlying factors driving the decision to examine trust outsourcing solutions, the expected benefits, and the current selection of outsource vendors.

Operations outsourcing is an older and more established industry. It removes much of the operational responsibilities from the individual bank or trust company and places them with an experienced operations outsourcing firm. The operations outsourcer has several key advantages discussed in detail in the report, including:

  • Scale in handling a greater number of transactions and assets at a lower marginal cost
  • More experienced trust operations personnel and management
  • Better ability to recruit and train operations personnel
  • More experienced IT support for the trust system

The development of investment management outsourcing is a newer phenomenon. As trust companies have been forced to compete with a wider universe of investment managers, many trust organizations have come to realize they are at a competitive disadvantage with their current investment selection capabilities and investment management personnel.

Benefits of investment management outsourcing discussed in the report include:

  • A wider range of investment opportunities, including full open architecture with some providers
  • The ability to access top-rated asset managers through separately managed accounts and alternative investments
  • More experienced investment professionals, with access to better tools and training
  • Retention and reward systems for top-performing asset managers far beyond what a community bank or local private trust company can pay their investment officers

"Outsourcing may offer the best opportunity to return trust companies to relevance in the new wealth management world," says Robert J. Ellis, Senior Vice President of Celent’s Wealth Management practice and author of the report. "By using outsourcing, trust companies can focus on those things that they do best, including providing a local presence for wealth management delivered by a trusted advisor."

Ellis adds, "Many trust and bank CEOs have dismissed outsourcing as a distraction or impediment to their mission. Nothing could be further from the truth. Outsourcing allows trust companies to focus on their key differentiators and build a strong client value proposition."

Within each arena of outsourcing, a variety of vendors are discussed and analyzed.

A hybrid outsourcing model that combines both investment management and operations outsourcing has also recently come to the forefront of trust company options. The attractive prospects for this type of organization, embodied by SEI, are discussed in this report. The report also examines the market for trust consolidation, a model of outsourcing that utilizes the benefits of scale while moving employees and systems from the trust company or bank to the trust consolidator. Lastly, the report makes projections for the future of trust company outsourcing.

The report is 46 pages and contains two figures and two tables. A table of contents is available online.

Members of Celent's Wealth Management and  Retail and Business Banking research services can download the report electronically by clicking on the icon to the left.  Non-members should contact for more information.


Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

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Michele Pace
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Chris Williams
Tel: +44 (0)782 448 3336

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Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

New York, NY, USA August 15, 2008

Trust Outsourcing: Assessing Opportunities  and Profits in Investment Management  and Operations Outsourcing

Executive Summary 3
Introduction to Outsourcing 5
Operations Outsourcing 9
Operations Outsourcing Vendors 15
Investment Management Outsourcing 25
Investment Management Outsourcing Vendors 32
The Consolidated Trust Outsourcing Model  38
Recommendations for Trust Companies and Outsourcers 40
Conclusions 43


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