US banks and wealth managers are outsourcing investment management and operations to boost profitability of their trust businesses, according to a report which looks at the issues facing firms trying to squeeze more efficiency from their operations.

The report by Celent, the research and consultancy, is called Trust Outsourcing: Assessing Profits and Opportunities in Investment Management and Operations Outsourcing. It 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 organisations have come to realize they are at a competitive disadvantage with their current investment selection capabilities and investment management personnel.