Professional trustee market revenue increased by 16 per cent in 2023, marking the fourth consecutive year of double-digit growth, according to Isio’s 2024 Professional Independent Trustee Survey.

The 16 per cent rise in 2023 follows average revenue growth of 21 per cent in 2021 and 14 per cent in 2022, as revenues almost doubled over the last four years on average.

This growth means that the top 10 firms now oversee 39 per cent of all defined benefit (DB) schemes and are responsible for £1.1trn in pension scheme assets.

The firms also reported a 10 per cent increase in the number of trustee appointments in 2024, as appointments across the firms surveyed were 2,300, up from 2,100 in 2022, with the number of trustee directors increasing in the same period from 290 to 320.

Isio suggested that the "dramatic growth" in the sector can be primarily attributed to the rise of corporate sole trustee roles, which accounted for 46 per cent of all new appointments in 2023, up from 41 per cent in 2020.

The report also noted that although the trend of sole trustee appointments started with smaller pension schemes, most firms now count £1bn plus schemes among their sole trustee clients.

Indeed, the sole trustee model is now responsible for £73bn in assets under management, with some firms stating that 50 per cent of new opportunities are sole corporate trustee appointments.

The report found that, given the increasingly competitive market, firms are also increasingly looking to differentiate themselves by taking distinct approaches to trusteeship.

In particular, the report identified three types of trustee firms: Focused firms that prioritise the role of experienced individual trustee director, integrated firms that stress a packaged solution to governance with larger teams, and hybrid firms that offer a mix or fit either description.

Following The Pension Regulator's (TPR) guidance on improving equality, diversity and inclusion (EDI) in schemes, Isio said schemes are also increasingly utilising professional trustees to achieve better representation.

With professional trusteeship becoming recognised as a long-term career option, the environment has become more diverse and inclusive, according to Isio, as the survey found that 43 per cent of trustee directors are female, while 7 per cent of trustee directors were from an ethnic minority.

Commenting on the survey, Isio partner, Mark Smedley, said: “The importance of professional trustees continues to rise as schemes rely on their expertise to navigate complex challenges and increasing regulation.

“In addition to an impressive fourth consecutive year of double-digit revenue growth, several intriguing trends are emerging.

“One of the most notable is the surge in sole trusteeship, evident in both new appointments and transitions from existing appointments.

“Two in five defined benefit schemes now use one of these 10 large firms as trustee, and almost half of those are as corporate sole trustee.”

He continued: “There's also ongoing demand for professional trustees to augment trustee boards’ diversity, in terms of professional skills and quite literally from an equality, diversity and inclusion perspective.

“With the regulator impressing upon the schemes the importance of EDI, this is likely to continue, with more work to be done to raise diverse participation in the industry.”

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