Sustainable Profit Model Construction For Trust Companies Under The "Pan Asset Management Era”

The trust industry has achieved a double harvest in both scale and efficiency even with the sound of a doubt ever since 2012. However, CSRC(China Securities Regulatory Commission) as well as CIRS(China Insurance Regulatory Commission) have introduced a series of policies towards the asset management market intensively for deregulation from the third-quarter of the year, heralding the arrival of the "Pan Asset Management era”, which affords other asset management organization opportunities of conducting the homogeneity business same as the trust companies. Since theirown bonus system of the trust industry has been undermined, it has faced intensepressure and enormouschallenge never seen before.This paper is composed of three main objectives. Firstly, to review theories and related literature papers especially on the core competitiveness theory, the trust theory, the profits model theory and the “Diversification & Specification” business strategy theory. Based on that, this paper systematically analyses the sustainable profit model of every financial sector in order to build a suitable profit model under the "Pan Asset Management" circumstance; Secondly, to analyze the current situation of the trust profit model, in addition to use a DEA method to examine from both the business type and management type of turst industry, and conduct empirical analysis on the profitability efficiency over various of profit models of the trust companies between 2011 to 2013, looking for more efficient model to provide the reliable basis for constructing a sustainable profit model; thirdly, research from the Pan Asset Management’s perspective, to sum up the dilemma, opportunity and superiority of trust companies through the comparisons among other financial organizations from both the regulatory policy and development situation. Finally, to set empirical tests to prove that the current profit models of trust companies are unsustainable so that they need to expand competitive differentiation with other financial organizations based on their own advantages. In other words, to prove the necessity of constructing such sustainable profit models. To do so, they need stick to their origin(entrusted by the people, generation financial management) and features(bankruptcy isolation and oproperty transfer). Therefore, this paper discusses the prerequisite and basic features for constructing sustainable profit models, and how to construct various models that suitable for all types companies based on their own operating characteristics and shareholders backgrounds. Then it recommends some feasible and sustainable trust businesses, and discusses the future development direction of such businesses and offers certain supporting polic suggestions.In conclusion, this paper believes that the origin of trust companies is “entrusted by the people, generation financial management”, the trust businesses should be the core of these trust companies, in which to construct a sustainable profit model should also be the core for all of them. Therefore, they need develop actively management businesses and make suitable management strategy based on their own characteristic and shareholders’ backgrounds. In future, this model would include large Versatile trust companies with the aim of diversified wealth management businesses, and also include Medium and Small-sized Focused trust companies with theaim of specified trust businesses.