2025 Predictions On Investing And Wealth Management
Forrester
The upcoming year will see investment firms wrestle with restless offspring and technologies that have moved from “emerging” to “almost there.” In other words, 2025 will feel like a centuries-old industry has just hit its teens. The impact of continuing wars, the “great wealth transfer,” and the US election will reverberate well into the new year. Uncertainty and change will inspire wealth management firms to try innovative digital approaches to keep younger investors, embrace AI (finally!), and go “all in” on tokenized assets. Forrester believes that forward-looking wealth management executives will see these predictions as opportunities and be ready to act on them in 2025:
AI is ready for prime time, and a firm will acquire an upstart focused on AI-driven advice.
Last year, we said that AI is not yet ready for prime time in wealth management. As 2025 approaches, AI technologies and their underlying large language models continue to mature and become more explainable. Startups in this space are leveraging AI as a way to give advisors more “intelligence” by pulling together external and internal research to create natural language explanations for their investment recommendations. Incumbent wealth management firms are now believers that “there’s an AI for that” when it comes to optimizing advisor effectiveness and will target a startup with AI-driven advisory strategies.
Money is in motion, and digitally savvy investment firms will have the customer experience needed to keep it “in the house.”
The “great wealth transfer” is underway, as approximately $84 trillion will pass from Baby Boomers to their children in the United States alone in the next 20 years. The challenge for wealth management firms is that younger investors are more digitally savvy, conduct their own research, and make impact-oriented investing decisions. Our research shows that firms offer a fragmented user experience, including a long, clunky, paper-heavy process when assets transfer from one generation to another. During this “moment that matters,” inheritors will find it frustrating and increasingly seek out firms that seamlessly integrate human and digital touchpoints. As a result, firms that mistakenly segment customers based on assets, rather than financial behaviors and attitudes about digital, will struggle to keep the money “in the house.”
The number of major banks issuing tokenized assets on blockchain will double.
Driven by new digital asset regulations, Hong Kong, Singapore, and the UAE have set clear requirements for managing the risk of this technology, and we expect that the EU and US will follow suit in 2025. HSBC launched a digital “Gold Token” in Hong Kong that’s accessible to millions of customers with just a few clicks on their smartphones. This initiative and others are likely to spur other banks to join the race. To stay competitive, forward-thinking banks will prioritize tokenized assets and develop teams, processes, and technologies to support them.
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This post was written by Senior Analyst Vijay Raghavan and it originally appeared here.
