Looking forward into 2025, GlobalData sees private wealth managers having to continue the productivity investments to meet the needs of the next generation of investors all the while being buffeted by major geopolitical challenges that are often directly contradictory to the long-term strategy they are pursuing.
So, while dealing with international trade disruption, regulatory divergence and resurgent inflation will certainly be keeping CEOs up at night, expect them to continue investing in digitization, ESG investments and international expansion. Here is a selection of what the GlobalData Wealth Management team is watching for in 2025.
Offshore wealth management will need to be nimble to cope with severe international trade disruption
With a trade war in the offing not just between China and the US but also the US and its Western trade partners, offshore wealth managers will need to adapt quickly to shifts in trade policy. It is important to remember that international business interests have long been a key driver of HNW offshore investing, 12.4% globally in 2024 but much more for markets like Indian and China.
And 2025 will see severe disruption to such international businesses, making it uncertain how much new business will be generated in as week as which offshore centers are likely to win out, particularly given the US is likely to be at the center of much of the disruption.
Dealing with cryptocurrency in mainstream finance
The latest crypto-winter is over and 2025 is likely to see a sustained run up in key coin prices and an explosion of crypto-investment products and channels. All wealth managers will need to revisit their strategies and policies to crypto investing. Clients will demand greater exposure to this fast-growing investment and the industry itself will also increasingly become a source of HNW investors, provided wealth managers are able to safely conduct due diligence and KYC checks on their wealth.
Inflation and interest rates
A key concern for investment and asset managers in 2025 will be the shifting and uneven inflation outlook due to trade disruption and its attendant economic impact; coupled with changes in interest rates around the world and how these are feeding through to various markets. What does this mean for equity investments vs fixed income and cash but also markets like commodities and property.
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Regulation
Always a factor for wealth managers. Key regulatory concerns will be around any anti-ESG or fairness rules in the US as well as more operational concerns like DORA, with AI regulations also a key concern. A major issue in regulation will be managing regulatory divergence in key areas.
ESG
Wealth managers will continue investing in building up their ESG, thematic and Impact Investing capabilities but the focus will shift away from overtly environmental to social and governance criteria. However, they will have to do it in a political climate in North America that is increasingly hostile to the concept as a matter of ideology. We expect continued development of ESG funds, investment tools and assessment tools but with launches and roll outs occurring in Europe and Asia.
Shift towards India
Given the expected geopolitical tensions between the US and China; along with the continued strong economic growth of India; there will be a shift in international banks, wealth and asset managers’ focus towards India. Both as a market for investments and a source of wealth investors in the country as well as the substantial Indian diaspora (both NRI and those of Indian origin) in key markets in the Middle East and the Anglosphere.
Gen Z and next generation investing
Given ongoing intergeneration wealth transfer as well as the growth in the age cohort, more wealth managers and fintechs will roll out propositions, products, and services for this age cohort. As this generally affluent (more so than Millennials were at a similar age) demographic ages, and becomes more economically active, their needs and views will come to dominate the thinking of wealth managers in a way that neither Gen X and Millennials managed to do while the Baby Boomers were the crucial demographic.
Cybersecurity and fraud
Attacks will continue to grow in 2025 as criminals adapt new technology to fraud schemes and bad actors, many driven by the dicey geopolitical scene, seek to disrupt leading wealth brands or financial markets. Continued investment in IT security will be crucial. The growth of crypto investments will also raise the role of crypto in fraudulent investment schemes as well as in the laundering of the proceeds of all illicit money. Wealth managers will have to better guard their clients against such schemes as well as ensure they do not become conduits for illicit money washed via crypto themselves.
Andrew Haslip is Head of Content for Wealth Management and Asia-Pacific (FS) at GlobalData
