Three Free Key WAM Predictions for 2025

There is nothing like a dream to create the future. – Victor Hugo

It’s that time of year for some predictions. I regard myself as a pragmatic optimist, and I guess that means that my heart is optimistic and my head is constantly trying to find the pragmatic solution to that optimistic future. So, channelling Victor just for a while, here are 3 predictions for Wealth & Asset Management in 2025 that I hope foster your dream for the future too:

1.????? People will Matter More Than Ever

In the fast-evolving age of technology that threatens to overtake us all, in 2025, people will still call the shots and still determine all the main successes and failures. Three examples:

(i)????????????????? Operational transformation only succeeds when the users, the people, agree and want to work with the new tech in the new op model. The tech & data might of Aladdin only works when people use it. The new fintech integrates when expert people take responsibility for its design & use. The biggest project delays are not because of tech issues, it’s politics, people issues.

(ii)??????????????? Retail investors will choose their own best path. We know about the tsunami of The Great Wealth Transfer with trillions upon trillions of dollars being passed down the generations. We know about the rapid growth of challenger banks & fintechs like Revolut, with over 45million customers already. And don’t even start me on crypto, eToro or even Ant Group (er, over 1 billion users!). WAM firms need to understand their role, capitalise on these macro trends or get ignored. Know your clients, deeply and engagingly.

(iii)????????????? The future of all firms depends fundamentally on being able to attract the right, younger, talent and to train them in the good, the bad and the ugly of business. Financial Services is not cool. It doesn’t pay the best. How do you hire great people when we’re tarred with a broad, Gordon Gecko brush? Many firms have yet to see the wisdom, or otherwise, of their hybrid working strategies or desires to get people back in the office. Juniorisation can make short-term economic sense, but where’s the long-term training strategy for your future, resilient leaders?

Prediction 1: The best firms in 2025 will understand their own experts, their evolving customers and their own role in improving people for the future. They will perform 5x better than their peers and stack all the people odds in their favour.

2.????? AI & Digital Assets will Come Of Age

I’ve seen it. And I’ve seen properly smart sceptics rethink and change their mind.

• Today’s AI can build new firms, technically and operationally, 10x faster than last quarter’s AI and 50x faster than pre-AI.
• Today’s Digital Assets can already settle any securities in T+0, real-time.

So, in 2025, these technologies will progress from the PoC, PoV & MPV to the WTF, the OMG and the JFDI. A new breed of tech-powered WAM firms with regulation-challenging operating models will create a parallel offering for clients. Probably younger clients, more tech-savvy, but the best tech is practically invisible so don’t rule out great new offerings for the Silver Surfers or the Luddites. Some good old custodians that I know and trust are predicting 10% of the market will comprise of digital assets by 2030.

Prediction 2: In 2025, watch some new offerings start to take hold of that market share. Let’s go with 2.5% for now. ??

3.????? Old op models will get Quicker, Faster & Cheaper or They Will Die

I'm not going to take this defeatist attitude and listen to all this crap any more from all these people who have nothing except doomsday to predict. - Carroll Shelby

Whilst I love new tech as much as the next futurist, I don’t, for one second, believe that the current market models will step aside gracefully, or that they universally need to. Operational efficiency, effectiveness and familiarity (to regulators & customers alike) is key. The incumbents will not die quickly, but many will get very very tired and they will all have to decide whether to materially improve productivity or let someone else try instead. But guess what? With most WAM firms operating at 35+% operating margins, there’s a lot of fat to train up and turn to muscle.

Predicition 3: In 2025, firms will get very smart and focus on Productivity, with detailed measurement and with canny short/medium-term solutions. The horses will get even faster, just don’t remind them of the (Shelby/electric/flying) cars next door.

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My last point is not a prediction, it’s a mantra really: audere est facere

In 2025, the winners will be those that Dare. And those that Do. Have fun out there!

The best way to predict the future is to create it – Peter Drucker