The year is 2025. Baby Boomers are passing the torch – and trillions of dollars – to their millennial and Gen Z offspring. For the wealth management industry, this isn’t just a generational shift; it’s a tectonic plate collision. And many firms, it seems, aren’t ready for the tremors.
A recent Forrester report paints a stark picture: the digital tools simply aren’t there to handle the massive wealth transfer smoothly. Think clunky, paper-heavy processes in an age of instant transactions. The report predicts at least half of North American investment firms will lose assets in this “Great Wealth Transfer.” This isn’t just a matter of a few million dollars; we’re talking about a potential $84 trillion shift in the US alone over the next two decades.
Younger investors, the report highlights, are digitally savvy, research-driven, and focused on impact investing. They’re not going to stick around for outdated systems. Customer experience scores are already tanking, and firms clinging to old ways of segmenting clients based solely on assets are in for a rude awakening. The firms that will thrive are those that blend human interaction with seamless digital experiences, catering to the preferences of this new generation of investors.
But the challenges don’t end there. The report also points to the rise of AI in wealth management, a technology rapidly moving from “emerging” to “mainstream.” Startups are leading the charge, developing AI-driven advisory strategies that offer personalized solutions and natural language explanations. Established firms, recognizing the potential for cost savings and competitive advantage, are likely to go on an acquisition spree, snapping up these innovative startups.
Another key trend? The explosive growth of tokenized assets. The report forecasts a doubling of major banks issuing these blockchain-based assets, with APAC, the Middle East, and Africa leading the way. HSBC’s successful launch of a digital gold token in Hong Kong and MUFG Trust Bank’s JPY 130 billion in tokenized real estate in Japan show the potential. However, to succeed, banks need to develop the right teams, processes, and technologies—and keep a close eye on evolving global regulations.
Finally, the report sounds a warning about wealthtech vendors. Private equity’s involvement has led to consolidation and significant leadership changes, sometimes at the expense of platform improvements. This could lead to customer frustration and a mass exodus of clients from vendors prioritizing profits over platform enhancements. Investment firms need to be vigilant, ensuring their vendors are delivering on promises and prioritizing customer success.
In short, 2025 will be a pivotal year for the wealth management industry. Those who adapt to the changing landscape—embracing digital tools, AI, and tokenization while prioritizing customer experience—will thrive. Those who don’t risk being left behind in the wake of the Great Wealth Transfer.
You may read the full report on this link Predictions 2025: Investing And Wealth Management .