Wealth managers are expecting continued strong growth this year, with firms forecasting an average increase in assets under management (AUM) of 13.7 per cent, according to Natixis Investment Managers (IM).

Its wealth industry survey highlighted that wealth managers’ AUM rose by 20 per cent globally over the past five years, and many forecast this growth to continue.

However, analysts warned that delivering on these expectations will be challenging amid geopolitical change, economic uncertainty and rapid technological advancements.

Natixis IM’s survey of investment professionals found that 73 per cent felt optimistic about their market prospects in 2025, although ongoing volatility in the macroeconomic environment was “still very much front of mind”.

Their top economic concerns were new geopolitical conflicts (38 per cent), inflation (37 per cent), escalation of current wars (34 per cent), US-China relations (34 per cent), and the tech bubble (27 per cent).

Nearly three quarters (74 per cent) were worried that inflation would be reignited by Donald Trump’s policies.

Furthermore, 66 per cent expected only moderate interest rate cuts going forward in their home region.

Despite this, 68 per cent of respondents stated they would not adjust return assumptions for 2025, as wealth managers were putting strategies in place for their businesses, the market, and client portfolios.

While many were concerned about the potential impact of Trump’s presidency, they also saw opportunities, with 64 per cent believing the regulatory shifts proposed by his administration would spur the development of innovative investment products.

AI adoption

Following the rapid progress seen in generative AI models, 79 per cent of wealth managers said AI had the potential to accelerate earnings growth over the next 10 years.

In light of this, firms were seeking to harness the benefits of new technology in three key areas: tapping into the investment potential of AI, deploying AI to improve their internal investment process, and using AI to enhance business operations and client servicing.

Almost seven in 10 (69 per cent) felt AI would enhance the investing process by helping them uncover hidden opportunities, while 62 per cent said AI was becoming an essential tool for evaluating market risks.

More than half (58 per cent) believed that firms that do not plan to integrate AI will become obsolete.

The same proportion (58 per cent) have already implemented AI tools in their investment process, with wealth management firms in Germany (72 per cent), France (69 per cent), and Switzerland (64 per cent) being the earliest adopters.

Wealth managers also expect AI will impact the service side of their business, with 77 per cent stating AI will help meet their growth goal of integrating a wider array of services.

However, 52 per cent were concerned that AI was helping to make robo advice a ‘meaningful competitive threat’.

Private assets

Natixis IM noted that while technology may have the potential to reshape the industry, firms are facing the more immediate challenges of meeting client investment preferences and return expectations.

Global portfolios currently rely on a mix of 88 per cent public assets and 12 per cent private, but this spread was “likely to narrow” as the focus on private assets intensifies.

Almost half (48 per cent) felt meeting client demand for unlisted assets would be a critical factor in their growth plans.

While 26 per cent said a lack of access to private assets was a threat to their business, new product structures were helping to ease the pressure, with 66 per cent saying that retail-friendly private asset vehicles help enhance diversification.

Education was also highlighted as a challenge, as 42 per cent felt client understanding of liquidity could be a hurdle to incorporating private assets.

Overall, 92 per cent of respondents planned to increase (50 per cent) or maintain (42 per cent) their private credit offering, while 91 per cent expected to increase (50 per cent) or maintain (41 per cent) private equity investments on their platforms.

“Wealth managers face a wide range of challenges in 2025, educating their clients to the benefits of owning private investments, to finding the best ways to integrate AI into their investment and business processes,” commented Natixis IM head of global financial institutions, Cecile Mariani.

“However, despite potential roadblocks, wealth managers are confident that they can harness potential disruptors to unlock new opportunities and live up to the AUM growth goals they need to hit in 2025.”

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