3 Trends Expected to Give Advisors Hangovers in 2025

Almost time to pop the bubbly, but advisors won’t want to go too hard on the fizzy stuff just yet. The wealth management industry may be in for a rocky and confusing transition into 2025, according to Forrester. 

Researchers pointed to three major areas of concern that may lead to headaches for wealth managers next year:

• Tokenization will add another layer of complexity to investment products. 
• Private equity’s tightening grip on wealthtech will continue to frustrate advisors. 
• The Great Wealth Transfer will bring younger clients into the fold, but advisors will need to hang on to those assets.

“In other words, 2025 will feel like a centuries-old industry has just hit its teens,” according to the report.

Out of the House

At least half of North American firms are expected to lose assets during the $84 trillion wealth transfer that’s already underway. Millennials and Gen Zers tend to be more tech savvy than their Baby Boomer parents. They also tend to conduct their own financial research, and are more interested in impact investing, the report said. As a result, these younger investors handle plenty of their assets through other channels. 

Plus, many clients’ kids don’t intend to use their parents’ advisors going forward. Paper-heavy processes to transfer funds will likely discourage younger investors, who are increasingly seeking out offices that seamlessly integrate human and digital touchpoints.

Hop on the Token Train

Alongside demand for better tech, Forrester predicts the number of banks issuing tokenized assets on blockchain will double in 2025. Firms in the Middle East, Africa, and Asia-Pacific are expected to lead the charge. 

Banks are already digitizing real-world assets: HSBC launched a digital gold token in Hong Kong and MUFG Trust Bank tokenized over $900 million in real estate in Japan. These moves will likely encourage other banks to follow suit, Forrester said.

A Private Matter

While private equity can benefit advisors, its growing role in wealthtech is causing a rift among financial planners. Case in point: PE-owned InvestCloud raised its service fees 5% earlier this year despite complaints about slow platform enhancements, the report found. If PE continues to prioritize revenue over platform improvements and customer support, wealth managers may seek alternatives, Forrester warned.