In the following analysis, as well as three promising trends he sees shaping up for 2025 – AI, secondary market growth and hyper-personalisation – Trilliam Jeong, CEO of WealthBlock, also highlights three not-so-trendy outcomes that haven’t quite lived up to expectations.
Every year the once-staid investment management industry experiences trends in technology, markets, and services that are viewed by many as sure to change the next year’s ways of doing business. Here are three promising trends we see shaping up for 2025 — as well as three from the recent past that turned out to be not-so-trendy.
Trend 1: AI Will Transform All Areas of Investment Management
Artificial Intelligence (AI), like cloud computing a decade ago, is reshaping the way investment firms acquire, onboard, and manage clients. In 2025, we expect to see deeper integration of AI, providing real-time portfolio insights and automating client communications. Firms will increasingly rely on AI to enhance efficiency and reduce operational costs.
Throughout the past year, leading investment firms have been upgrading their platforms to automate tasks like investor onboarding, marketing, and reporting. This has reduced manual work and human errors. Today, with rapidly advancing technologies like AI and cloud-based solutions, firms are creating customized workflows. These solutions not only benefit clients but allow firms to quickly adjust to changing compliance needs.
Trend 2: Secondary market growth
The market for private stakes is likely to expand, offering clients liquidity options beyond traditional public market exits like IPOs. Investors may look to secondary markets for more flexible and immediate exposure to private equity investments. With IPOs remaining limited, secondary market transactions (where private equity stakes are bought and sold) are expected to grow. Both Limited and General Partnership secondaries provide liquidity without requiring a full exit, making them appealing in a market with constrained traditional exit options.
Trend 3: Hyper-personalisation through AI
The move toward hyper-personalisation will intensify, with AI tailoring investment firm client interactions to individual preferences. This is crucial for retaining clients in a competitive market. To ensure success in 2025, organisations should focus on adopting AI, strengthening their capabilities in secondary markets, and enhancing cybersecurity to protect client data.
Investors now expect quicker, more transparent communication. The state-of-the-art engagement and analytics tools available today have helped reduce delays, but demand for even faster response remains. We foresee further advances in 2025 and beyond.
But let us add a grain of salt. Beyond these positive trends it is interesting to take note of some oft-hyped predictions in investment technology over the recent past that have not exactly worked out as predicted:
- ESG Investing
ESG investing, which gained significant traction between 2019 and 2022, is now witnessing a notable decline. The percentage of new funds labeled as ESG has sharply decreased, and online searches for ESG investing have reverted to 2019 levels.
- Tokenization of Investments
Blockchain and tokenization initially promised a revolution in private investments. But adoption has been slow, primarily due to complex regulations. Firms are now being more selective about blockchain’s real value.
- Neobanks and Digital Wallets
Neobanks for private investors have struggled to compete with traditional banks’ digital offerings, leading to a shift in focus. Digital wallets also face security and compliance hurdles in private investment.
AI and Cloud take centre stage
Generative AI is clearly transforming private equity, with firms exploring AI tools for due diligence, portfolio optimization, and cost reduction in portfolio companies. While this area is rapidly growing, the high cost and expertise required could limit smaller firms from fully implementing AI solutions across the board.
In 2025, you can expect to see AI more deeply integrated, from real-time portfolio insights to automating investor communications. Firms will likely lean on AI to cut costs and improve response times, making operations smoother overall.
We see the continued investment in AI/Cloud as the overriding trend in 2025. As AI is deployed to help streamline everything from data analysis to investor communication, firms that focus on automating routine tasks will find their team can spend more time on high-level strategy.
