Top 6 Asset Management Trends Shaping the Industry in 2025 and Beyond

The asset management industry is anything but static, and industry professionals must continuously deal with four key dynamics: changing investors’ expectations, the need for operational efficiency, changing macroeconomic realities, and regulatory updates. 

For example, the rise of passive investing (index funds and ETFs) in recent years meant investors began to require that asset managers justify their fees (changing investors’ expectations), as Acuity Knowledge Partners, a research firm focusing on financial institutions, has reported. Not surprisingly, this is a key subject in the Future of Asset Management Europe conference that the Financial Times is organising.  

This led to attempts to cut costs (operational efficiency) or even review operating models to stay competitive in a lower fee regime, according to Broadridge Financial Solutions, a financial technology company. 

Also, recent changes in trade policy in the US (changing macroeconomic realities) have led many asset managers to reconsider their risk and portfolio management strategies. 

Finally, recent clampdown on greenwashing in the US and Europe has increased the reporting requirements of asset managers, according to Acuity Knowledge Partners. 

The future of asset management will revolve around dealing with the current manifestations of these four key dynamics so that asset managers can keep delivering value for all stakeholders. 

In this article, we will consider six asset management trends that have developed (and are still developing) in this quest for greater value delivery.   

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1. Growing use of AI in asset management

Artificial intelligence has become so popular in today’s world that even someone living in the backwoods must have caught a whisper of it. 

Almost every industry is awash with discussions of how AI will impact its operations, and the asset management industry has not been left behind. 

AI is positioned to solve two of the key issues we highlighted above: changing investors’ expectations and operational efficiency. 

“Asset managers have a pressing need to leverage technologies like automation, artificial intelligence (AI), and analytics— not only to realise cost savings, but also for product development, alpha generation, and delivering a differentiated client experience,” according to Accenture, the global management consulting firm.

Let’s focus on cost savings a bit. 

“Amidst ongoing pricing pressures and a shifting market landscape, the issue of costs has magnified,” according to BCG, the global management consulting firm. 

In response, they advocated a zero-based approach to cost management. “This approach entails reexamining all costs and may lead to such changes as outsourcing non core functions, automating processes with generative AI (GenAI), and avoiding dual-run costs, especially in headcount.”

We see from this that GenAI will continue to be of huge importance as asset managers seek to reduce costs in response to ongoing pressures on fees. 

Beyond concerns about costs, AI has been emerging as a powerful tool in both the front office and the back office. It is helping to improve client engagement, streamline workflows, automate customised reporting, provide real-time insights from data, navigate evolving regulatory requirements, and support investment reporting, among others. 

AI is also becoming crucial in meeting customers’ expectations. BCG mentions that investment managers are using AI to analyse market trends, extract insights from large data sets, and optimise investment strategies. Said differently, AI is contributing to the search for alpha. 

It is no wonder, then, that about 95% of asset managers surveyed by Accenture believe that technology, data, and digital capabilities will be key differentiators in 2025, while 72% do not consider themselves leading firms in the adoption of technological advancements like AI (which means there is still room for improved adoption).

Talking about improved adoption, the AI in asset management market is expected to grow by a 24% CAGR between 2025 and 2034 to become valued at $21.7 billion from $3.4 billion in 2024, according to Global Market Insights, a market research company.  

AI in Asset Management Market

Source: Global Market Insights

This forecast is consistent with a survey conducted by BNY Corporation, a global financial services company. As shown below, 56% of those surveyed plan to further develop capabilities in AI over the next three years: 

Asset managers and owners planning to further develop capabilities in AI, predictive analytics, and cloud computing over the next three years.

Source: BNY Corporation

“Reliance on data and analytics was identified as the top trend in asset management over the next 3‑5 years by both asset managers and asset owners,” they noted. They feel the pressure to seize opportunities being created by big data and the technology that can be used to analyse it, including cloud computing, artificial intelligence (AI), and machine learning (ML).”

2. Private markets will become more important

Both the search for alpha (given active managers’ failure to beat their benchmarks) and the risk-reducing benefits of diversification have led asset management firms to fix their attention on unlisted securities in private markets. 

For example, after two years of decline, global private equity deal-making increased by 14% to $2 trillion in 2024, its third most-active year by deal value, according to a survey by McKinsey and Co, a global management consulting firm. 

Private Equity Deal Value, 2015-2024

Source: McKinsey and Co.

This trend will continue and deepen in 2025 and the coming years. 

“Investors want reliable outcomes at the best price,” according to Oliver Wyman, a global management consulting firm. “Delivering those results belongs solely to neither public assets nor private assets — each has a role to play. Asset managers will blend listed and unlisted securities — with credit products first in line — to build better outcomes, with higher risk-adjusted yields, improved liquidity terms, and attractive fee levels.”

About 74% of asset managers and 62% of asset owners expect growth in private equity activity over the next three years, according to the BNY Corporation survey. Similarly, 68% of asset owners and 33% of asset managers expect increased allocations to infrastructure, while 26% of asset owners and 42% of asset managers plan to grow allocations to private credit. 

A more interesting data point is that only 4% of asset managers believe that standard investment products alone will be sufficient to meet the needs of their institutional investor clientele, according to Accenture.  

Thus, the quest for better returns (with private markets producing double-digit annual returns) and the need to diversify (two pursuits vital for meeting changing investors’ expectations) will drive further interest in the private markets. Changing macroeconomic conditions provide another motivation, as noted by Acuity Knowledge Partner: “Swings in asset prices and interest rates have compelled asset managers to constantly adjust their strategies, such as increased investment in private markets, to provide superior returns.”

Accenture even believes that greater adoption of blockchain technology will lead to the democratisation of alternative asset classes as fund managers welcome new investments from retail investors interested in them.  

BCG agrees. They note that while alternative investments (private equity, real estate, infrastructure, hedge funds, commodities, cryptocurrencies, etc.) are only 25% of the global assets under management (AUM), they provide more than half of global revenues. Asset management firms that can find a profitable way to offer them to retail investors can gain an edge in the market. 

3. Interest in value-based investing continues

ESG-based investing has been around for a while, and current signs show it will remain a significant part of the future of asset management.

“Over 55% of respondents ranked full integration of ESG criteria as one of the top 3 trends in the asset management industry over the next 3‑5 years,” according to BNY Corporation. “When asked about expectations regarding their organisations’ offerings over the next 1‑2 years, the highest proportion of respondents (87%) anticipated increasing ESG strategies in general.”

This is consistent with the survey by Accenture, which shows that 79% of asset managers expect purpose investing to grow over the next five years.  

The ESG investing market was valued at $29.77 trillion at the end of 2024 by Cervicon Consulting, a market research firm. They expect the market to grow to $127.03 trillion by 2034 at a CAGR of 15.96%. 

ESG Investing Market Size, 2024 to 2034

Source: Cervicon Consulting

This growing focus on ESG is part of asset managers’ response to the changing demands of investors. “Many consumers now want at least part of their portfolio invested in companies whose purpose is actively centred on promoting environmental, social and corporate governance (ESG) goals— the central factors in measuring the sustainability and societal impact of an investment,” noted Accenture. 

Interestingly, BNY Corporation notes that the interest in sustainability extends beyond ESG to also include green bonds. Over 60% of asset owners and 52% of asset managers expect increased allocations to these bonds over the next one to two years. 

Similarly, the interest is also extending to private markets. “Valuation of companies are dependent on their ESG ratings to some extent,” highlighted BNY Corporation. “In private markets, ESG incorporation has become vital to ensure that the valuations will be strong during exits. Full integration of ESG criteria will become more important over time.”

Another interesting factor is that some asset managers are reporting that ESG approaches are outperforming traditional ones, as noted by Accenture. 

Given this variety of factors, asset management firms can expect ESG investing to become even more important going forward. “Full integration of ESG criteria will become more important over time,” according to BNY Corporation. 

However, there is a qualification required regarding the role of ESG investing in the future of asset management. “Despite all regions potentially benefiting from a strong ESG space, the next few years might see just a selection of countries becoming bastions of the sector,” according to Fintech Global, a company providing fintech insights.

They noted that political resistance and regulatory pushback are slowing down adoption in the US even as Europe continues to embrace various ESG frameworks despite the regulatory complexity involved.  The situation is also divisive in Asia – Japan and Singapore are embracing adoption, while others are hesitant.

Regarding the US, anti-ESG rhetoric and concerns about greenwashing are two of the most popular challenges, according to the US Sustainable Investment Forum (USSIF), a membership association promoting sustainable and impact investing. 

Looking beyond the US, there are five reasons why investors across the globe have doubts about ESG, according to the University College of Estate Management: 

• Greenwashing
• It’s difficult to satisfy multiple stakeholders
• No standardised measurement for ESG success
• No meaningful impact on society
• No convincing evidence that it delivers better returns

Yet, instead of ESG investing going extinct, all of these concerns will more likely result in discussions around how to improve transparency, impact, simplicity, and education. 

“To truly reenergize ESG, wealth management firms and technology providers must close these gaps—by simplifying compliance, expanding investment options, and providing clear, standardized data. Only then can ESG investing become seamless, trusted, and scalable,” according to Ralf Heim, founder of Fincite, a wealth technology company, quoted by Fintech Global. 

Also, when we remove the political factors, it becomes evident that “the recent setbacks for ESG investing are small backflows, but the much more significant wave of overall ESG investing still exists,” according to The Corporate Governance Institute, a corporate governance education platform.

However, in the interim, we will have to cope with geographical diversity in ESG adoption and enthusiasm.

 4. Greater focus on customised investment solutions

Increased demand for personalised services is one of the structural challenges of asset management companies, according to Acuity Knowledge Partners. 

Asset and wealth managers have been responding well to this change in investors’ expectations, according to BNY Corporation. About 90% of respondents provide customised client products such as direct indexing. Similarly, almost 50% of them plan to increase such offerings in the next one to two years.  

Similarly, 80% of those surveyed by Accenture affirm that “customisation for the masses” will be a key driver for growth over the next five years. They believe that personalisation is a better alternative to low-cost beta investing in a world where alpha is proving more difficult to obtain. Also, personalisation improves the client’s experience and contributes to client centricity. 

Customisation can occur at the level of product/service offerings and customer communication.

Regarding the former, asset managers are looking beyond the active-passive divide (mutual funds vs ETFs or actively managed ETFs vs passively managed ETFs) to create investment solutions attuned to the expectations and risk profile of investors (short-term vs long-term investors, for example). “To personalise an investment for a client,  an asset manager should first understand the client’s reasons for being in the market and then recommend the right investment at the right time,” according to Accenture. 

Personalised communications involve sending articles, reports, emails, and other forms of content that are relevant to the customer at every point. 

This is one area where AI is expected to play a huge part. “The drive towards personalisation requires significant investment in data collection and data analysis, using AI tools to understand client preferences and predict future requirements,” according to Acuity Knowledge Partners. 

Also, “nuances in data, reporting, regulatory and regional requirements are all factors that could contribute to the preference of a customised solution over a commingled fund,” according to BNY Corporation.

5. Digital transformation will remain on the agenda

The search for operational efficiency will make digital transformation an important part of the future of asset management. This is another key point that the Future of Asset Management Europe is set to focus on. 

We have identified the growing importance of AI, but this is just one part of the pie, even if it’s the biggest. Cloud computing, predictive analytics, data analytics, machine learning, and blockchain technology are all parts of the digital transformation pie designed to improve decision making, risk management, and operational efficiency, according to BNY Corporation.

In pursuit of this digital transformation, asset managers have not shied away from outsourcing some of their non-core functions or using solutions from other vendors. 

“Asset managers are increasingly beholden to technology and service providers that they have outsourced large portions of non-core functions to, as well as specialised vendors providing access to critical data and processing power required to enhance investment processes and distribution effectiveness,” according to Oliver Wyman. 

BNY Corporation also noticed that asset managers are looking to hire specialist staff while asset owners are pursuing several partnerships with financial service providers to improve the asset management technology stack. 

Asset managers and owners are also recognising the importance of fintech trends for the future of asset management. About 95% of them ranked startups or fintechs as one of the top three disruptors in the sector, according to BNY Corporation. 

However, instead of always competing or changing their business model, service providers (and intermediaries) prefer to form alliances with fintechs or even onboard their new technologies in-house. 

Asset managers and owners are also taking this route, with 39% of asset managers planning to partner with a fintech company to accelerate digital innovation, 22% of asset managers preparing to acquire a fintech company, and 61% of asset owners co-creating new products or services with them. 

6. Regulatory adaptation remains key

Many of these asset management trends present fresh regulatory challenges that asset managers need to navigate going forward. 

The most obvious is AI. “Regulatory oversight is a crucial factor as well, with evolving frameworks such as the EU AI Act shaping the trajectory of AI adoption,” noted BCG. This requires that asset managers become familiar with evolving frameworks and ensure adoption aligns with them. 

BCG also highlighted that fund managers who want to democratise private assets to retail investors will need to contend with the rigid regulatory requirements associated with the retail market. 

ESG adoption is another area where regulatory concerns are rife. “A lack of standardisation throughout ESG investment and reporting processes is raising investor and regulatory concerns about the real impact of these products across the ESG spectrum,” according to BNY Corporation. 

There are also new regulations regarding greenwashing and alternative asset classes in Asia and Europe, as Acuity Knowledge Partners has reported. All of these led them to conclude that “regulatory pressure is bound to increase.”

The future of asset management will involve dealing with this regulatory pressure. “Asset managers are expected to keep systems ready and even embed new requirements to avoid regulatory risks and penalties for non-compliance,” they noted. “In the coming years, we expect heavy investment in hiring, upgrading technology/infrastructure, and adopting AI in the areas of monitoring, data management, and risk. We expect asset managers to increasingly use KPOs to provide specialised skill sets for oversight and review in a cost-effective manner.”

This point about how asset management technology can improve regulatory compliance has already been raised by BCG: “Compliance teams use AI to navigate evolving regulatory requirements more efficiently.” 

As regulatory pressure increases, then, we can expect the usage of AI to surge. 

Preparing for the future of asset management

What can you do as an asset manager to remain competitive amidst the industry changes happening (and projected to happen)? 

Below are six things to consider: 

• 1) Start small with AI: Given the multiple use cases of AI, you may be unsure where to start. 

However, getting started is the most important thing. You can start with using AI to automate repetitive tasks before moving to extracting insights from large data sets, creating investment reports, or enhancing regulatory compliance. 

You can also focus on where the need is the greatest or where you can quickly gain some traction, given your current technological capacity.  

• 2) Continue investing carefully and smartly in private markets: If you are not already exploring private markets, you are missing out. As we have seen, they provide higher returns and portfolio diversification. 

Yet, private markets have their problems, especially illiquidity and the lack of adequate regulations. Therefore, your private markets strategy must be sophisticated enough to take advantage of the benefits and manage the inherent risks. 

• 3) Pay attention to value-based investing: Irrespective of whether it provides higher long-term returns or not, interest in value-based investing is not projected to fade. 

Whether you are investing in the public or private markets, concerns about sustainability and impact should be part of the relevant factors that drive your decisions. 

Also, you should do your best to avoid companies engaged in greenwashing by carefully applying updated ESG criteria.   

• 4) Give investors what they want: While there is nothing wrong with you having a stated approach to asset management, the unique needs of each investor must always be an important factor in designing investment products and services. 

The recent growth of actively managed ETFs and direct indexing shows that asset managers are recognising that the needs of investors must transcend mere ideological commitments. 

Use AI and other technological advancements to understand the uniqueness of each investor client and provide solutions that will help them achieve their goals. 

• 5) Digital transformation can come from anywhere: As we have seen, financial services providers have been embracing different approaches to digital transformation: in-house, outsourcing, acquisition, and partnerships. 

Each path has its pros and cons. Like AI, what matters most is getting started. Choose the path that best aligns with your current capacity and organisation’s culture and keep growing from there.   

• 6) Regulatory compliance is everything: Asset management is a business of trust. This is why no amount spent on regulatory compliance is a waste. However, operational efficiency demands that you get value for money. 

Thus, one of the focal points of your digital transformation should be how technology can aid regulatory compliance, such that you can significantly reduce the cost of compliance.   

One way to keep abreast of asset management trends is to have regular conversations with other asset managers and asset owners.

This is what we provide at the cio investment club: an opportunity to exchange ideas with other asset managers across the globe so you can understand the best practices in the industry and remain competitive in an ever-changing landscape. 

We also organise exclusive roundtables and investment breakfasts where you can have face-to-face interactions with other finance and investment professionals. 

Do you want to be part of an investment community where you can discuss trends shaping the asset management industry and how to adapt to them? Register today to become a part of the cio investment club. 

Takeaways

• Artificial intelligence is helping firms cut costs, enhance client engagement, and meet evolving investor expectations, making it a critical tool for competitive advantage and future growth.
• Asset managers are increasing allocations to private equity, credit, and infrastructure in response to investor demand for higher returns, diversification, and resilience in a volatile macroeconomic and geopolitical environment.
• There’s a rising emphasis on value-based investing and personalised investment solutions, with ESG integration and tailored client experiences emerging as strategic priorities.
• Asset managers must invest in digital tools, partnerships with fintechs, and compliance technologies to stay efficient and adapt to increasingly complex regulatory demands.

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