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Transforming Wealth Management: A Look into AI and Next-Gen Investors

The landscape of asset and wealth management is undergoing a significant transformation, driven by the increasing adoption of artificial intelligence (AI) and the changing preferences of a new generation of investors. This evolution is highlighted by the findings from the 2025 Money Management Institute (MMI) and Broadridge Financial Solutions survey, which reveals how firms are adapting to meet the demands of both clients and the market.

In today’s dynamic environment, AI is emerging as a key strategic priority for wealth management firms. The survey report notes that a clear majority—95%—of financial firms believe AI will positively impact the industry, emphasizing its role not just in enhancing operational efficiency but also in boosting client engagement. AI applications are particularly valued for improving productivity and streamlining communications, research, marketing efforts, and data synthesis, with a significant portion of firms actively integrating these technologies into their operations.

The Drive for Product Innovation

As investor preferences shift, wealth management firms are noticing a progressive move towards more flexible product offerings. According to survey responses, active exchange-traded funds (ETFs), private markets, and separately managed accounts are expected to be the frontrunners in asset growth over the next two years. This trend indicates a growing demand for diversified investment options that cater to the unique needs of investors seeking customization and transparency beyond traditional mutual funds.

Tim Kresl, Managing Principal of Data Analytics at Broadridge, reflects on this challenge, stating that both advisors and investors are increasingly looking for customizable investment solutions. He emphasizes that while active ETFs and alternatives lead the change, it is the integration of technology and data analytics that enables firms to provide tailored solutions at scale. Firms are leveraging digital platforms to dive deep into investor behavior, identify product gaps, and rapidly adapt to market demands.

Interestingly, the optimism surrounding active ETFs varies between asset managers and wealth managers, with 78% of asset managers viewing them as a significant growth area, compared to only 48% of wealth managers. Furthermore, 57% of wealth managers believe private markets and alternative options have yet to reach their full potential, suggesting substantial opportunities for growth in this sector.

Addressing the Needs of Younger Investors

Importantly, the survey reveals that younger investors—who are increasingly becoming a focal point for wealth management firms—require different products and service approaches. Despite 87% of respondents agreeing on this need, only 30% of firms have made deliberate efforts to realign strategies towards effectively engaging this demographic. The key challenges identified include providing digital tools that meet their expectations, connecting through traditional channels, and fostering long-term loyalty.

The acknowledgment of these challenges is further echoed in firms' growth strategies, as nearly half anticipate increasing their workforce within the next two years. However, preferences for hiring vary, with wealth managers focused on product specialists and technology support while asset managers explore a wider range of roles.

Conclusion: Embracing Change and Innovation

In conclusion, the MMI-Broadridge survey sheds light on an industry in the midst of significant transition. As technology, particularly AI, reshapes client interactions and product offerings, the ability of firms to adapt and innovate will be critical for success. Emphasizing collaboration, personalized solutions, and responsiveness to the evolving market landscape will enable firms to strengthen their advisory relationships and meet the demands of the next generation of investors. The future of asset and wealth management is bright, provided that the industry embraces these changes with agility and foresight.