Seven keys to understanding the future of investment
8 JAN, 2025
The asset management and financial advisory industry is undergoing a transformation. Technological advances, different investor expectations, and a regulatory environment that is adapting to the latest innovations are driving this redesign. According to the report "The future of investment 2024/25" by Franklin Templeton, these changes are not isolated, but interdependent, and are marked by a convergence of factors pushing towards a more efficient, accessible, and personalized ecosystem.
The asset manager has interviewed about a hundred global leaders in the financial sector, responsible for managing assets worth a combined $50.8 trillion. These confidential and in-depth conversations highlighted the challenges and opportunities facing the sector in the coming decades. This analysis, based on global trends, offers a comprehensive view of how the industry can adapt and thrive in the coming years.
From this survey, the following 7 keys have been extracted that will mark the future of the asset management industry and advisory based on the development of technology, new investment models, portfolio personalization, and regulatory requirements.
1. Blockchain and transaction speed
“Speed and accuracy are essential for modern investment,” highlights Sandy Kaul, Head of Franklin Innovation Research, Strategies and Technologies.
Franklin Templeton, pointing out that the advancement of financial platforms based on blockchain and smart contracts is driving a radical change in settlement times and operational costs. For example, a 80% of respondents stated that the adoption of these technologies will reduce transaction times from days to minutes in the next five years. These capabilities also open the door to new diversification opportunities, by allowing investors to access global markets more efficiently and transparently. The evolution towards an infrastructure that supports real-time settlements also represents a fundamental change in financial architecture.
2. Portfolio optimization: pillar for tax efficiency
ETFs have evolved from passive tools to strategic wealth management vehicles. The ability of ETFs to minimize tax impact and increase liquidity is key for institutional and retail investors. By 2024, the use of active ETFs has grown by 25%, establishing itself as an effective bridge towards more efficient and diversified management. In addition, advances in data technology have improved managers' ability to analyze and adjust strategies in real time, using ETFs as key tools in portfolio customization.
3. ETF-ization and the future of assets
The “ETF-ization” of assets marks the beginning of a transition towards a more digital and accessible financial ecosystem. The use of blockchain to back ETPs and tokenized ETFs is creating new opportunities to automate key processes through smart contracts. These innovations are enabling the tokenization of real-world assets, such as real estate and commodities, improving transparency and expanding access to previously more exclusive markets. By 2024, more than 40% of institutional investors explored the use of ETP as a primary tool for alternative investment vehicles. The convergence of blockchain technology and ETFs not only accelerates operational efficiency, but also opens up new possibilities for managing risks and capturing opportunities in emerging markets.
4. The new demographic profile of investors
The profile of investors is changing rapidly. Millennials, who will represent 55% of people in their highest earning years by 2035, are looking for interactive and flexible platforms. "Technology allows for the creation of customized solutions that cater to both the accumulation needs of young people and the financial sustainability of senior profiles," highlights Sandy Kaul. In a recent study, 72% of younger investors valued social networks and communities as key elements in building their investment strategy. Additionally, institutions are adopting more segmented approaches, using advanced data analysis to anticipate the specific needs of each generation and design tailor-made products.
5. APIs: essential for open advisory
Inspired by the concept of open banking, open advisory allows financial institutions to integrate third-party services into their platforms through APIs. APIs are the bridge to a truly interconnected ecosystem, facilitating interoperability between services and offering customers a smoother experience. By 2024, 60% of leading institutions implemented APIs to consolidate the customer experience and improve operational efficiency. This model promotes innovation by allowing financial advisors to combine internal solutions with advanced external technologies, creating a more robust ecosystem adaptable to the changing demands of the market.
6. Robo-treasurers and real-time advice
The digitization of financial advice is changing how investors make decisions. Tools like robo-treasurers not only optimize cash flow but also democratize access to advanced financial strategies. These solutions allow investors to adjust their decisions in real time, leveraging up-to-date data and analysis. By 2024, it was projected that more than 50% of financial institutions adopted automated advisory solutions as part of their core offering. In addition, the integration of artificial intelligence is raising the level of advice personalization, offering precise recommendations based on market behavior and individual preferences.
7. Exclusive communities for high net worth investors
For investors with large assets, communities are emerging as a crucial factor in asset management. "The power of networks lies in collaboration and knowledge sharing," says Kaul. In 2024, more than 30% of institutions created educational and interactive platforms for investors, allowing them to share strategies and maximize the impact of their investments. These communities also promote access to co-investments and new liquidity options, transforming the traditional approach to wealth management. At the same time, technological advances are enabling the creation of ecosystems where families and investor groups can manage their assets more integrated and efficiently, leveraging digital tools to strengthen their strategic positions.
Entities that adapt quickly to these dynamics will be better positioned to lead the market and redefine the future of investment.
