Looking ahead to 2025, the wealth management industry stands on the brink of a transformative era. The integration of artificial intelligence (AI) is set to redefine how firms operate, engage with clients, and drive growth. For growth leaders and chief marketing officers at large RIAs understanding and leveraging these changes will likely be crucial.
Here are my key predictions for 2025 and what they mean for the industry.
1. The adoption curve for AI technology in wealth management will be steep, with a rapid surge as firms race to catch up and leverage new technology.
I don’t believe the adoption of AI in wealth management is following the typical bell-shaped curve. Instead, anticipate it will resemble a tidal wave, with a rapid surge as firms race to catch up and leverage new technology. Unlike other industries that have gradually integrated AI, wealth management is poised for a swift and significant transformation.
A Tidal Wave of Adoption
In most industries, technology adoption follows a predictable pattern: innovators and early adopters lead the way, followed by the early majority, late majority, and laggards. However, in wealth management, most firms are concentrated in the late majority. This means that once the benefits of AI become undeniable, I think there will be a rush to implement these technologies across the board.
Playing Catch-Up
While industries like finance, healthcare, and retail have already embraced AI to enhance efficiency and customer experience, I believe wealth management firms are only beginning to explore its potential. This delay presents both a challenge and an opportunity. Firms that move quickly to adopt AI can gain a competitive edge, while those that hesitate may find themselves struggling to keep up.
Key Areas of AI Adoption
In 2025, I see AI technology most widely adopted in administrative tasks and advisor prospecting. AI-powered tools will likely streamline note-taking, automate routine tasks, and provide advisors with actionable insights. Specifically, AI can excel in identifying the Next Best Action (NBA) for advisors, helping them to better engage and serve their clients as well as grow their business.
2. The fastest-growing firms will find a way to win with younger generations, specifically HENRYs (High Earners, Not Rich Yet), positioning themselves to capture future wealth.
The fastest-growing firms will find ways to win over younger generations, particularly High Earners, Not Rich Yet (HENRYs). I anticipate these firms will position themselves to capture future wealth by focusing on segments that have not been widely targeted historically.
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Conviction on Growth
Successful firms will have a clear conviction on growth in specific segments. They will likely develop tailored strategies to attract and retain HENRYs, offering services and advice that meet their unique needs and preferences. This targeted approach can differentiate them from competitors and position them for sustained growth.
Contrary to the Upmarket Strategy
While many firms are moving upmarket to capture high-net-worth investors through expanded capabilities such as estate and tax planning, the fastest growing firms are the least reliant on HNW and UHNW prospects. Based on our conversations throughout the year with RIA clients and prospects, my observation is that they're finding ways to successfully pursue leads with $500,000 or less in investable assets and are making use of these leads at a higher rate than those that are growing less rapidly.
For illustrative purposes only
The ability of rapidly growing firms to take on younger and lower investable asset leads indicates that they’re investing in infrastructure to determine which leads in those segments are most likely to convert to clients and developing service models that can profitably provide value for those segments. This allows these rapidly growing firms to benefit from a higher volume and wider variety of digitally generated leads.
3. Firms that prioritize their niche specialization and accurately match leads with the right advisors can transform client acquisition in 2025.
Firms that lean into their niche and focus more on who they serve well can enhance efficiency and improve client satisfaction.
Lead Routing and Matching
The idea of “no bad leads, just mismatched leads” will become a guiding principle. By accurately matching leads with advisors who specialize in their specific needs, firms can improve conversion rates and client satisfaction. Effective lead routing can help ensure that clients are paired with advisors who have the expertise and experience to address their unique financial situations.
Increased Efficiency through Niching
Specializing in specific niches allows firms to operate more efficiently. Advisors can develop deep expertise in their chosen areas, providing more value to clients and differentiating themselves from generalist competitors. This focus on niche markets can drive growth and improve client outcomes.
Insights from Industry Experts
Industry experts like Kristen Luke have discussed the importance of niche specialization at length. Her insights highlight the benefits of this approach and provide valuable guidance for firms looking to implement it. You can catch her explaining how you niche in episode four of Grow Organically.
4. Growth through cross-sell partnerships will increase (accounting firms, insurance firms, etc.)
There will be an increase in the number of firms turning to cross-sell partnerships for growth. Collaborations with accounting firms, insurance firms, and other complementary businesses will become more common.
Leveraging Cross-Sell Partnerships
Cross-sell partnerships allow firms to offer a broader range of services to their clients, enhancing value and deepening relationships. By partnering with complementary businesses, wealth management firms can provide holistic financial solutions that meet all of their clients’ needs.
Competition and Cost of M&A
The increasing competition and cost of mergers and acquisitions (M&A) are driving firms to explore alternative growth strategies. Cross-sell partnerships offer a cost-effective way to expand services and grow the client base without the significant investment required for M&A.
5. There will be a shift to performance marketing and away from general brand marketing activities
In a race for growth, marketing teams will laser focus on performance marketing, moving away from scattered brand marketing activities. This shift will be driven by the need to measure efficiency and optimize marketing investments.
Measuring Efficiency by Channel and Campaign
Performance marketing allows firms to measure the efficiency of their marketing efforts by channel and campaign. By tracking key metrics, firms can identify which channels and campaigns are delivering the best results and allocate resources accordingly.
Segmenting Clients for Better Insights
Segmenting clients by investable assets (IA), income, interests, and other factors can provide valuable insights into which sources are generating the best leads. This data-driven approach will enable firms to refine their marketing strategies and focus on the most effective channels.
Influencing Marketing Investment
The insights gained from performance marketing will likely influence marketing investment decisions. Firms will prioritize channels and campaigns that deliver the highest return on investment, ensuring that marketing efforts are aligned with business goals and growth objectives. To do this effectively, marketing teams will need to develop rigorous measurement systems and KPI’s (key performance indicator). Metrics like cost per qualified lead are helpful for understanding top-of-funnel efficiency. But advanced teams will also examine full funnel metrics like cost per thousand dollars of AUM acquired. This KPI was brought to my attention by Jen Abound-Smith SVP of Marketing Strategy at Carson when she appeared on the Grow Organically Podcast. This can help teams gauge efficacy of one channel vs. another and overall effectiveness. In addition, firms should also understand the life-time-value of a typical customer so they can create a benchmark for how much they are willing to spend to acquire new leads.
For executives at large RIAs, I encourage you to embrace these trends and the technology at our fingertips. Adopting AI can define the future of our industry, separating firms into two distinct groups: firms proactively leveraging innovation to drive growth and firms scrambling to keep up with the evolving industry standard.
We seek to help advisors accelerate organic growth and navigate these changes. We hope you’ll get in touch if you seek to do the same.
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