Some 60% of professional fund selectors at major U.S. wealth management firms say that high valuations and inflation are their main portfolio risk concerns in 2025, according to new survey findings from Natixis Investment Managers. These concerns topped a wide-ranging list of political, economic, technological and business challenges.
American investment professionals project average growth in assets under management of 17.6% this year, well above the global average of 13.7%. By comparison, survey respondents in Europe, excluding the United Kingdom, project 11.2% in growth. Those in Asia forecast 8.3%.
To achieve their asset growth targets in what could be a volatile period, 48% of U.S. wealth managers prioritize the need to move clients beyond cash, while 45% emphasize expanding service offerings.
“Following a year of contentious national elections in the U.S. and other major economies, wealth managers are moving to adapt to policy changes, economic uncertainty, technological advances and industry consolidation,” Dave Goodsell, executive director of the Natixis Center for Investor Insight, said in a statement.
“To secure both short-term asset growth and long-term prosperity, wealth managers recognize that broadening their service offerings and delivering more sophisticated investment options to clients will be critical.”
CoreData Research conducted the survey in December and January among 520 wealth industry professionals in 20 countries throughout North America, Latin America, the United Kingdom, continental Europe and Asia. The sample included 170 U.S. fund selectors at wealth management firms that collectively manage $17.5 trillion in assets.
Optimism Remains, Despite Inflation Fears
The survey found that 80% of U.S. wealth managers remain optimistic about 2025, but their concerns about inflation have resurfaced, driven by uncertainty around new U.S. policies.
Half of U.S. managers see inflation as the biggest economic threat, followed by 35% who cite geopolitical conflicts, 32% escalation of wars, 31% U.S.-China relations and 27% a tech bubble. Natixis IM noted that with CPI coming in 3% higher on a one-year basis in January, their concerns may have been well placed.
Despite these concerns, 58% of U.S. managers anticipate a soft landing for the economy, while 33% expect no landing.
Seventy-nine percent predicted a moderate interest rate-cut cycle: 54% expect interest rates to settle at 3.5% to 4.49%, 30% expect 2.5% to 3.49% and only 10% expect rates to exceed 4.5%. In response, 54% of wealth managers are recommending longer-duration investments.
Although two-thirds of U.S. wealth managers worry that the Trump administration’s policies could drive inflation, some of its policies elicit a sense of optimism. Eighty-one percent anticipate increased mergers and acquisitions activity, and 69% expect growth in domestic manufacturing.
In addition, 68% believe that tax cuts and spending boosts will fuel a market rally, while 67% foresee regulatory shifts leading to innovative investment products.
Expanding Investment Offerings
Despite their uncertainty about the new administration’s policies, 74% of U.S. wealth managers said they expect clients to be more willing to move out of cash. Forty-eight percent maintained that this would be an important factor in growing their business.
Although they are not making drastic allocation shifts, these wealth managers are looking to add their investment offerings.
Active ETFs: Half plan to introduce active ETFs within two years. Eighty-one percent said their ease of trading is a major improvement over mutual funds. About 40% each said these ETFs will primarily support expense management, core holdings in model portfolios and thematic investments.
Private assets: Wealth managers are increasing their recommended allocation to alternative investments, in particular to private assets, from 12.8% to 14.5% in 2025. Fifty-five percent said they intend to add private credit offerings, while 47% will introduce private equity options.
Three-quarters said they incorporate private market assets for diversification, although two-thirds cited liquidity concerns as a challenge.
Direct indexing: Nearly half of U.S. managers said they will introduce direct indexing within the next two years.
Thematic funds: Thirty-seven percent of managers aim to add thematic strategies:
- Artificial intelligence/robotics, 85%
- Cloud infrastructure, 57%
- Biotech/health care innovation, 46%
Driving Efficiency
Wealth managers are seeking to strengthen efficiency and client retention as they broaden their services, according to the survey.
Eighty-two percent of American asset managers reported that they use model portfolios, with most saying that these streamline investment processes. In addition, 85% said model portfolios provide a more consistent investing experience, 84% said they help clients stay invested during periods of uncertainty and 81% said they help manage risk.
Fifty-five percent of managers plan to allocate more client assets to model portfolios over the next year, including tax-managed strategies, tactical allocation models and high-net-worth models.
Forty-two percent of U.S. wealth managers in the survey saw AI as a key growth driver, with 70% believing it will integrate more services and 60% seeing potential for uncovering investment opportunities. At the same time, they also recognize that not implementing AI could leave them behind, with half saying that they fear competition from disruptive tech-driven entrants.
In terms of implementing AI, U.S. wealth managers are largely exploring or in the early phases of using it in these ways:
- Office productivity, 74%
- Investment research, 73%
- Risk analytics, 71%
- Client materials development, 65%
- Portfolio optimization, 63%
- Investment operations, 61%
- Customer service, 51%
- Client acquisition, 49%
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