How to Invest for Your Future: What to Expect in 2024 and Beyond

As a result of ongoing inflation, unpredictable stock markets, elevated interest rates, and heightened geopolitical tensions, wealth and asset managers had a dynamic and unpredictable 2023. Because of this uncertainty, 32% of wealth managers had a drop in income, and they will probably still be worried about the economy in 2024. 

Asset managers are no different; 41% of them expect revenue to fall that year as well.

As a result, 62% of investors are anxious about their financial future, a significant increase from 46% last year, reflecting the emotions of regular retail investors today. Consequently, these investors are looking to their advisors for further support and guidance, particularly in an election year when there is bound to be more short-term uncertainty.

Priorities for 2024 will center on meeting the changing demands of investors and maximizing assets under management. On the horizon, 80 % of wealth managers see technology to be an "essential" or "very important" facilitator of this expansion. When deciding where and how to invest, wealth managers should strategically use technology, bearing in mind the following trends and factors.

Wealth Management

Two parts of wealth management are managing one's finances and developing an investing plan. Retirement planning, handling inheritance taxes, and preparing estates are all part of financial management.

The ability to receive comprehensive financial advice and guidance from a single source is an important benefit of wealth management. Because of this, they will have a simpler time managing their money and paying their taxes throughout their lives.

1. AI-Powered Automated Financial Advisors

Robotic investing advisors, driven by artificial intelligence, are changing 

the game. These systems automate rebalancing, portfolio management, and investment guidance with the help of complex algorithms. Robotic investment advisers (robo-advisors) analyze massive volumes of data to provide clients with tailored investment suggestions, enhance risk management, and provide affordable wealth management.

By 2027, assets under management are projected to exhibit a compound annual growth rate (CAGR) of 14.0 %, according to the Statista analysis. 

The necessity for tailored financial guidance, the proliferation of digital natives, and the search for low-cost investment solutions are all factors propelling the robo-advisor industry forward.

Advantages of robo-advisors powered by AI:

• Minimal investment requirements and reduced costs make it more accessible;

• Personalized investment suggestions powered by ML algorithms; investment process optimization.

2. Digital Wealth Management Platforms

Many resources for personal financial planning are available to users of digital wealth management platforms. To offer customers a complete picture of their financial situation, these systems offer a wide range of functions such as account aggregation, budgeting, investment tracking, and goal-setting.

Advantages of digital wealth management systems:

• Smart algorithms and AI-driven financial analysis; User-friendly interfaces and tailored suggestions.

• More alternatives for managing money and investing in things that really matter.

• Less expensive and easier to use than more conventional wealth management services.

The most successful wealth management platforms in the modern day certainly confront a number of hurdles. 

Striking a balance between digital capabilities and human engagement is important, as is navigating changing business models, adapting to FinTech disruptors, meeting increased customer expectations, managing challenges to compress income and fees, successfully managing data, and overcoming limitations of outdated systems.

3. Analytics & Data

Wealth management use data and analytics to get actionable insights and make data-driven choices. Advanced analytics technologies find patterns, trends, and investment performance using huge data. Data analytics can provide financial advisors an edge by personalizing services and boosting investing strategies.

Benefits of wealth management data analytics:

• Personalized financial data analysis for clients

• Better client interactions and retention

• Improved investment strategy using market trends and performance data

• Data-driven investing decisions that improve client returns and performance

4. The Next Generation Needs New Methods

Many middle-class people may become very wealthy in the years to come due to a massive wealth transfer from one generation to the next.

There is a disturbing pattern in the way this wealth is being managed: 87% of the children who get inheritances do not continue working with the financial advisor their parents initially hired. The way younger generations approach investing is clearly changing.

The millennial generation is more receptive to recommendations made by objective third parties, such as algorithms or online platforms. The vast majority are considering utilizing robo-advisors to handle their financial matters. 

Significantly, younger investors are gravitating towards automated investment management solutions, as projected growth in the robo-advisor business to about $1.2 trillion by 2024 reflects this trend. 

Wrapping It Up

A multitude of trends are shaping the future of wealth management. These trends include sustainable investing, millennial investor preferences, multi-generational asset transfer, and tailored services.

In order to keep up with their clients' ever-changing needs, wealth managers must stay knowledgeable about these trends and adjust their strategies and offers appropriately. Those who are open to change are going to succeed in the wealth management business as it undergoes further transformation in 2024.