As far as the sector is concerned, one standout theme has been technology: AI. This was the year when artificial intelligence and the various use cases for it became a general feature of conferences, research reports and initiatives. I think the acronym “AI” decisively pushed another one, “ESG”, aside, even though concerns about energy transition and governance remain important. But if you look at the performance of companies linked closely to AI, such as Nvidia, Microsoft and other Big Techs, the impact of AI is undeniable. The wealth sector is wrestling with how to use AI in ways that don’t dent the “white glove”, value-added aspect of private banking and wealth management that HNW individuals pay for, but how to embrace it in ways that augment the role of advisors. 

And with compliance issues and cybersecurity important topics in a volatile world, expect AI to remain very much in the conversation. We intend to spend a fair amount of our editorial time talking to firms and individuals about this during 2025 . 

I also expect that another important area in 2025 will revolve around the theme of “protecting the client”. That protection will be against cyber and physical threats. Take the latter. While obviously a sensitive and upsetting topic, we have to consider the implications of the murder in Manhattan in December 2024 of UnitedHealthcare CEO Brian Thompson. Alas, those in the public eye, including people working at the top of banks and other institutions of modern-day capitalism, are potentially vulnerable to those nursing grudges or carrying ideological agendas. I expect those firms involved in areas relating to security will be busy offering advice and support. 

Cybersecurity, particularly given fraught relations between the West and countries such as China and Russia, remains a big area. Ransomware attacks, from all kinds of sources, are legion. Wealth managers and banks are in the frame because, as the saying goes, that is where the money is. To mention AI again, I expect such tech to play a role in combating this. Another and related part of protecting the client is how advisors counsel clients to be on guard about use of social media, for example, and manage their online reputations. In this era, one misstep can hurt a business, philanthropic organization and family.

The protection theme also extends into areas such as care for elderly relatives and the young, as in cases where families have to consider powers of attorney in relation to a parent suffering cognitive decline, for example. 

The investment side of wealth management remains central. US stock markets have risen this year, powered for much of the year by those Big Techs, with the AI story playing its part. We have had scores of elections. And from January 20 in the US there’s a familiar face calling the shots again in the White House: Donald J Trump. He’s keen on tariffs, fracking and deregulation, with the likes of business tycoon Elon Musk offering his advice. The threat of wealth taxes on the rich appears to be out, for the time being. By contrast, in Europe, a continent experiencing sluggish growth and a fondness for a Precautionary Principle regulatory approach to areas such as AI, it must try and keep up and falling further behind the US. It remains an open question whether Europe can win back its growth mojo. 

China has been attempting, meanwhile, to reinvigorate growth after Beijing’s crackdown on certain sectors such as tech three years ago weighed on markets. China has for years helped boost the wider Asia-Pacific economy, making APAC a rising wealth management region. There’s been a maturation effect to some extent. The scorching pace has decelerated.

Mention of China and Russia is a reminder that geopolitics is worrying, and of course we have to throw the likes of Iran and the wider Middle East, and North Korea, into the mix. Perhaps what’s remarkable is how many equity markets, despite all this, have done as well as they have. But as any shrewd investors knows, markets seldom move up in a straight line for very long, and there could be problems at some point. For example, if Trump does ramp up tariffs and hits the likes of Europe, Canada, and Asia, will this force inflation higher in the US and hurt the wider world economy? Experience and economic logic shows that tariffs rarely work as intended and impoverish the wider world. Adam Smith had this worked out 250 years ago. On the other hand, it is quite possible that AI, and maybe other related breakthroughs, could boost growth in certain ways.

Growth, and how to achieve it, is going to remain a strong theme in 2025. Politicians of various stripes say how important it is. They know that if GDP growth picks up, it makes it easier to control spending and keep budgets in robust shape. Even so, there is a need for a willingness to face financial reality, and unfortunately, the past 25 years have, in nearly all major countries, been ones in which growth has run alongside consistent budget deficits. We’ve been racking up debt and relying on central bank cheap money to push the consequences down the road. 

Offshore and the business of wealth
The past 12 months have demonstrated that any attempt to write off offshore financial centers as outmoded is foolish. With some governments such as those of Norway and the UK pushing up taxes on HNW people, for example, this has encouraged emigration. The UAE, Monaco, Jersey, Guernsey, Malta, Singapore, Italy, Portugal and Spain, among others, are beneficiaries. Capital remains mobile. What’s clear is that when debt-laden governments hike taxes , people respond. I recently moderated a panel discussion in London about Switzerland and the UK. There’s a lot of interest in the idea of moving to places such as Switzerland. This is going to continue. To some degree, this also mitigates a bit of the hit to Switzerland’s own economy from the 2023 “shotgun wedding” of UBS and Credit Suisse.

Another theme that played out this year was industry consolidation. The US RIA sector remains very actice. Besides the mergers conducted amid stresses in 2023, the past few months have seen a continuation of firms being acquired by private equity and sovereign wealth funds. In Canada, for instance, CI Financial, which three years ago had been busy buying a raft of US wealth managers, said it was going private, with another Middle East-based sovereign fund in the mix. In fact, the role of Middle East wealth in driving such changes, reflecting the dynamism of places such as Abu Dhabi and Dubai, is clear.

The family office industry has continued to be a growth story in 2024, although some of the pace may have slackened, given a desire by authorities in jurisdictions such as Singapore to tighten standards. A few weeks ago we wrote about an initiative by a family offices network group to try and benchmark what a family office actually is and weed out those masquerading under that title. Whenever there is rapid growth, some questionable characters try to tap it. Even so, much of the growth speaks to a genuine desire by families for control, and I don’t see that changing. 

Another steady theme during 2024 was talk about growing access to private market investing. The drivers of this are well-rehearsed. I did get a sense from some in the family offices sector that there is a bit of hype creeping in; private equity/credit/other funds typically charge higher fees, for example, than on a fund of listed stocks, and clients need to be aware of what they are getting into. Also, with all the tax changes being mooted or actually taking place, asset location has risen to be as significant as asset allocation. The share class, structure and location of a specific fund/investment is becoming as important as the split of assets themselves. 

Compliance and alignment of interests remain important themes in the sector. During 2024, we were able at the end of July in the UK to mark the first anniversary of the Consumer Duty package of reforms, designed to produce better outcomes for clients. With a new US administration and leadership for the SEC, we shall see what, if anything, changes in terms of regulatory control and issues such as fiduciary standards. Around the world, however, there remain challenges of how banks, for example, which are under shareholder pressure to deliver return on equity, can square this with treating clients well. 

zDigitalisation of parts of the value chain and the disintermediation impact of technology could also continue to shake up how wealth management/banking is delivered. 

At this juncture, I look forward with a mix of trepidation on geopolitics but also optimism about the industry. I never fail to be struck by the amount of entrepreneurial vigor that exists. A few days ago, for example, I chatted to a young Turkish woman from an affluent family who has built a family office advisory firm – something of a ground-breaker. A young Swiss family office/investment firm is trying to make breakthroughs in venture capital. And I am struck by the dynamism of much of the North American wealth sector, and the speed of growth in Asia. The UK, for the moment, concerns me because of what I think are foolish policy choices by the current government. Maybe there could be changes ahead?

To finish on a cautiously optimistic note, let’s go to Argentina. President Javier Milei, a devotee of “Austrian”, free market, classical liberal economics, has upended conventional wisdom on what is doable. He has cut spending and the public sector payroll, deregulated sectors such as rental housing, cut inflation low single digits, and bond yields have sunk. The Argentinian peso has risen more than 20 per cent versus the dollar this year. So much so that some commentators are starting to call the peso’s exchange rate a problem. But that rate also means Argentina is drawing in capital rather than losing it. If progress continues, that could mean a higher standard of living for a country wracked for too long by poverty and poor governance. Caution is key, of course. But if Argentina manages a decisive break with its Peronist past, then this could be one of the most promising developments in years. 

Anyway, prediction is always difficult – particularly about the future! Whatever 2025 brings, the wealth management sector will, I am sure, continue to demonstrate the kind of energy and focus that clients will expect. I wish all our readers and my colleagues a very happy holiday season and a prosperous, happy and hopefully more peaceful 2025.