2025 expert predictions: The year ahead for wealth management

One of the bets most large wealth managers are now willing to make is that private markets will continue on the upward trajectory they've enjoyed in recent years.

The research and rating firm S&P estimates the total value of assets in private equity, credit, real estate and similar investments will hit $15 trillion next year and will top $18 trillion by 2027. That's up from $7.4 trillion a mere four years ago.

Wealth managers are scrambling to be at the forefront of giving clients access to these often lucrative — but also many times risky, obscure and illiquid — markets. The investment management giants BlackRock and Invesco, for instance, are both seeking to offer exchange-traded funds that make it easier for investors to put money into private credit, equity and similar vehicles. Regional firms like St. Louis-based Stifel have also been entering into partnerships meant to lower private markets' barriers to entry. 

Jed Finn, the head of wealth management at Morgan Stanley, said private investing remains too cumbersome and needs further streamlining. He predicted wealth managers will continue pushing to make private markets have at least some of the conveniences of their public kin.

"With public shares, it's very easy to trade," Finn said. "It's a bilateral agreement between a buyer and seller, and there are [clearinghouses] and there are exchanges."

Private markets, he said, still have a long way to go before they can offer that ease of trading. But client demand for private investments will give wealth managers plenty of reasons to find ways to remove some of these obstacles, Finn said. 

"Clients, you know, are used to being able to push a button and say, 'I'm buying this and I'm getting cash in my account,'" he said. "So I think it's really infrastructure, and the operational backbone, that will lead it to be more widespread."

There's also a bit of a chicken-and-egg situation, Finn said. Greater trading in private markets, for one, should make it easier not only for investors to get in but also to pull their money out when they've had enough.

"Once there's more liquidity, more people are going to want to buy into it," he said. "Once more people want to buy into it, there's more liquidity. And it kind of feeds itself." — Dan Shaw

With respect to taxes, the top question for planners and clients next year revolves around the fate of the many expiring provisions of the Tax Cuts and Jobs Act of 2017.

The trifecta of GOP control of the White House and both houses of Congress leaves their outlook much less in doubt beyond their current sunset date at the end of next year. However, the cost of upward of $5 trillion to extend the law and carry out further Trump campaign promises of tax cuts will pose big challenges for the president and his congressional allies.

Lower federal income rates and higher exemptions for estate and gift taxes look like the most likely parts of the bill to get the green light beyond 2025, since they have received "strong support among high net worth clients and Republican lawmakers," according to industry experts cited by Kelly Gillette, partner at tax, advisory and business consulting firm Armanino Advisory.

"The cap on state and local tax (SALT) deductions, however, may face ongoing debate, though it is more likely to remain intact given the Republican majority," Gillette said in an email. "The pass-through business income deduction is also expected to be extended, aligning with pro-business priorities under a unified Republican government. Advisors should closely monitor these developments, as final outcomes will depend on ongoing congressional negotiations and the political landscape." 

In terms of that environment, advisors should expect the GOP to incorporate the collection of Trump's proposed tariffs into their calculation of the deficit impact of any tax legislation and — due to the rules of the Senate reconciliation process — use an even shorter time span for the law's provisions this time around, according to a panel last month with Anna Taylor, the deputy leader, and Jonathan Traub, the leader, of Deloitte Tax's Tax Policy Group.

"You can reduce the cost of the bill in three directions. You can make it shorter. You can make it skinnier by reducing the number of provisions, in effect, reducing the generousness of certain provisions or you could include pay-fors. And I think they're not going to do the second thing. I think that they're not going to skinny down the provisions of TCJA. I think the more likely answer is they're going to shorten the length of the bill," Traub said. "I'm guessing three to five years is more likely than eight years."

He asked Taylor if she has seen any signs that the GOP majority may choose another path.

"I agree that the cost is going to be an inhibitor on the duration here," Taylor said. "So they're going to have to figure out there's some kind of way to make the numbers work and see how many years of policy they can fit into whatever their budget cap is. And we'll just have to wait and see." — Tobias Salinger

Call it one of those ironies of fate: More than a third of the advisor workforce is expected to step down in the next 10 years even as the pending great wealth transfer is expected to send demand for advisory services soaring.

Wealth management executives have been eagerly awaiting the long-expected passing down of tens of trillions of dollars from baby boomers and older Americans to younger generations as a rare opportunity to amass hordes of new clients. The only problem is that there may not be enough advisors around to do all the required work.

The research firm Cerulli has estimated as much as $84 trillion could be handed down. Meanwhile, analysts also at Cerulli predict 109,093 advisors will retire in the next decade — a group managing 41.5% of the industry's assets and making up 37.5% of its headcount.

The points of friction likely to come from this should be obvious to anyone who cares to look, says David Chubak, the head of branch development and the U.S. business unit at Edward Jones. Chubak predicted one of the biggest tasks facing wealth managers in 2025 will be to lay the groundwork to make sure the industry can keep up with the demand for its services once the great wealth transfer gets underway in earnest.

Chubak also noted that there are a perhaps unappreciated large number of small-business owners who will be looking to pass on their firms in coming years. Chubak said Edward Jones is trying to help meet the demand for financial services that all these transfers are likely to stoke by training more than 1,500 fledgling advisors next year.

"We're going to keep hiring and training people because we need to," Chubak said. "But us alone, we can't solve this."

Edward Jones is, of course, trying to fill some of the holes in its own ranks that can't be plugged with trainees by recruiting experienced advisors from other firms. But that, too, has its limits.

Like many others, Chubak predicted technology will play an increasingly large role in ensuring the advisors who remain in the industry can serve an ever greater number of clients.

"Our way of being able to drive transactional work gets a lot faster with new technology, new digital tools, where clients are saying they want to do more of the work themselves," Chubak said. "They want to self-serve. They want to be able to do it on their time and in their own way. And that is creating opportunities for our FAs to serve more clients."

The good news, Chubak said, is that advisors next year will most likely find themselves working with investors whose portfolios are only rising in value. Chubak predicted the stock market will continue pressing upward in 2025, however unlikely the explosive gains of the past two years may have become to sustain.

"It's also a moment where investors are thinking about diversification, or thinking about how they're taking gains, how they're thinking about tax impact, especially if that may change under a new administration," he said. "And so the great thing about all these environments, good and bad, is that they're usually all good for advice, and we'll continue to be serving in the good as well as the bad." — Dan Shaw