How innovation is driving a new era for wealth and asset managers

Embrace innovation in wealth management to thrive amid change and meet evolving client needs. The time for action is now.

In brief

• The European regulatory landscape is complex, shaped by various bodies and agendas, focusing on enhancing EU strategic autonomy in financial services.
• CEOs are prioritizing strategic transformation, emphasizing cost efficiency, growth, and talent retention amid rising margin pressures and geopolitical issues.
• Banks should focus on geopolitical risk, improving cybersecurity measures, and increasing supervisory engagement to stay competitive in the current market.

The wealth and asset management industry stands at a pivotal moment, where the convergence of traditional and alternative business models is reshaping the competitive landscape. This is not just a passing trend; it is a fundamental shift that requires immediate and decisive action from industry leaders. The question is no longer whether to adapt, but how quickly and effectively we can embrace transformation.

In this new era, the winners will be those who dare to innovate and prioritize client-centric strategies. Firms that cling to outdated models risk obsolescence, while those that proactively seek to redefine their value propositions will emerge as leaders.

The urgency of strategic transformation

The pressures facing wealth and asset management firms are mounting. Margin compression is a persistent concern, even as assets under management have shown growth. Geopolitical tensions and economic fluctuations are influencing client behavior, making it imperative for firms to reassess their strategies.

While wealth and asset management CEOs seem optimistic about their ability to seize market opportunities, it is clear that the current geopolitical and trade environment is giving them pause. According to the EY-Parthenon CEO Outlook Survey, 81% of CEOs in our industry anticipate that increasing margin pressures will necessitate their firms to streamline business units and/or their geographic footprint this year. The time for complacency has passed; the urgency for strategic transformation has never been clearer. The research also shows that achieving cost efficiencies, top-line growth and retention of key talent remain key priorities for wealth and asset management CEOs in 2025, and the majority are actively looking to pursue M&A, joint ventures and strategic alliances this year.

Identifying new growth opportunities

The democratization of alternative investments is becoming an accelerating trend, fueled by growing demand from high net worth (HNW) and ultra-high net worth (UHNW) investors for the returns and diversification that alternatives promise to deliver. Innovations such as semi-liquid structures, interval funds and new fund structures in Europe are making alternative investments more accessible to individual investors. The 2024 EY Global Alternative Fund Survey indicates that 37% of firms plan to target individual investors with private equity, highlighting the urgency for firms to enhance their capabilities in this area.

Our research also reveals a striking disconnect between client expectations and advisor engagement. According to our recently released 2025 EY Global Wealth Research Report, 61% of clients view alternative investing as a critical topic for discussion but many advisors are failing to initiate these conversations. This gap represents a significant opportunity for firms willing to invest in training and technology that facilitate deeper client engagement.