2.3.26
The global investment and asset management industry is in the midst of profound transformation. Once dominated by traditional banks, mutual funds, and full-service brokers, the industry is now shaped by regulation, demographic change, technological disruption, and shifting investor behavior. Trillions of dollars are flowing into new products, platforms, and strategies, forcing asset managers to rethink how they compete, innovate, and serve clients. Several major trends stand out as especially influential in defining the future of investing.
Even more information on this industry is available! Check out our Investment Industry Center.
Plunkett’s Investment & Asset Management Industry eBook, latest edition
1. Regulation Is Redefining Risk, Scale, and Profitability
Regulatory reform continues to reshape how investment firms and banks operate. In the United States, Basel III, the Dodd-Frank Act, and the Volcker Rule have raised capital requirements and restricted proprietary trading by banks. In Europe, Solvency II and MiFID II have imposed sweeping transparency rules, restricted “dark pool” trading, and required the unbundling of research and execution fees. While these reforms have strengthened systemic stability, they have also compressed margins and reduced risk-taking by traditional banks. As a result, many institutions are shrinking balance sheets, exiting certain trading businesses, or shifting toward fee-based asset management and advisory services. Compliance costs now represent a significant portion of operating expenses, favoring large, well-capitalized firms that can absorb them while placing pressure on smaller competitors.
2. Private Credit and Non-Bank Lending Are Expanding Rapidly
As banks retreat from certain lending activities, non-bank lenders have stepped in aggressively. Private credit, hedge funds, private equity firms, and specialized finance companies now provide trillions of dollars in loans globally. Often referred to as “shadow banking,” this sector offers borrowers faster approvals, more flexible terms, and longer maturities than traditional banks. For investors, private credit has become an attractive source of yield in a world of volatile public markets. However, lighter regulation and reduced transparency raise concerns about risk concentration and potential stress during economic downturns. Despite these risks, private lending continues to grow, filling gaps left by regulated banks and reshaping global credit markets.
3. Retirement Assets Are the Industry’s Central Battleground
Demographics may be the single most powerful force driving asset management growth. Aging populations—especially Baby Boomers—are shifting trillions of dollars into retirement-focused products. In the U.S. alone, retirement and pension assets reached $45.8 trillion in 2025, including $18.0 trillion in IRAs and $9.3 trillion in 401(k) plans. Automatic enrollment in employer-sponsored retirement plans has dramatically increased participation, ensuring a steady flow of assets into managed funds. As workers retire, large sums are rolling over from 401(k)s into IRAs, creating intense competition among asset managers, brokers, and financial advisors. Firms that can deliver retirement income solutions, annuities, and low-cost diversified portfolios are best positioned to capture this growing market.
4. ETFs Continue to Disrupt Mutual Funds
Few trends have reshaped asset management more than the rise of exchange-traded funds (ETFs). With low fees, tax efficiency, intraday liquidity, and transparency, ETFs have steadily taken market share from traditional mutual funds. Global ETF assets reached approximately $17 trillion in 2025, representing more than 30% of all “mutual fund-like” assets. ETFs have evolved well beyond simple index tracking. Actively managed ETFs and “smart beta” strategies now compete directly with traditional active managers. As fees across the industry continue to fall, mutual fund companies are being forced to lower expenses, improve performance, or reinvent themselves through ETF offerings of their own.
5. Trading Is Faster, Cheaper, and Almost Entirely Digital
Online brokerage platforms have transformed how individuals invest. Trading commissions have effectively fallen to zero, pushing brokers to generate revenue through payment for order flow, margin lending, interest on cash balances, and premium advisory services. At the same time, many firms are closing physical branches and focusing on digital platforms. Market infrastructure has also evolved. High-frequency trading, ultra-low-latency systems, and algorithmic execution now dominate professional markets. Speed and technology are critical competitive advantages, reshaping how liquidity is provided and how prices are formed across global exchanges.
6. Artificial Intelligence and FinTech Are Becoming Core Capabilities
Artificial intelligence and financial technology are no longer optional—they are central to modern investment management. Hedge funds rely heavily on quantitative models, machine learning, and alternative data sources to identify pricing inefficiencies. Robo-advisors and digital platforms use algorithms to build and rebalance portfolios based on investor goals and risk tolerance. By 2025, assets influenced by AI-driven strategies had grown into the trillions, and most financial advisors were using AI tools to support portfolio construction, risk management, or client communication. Fintech platforms have also lowered barriers to entry, making investing more accessible to millions of individuals worldwide.
7. Alternatives Are Moving Into the Mainstream
Private equity, hedge funds, private credit, and other alternative investments were once reserved for institutions and ultra-wealthy investors. That is changing rapidly. New product structures and regulatory adjustments are opening access through retirement accounts, lower minimum investments, and blended public-private portfolios. Major firms are launching target-date and retirement products that include allocations to private markets. This shift reflects investor demand for diversification and higher return potential—but it also introduces complexity, liquidity constraints, and valuation challenges that asset managers must carefully manage.
8. Individual Investors Are Influencing Markets More Than Ever
Retail investors now play a far larger role in market activity than in the past. Online platforms, social media, and commission-free trading have empowered individuals to trade stocks, ETFs, options, and cryptocurrencies at unprecedented levels. By late 2025, retail trades accounted for more than one-fifth of total market volume. This shift has altered market dynamics, increased volatility in certain securities, and challenged traditional assumptions about investor behavior. Asset managers and exchanges alike must adapt to a world where individual investors are a permanent and influential force.
9. The Future
The investment and asset management industry is becoming more competitive, more technology-driven, and more client-centric. Firms that succeed will be those that adapt to regulatory complexity, embrace technology, offer low-cost and transparent products, and address the evolving needs of retirees and individual investors alike. In an industry defined by change, adaptability has become the ultimate asset.
Key Concepts: Stocks, business, mutual funds, economics, asset management, venture capital, finance, future, globalization, investments, innovation, investing, marketing, hedge funds, bonds, quantitative analysis, artificial intelligence (AI)
Source: Plunkett Research, Ltd., Copyright © 2026
