External asset management is changing along with the whole wealth management sector. Understanding how trends and innovations shape this segment is crucial if you want to provide relevant, effective, and satisfying services. What are the top trends right now? We discuss them in this article.
Integration of Environmental, Social, and Governance (ESG) Factors
ESG considerations have become central to investment strategies. Investors increasingly demand that their portfolios reflect ethical and sustainable practices. A 2023 report indicated that over 55% of asset managers ranked full integration of ESG criteria as a top trend for the next 3-5 years. EAMs are responding by incorporating ESG factors into their investment processes, offering clients transparency and alignment with their values.
At the same time, this prompts the growth of ESG greenwashing—a practice where asset owners manipulate the data to present their assets as more ESG-compliant than they really are. This means that as an external asset manager, you have to be cautious and conduct thorough analyses to avoid falling into such traps.
Embracing Technological Innovations
The adoption of advanced technologies is also transforming external asset management. Artificial intelligence (AI) and machine learning enhance data analysis, enabling more informed investment decisions. What’s more, systems are now available to consolidate custodian data, enabling EAMs to overview all their information from a single interface. Technology brings new opportunities and streamlines traditional processes; without a doubt, it will leave a mark in the upcoming years.
Adoption of Hybrid Work Models
The shift toward hybrid work arrangements has become prevalent in the asset management industry. A 2025 industry outlook by KPMG revealed that 69% of firms have adopted a mix of office and remote work. EAMs are adapting by implementing flexible work policies and investing in digital collaboration tools to maintain productivity and client engagement.
Naturally, this shift isn’t dictated purely by the needs of EAMs and related employees. Clients also strive for convenience in the form of remote services. With such an approach, working in the office is no longer a must since most meetings take place in the digital realm anyway.
Focus on Thematic Investing
Thematic investing, which targets macro-level trends like technological innovation or demographic shifts, is gaining traction. This approach allows EAMs to align investment strategies with specific themes expected to drive future growth. Naturally, it is often prompted by the clients themselves. Nevertheless, it opens numerous new opportunities, can be aligned with ESG investing, and frequently yields high returns, so it’s a trend to look into in 2025.
Conclusion
ESG investing, thematic investing, hybrid work models, and technological innovations—these trends define external asset management in 2025. Their popularity isn’t unjustified. By following these trends, you can achieve higher returns, enhanced client satisfaction, and improved risk management. Therefore, don’t just think about them—try to implement the best practices in your activities and strategies.
