Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 82

How megatrends are reshaping investment management

What will the investment management industry look like in 2030? Nobody can predict the future with certainty, but it will be very different to today. Specifically, what the investors of the future will look like, how their needs, requirements and behaviours will evolve and what this could mean for investment managers. As you read this paper, we ask you to consider which trends will impact you most.

The world is changing rapidly, driven by a number of deep-rooted forces we call megatrends. We have been tracking these trends and considering the potential implications for the industry.

Seismic shifts in demographics, technology, the environment, social values and behaviours are set to re-draw the corporate landscape. Investment management will not escape this overhaul.

There is a significant prize up for grabs. Not only is the industry likely to be considerably larger in 15 years’ time, but it will have a more important role to play in clients’ lives and society in general.

Clients will be more diverse

The clients of tomorrow are likely to be different from the clients of today. The demographic drivers are clear. There will be more older people living for longer. By 2030, 13% of the global population will be over 65, compared to 8% today. But other trends such as the changing role of women, growth of the middle class, increasing mobility and growing economic influence of the developing world will help to make gender, culture and religion more important drivers of change.

Individuals will need to take greater responsibility for their retirement planning. No one else will do it for them given the decline of state provision in many counties and continued pressure on the traditional annuity models. An increasing number of people will simply run out of money in retirement. This presents an opportunity for the industry to capture clients earlier and build a cradle-to-grave relationship, rather than only focus on attracting clients when they have assets to invest. The net result is likely to be a much broader, younger, more diverse, multi-generational and multi-cultural client base.

However, each client segment will have different requirements, needs and expectations. Herein lies the challenge for an industry which to date has largely served a relatively narrow demographic.

Expectations will be different

We believe future generations will be more engaged in managing their savings and planning their retirements. Investors will seek greater certainty and personalised solutions which can transition across life-stages. The growing relevance of online communities and social networks is creating a new ‘trust paradigm’, with people increasingly looking to ‘people like me’ rather than professionals for advice.

Being able to provide timely, relevant, engaging and personalised information and education about the choices available to an investor will become as important – if not more so – than the underlying product.

The increasing capability of personal technologies will drive demand and expectations for all this to be delivered seamlessly through a multiplicity of devices at any given point in time. The incredibly rapid rate at which new technology is adopted is a feature of the modern age and the pace of development will only increase. Some 75% of the world now has access to a mobile phone and by 2030, 50% of the world will have access to the internet. This will drive huge change in behaviours.

Institutional investors will be calling for greater information, education, flexibility, solutions and certainty. We are already seeing an increase in institutional demand for tailored and multi-faceted delivery and reporting.

What does this mean for industry?

We believe that a new investment management value chain will emerge. The days of the ‘product-push’ model and being able to attract flows solely on the premise of delivering a decent return are in our view numbered. Traditional products will increasingly become components of more flexible solutions. We will see a greater demand for outcome certainty, and investment niches will become more mainstream.

We also believe that investment managers can play a much broader, deeper role in clients’ lives and the industry value chain. This will mean understanding clients far better than today and creating a new value proposition based around education, outcomes (not just returns), flexibility and personalised solutions. Investment return will continue to be important but we believe that the pendulum will swing from manufacturing to distribution.

Investment managers can play a more important role in the value chain. This could be through a greater role in asset allocation, development of a broader range of solutions, helping intermediaries better understand and educate end-investors or taking a lead in aggregating an investor’s total financial position.

The technology platform and supporting infrastructure must also provide the ability to capture, harvest and leverage data. The industry has struggled to take advantage of the client information available to it, to deliver and use its insights into its clients.

The new business models will demand people have new skill sets while technology could continue to replace many traditional roles. The industry will need to adjust to acquire talent from different pools and employ a more diverse multi-generational staff.

The potential for more disruption

There are emerging models leveraging a combination of technology, data and social networks to bring fresh propositions to market which play to the evolving megatrends. One of the key challenges many new entrants have is creating a brand and building an appropriate profile and distribution footprint. A trusted brand which resonates and appeals to a more diverse client demographic and a new generation of investors with widely different values and behaviours will be increasingly crucial to build scale. This provides opportunities for non-traditional new entrants.

It may seem a little clichéd but could the likes of Amazon, Google and Apple be the next powerhouses in investment management? Instinctively they have the attributes and capabilities: brand ubiquity which is increasingly trusted by younger generations; propositions that engage and are relevant; business models which put them at the centre of extensive networks designed to understand needs, anticipate requirements, aggregate information, make clients lives easier, solve problems and change behaviours; enviable distribution footprints and huge client bases spread across all demographic groupings.

This is combined with an ability to capture and leverage data to really understand clients and an infrastructure which can deliver personalised and tailored services.

We can also see an opportunity for even more radical propositions to shake up the industry, particularly in response to challenges such as the pension time-bomb. With investors likely to increasingly value outcomes and certainty over returns and look for opportunities to lock-down value earlier, the focus could shift to products and services rather than cash savings.

Retirement planning should be about securing lifestyle expectations rather than simply cash accumulation. On that basis, options to secure holidays, cars and healthcare during retirement may be as attractive as putting aside cash. We believe such a paradigm shift could be feasible.

Conclusion

We are not attempting to predict the future. We are simply looking to better understand how megatrends could impact the industry. The spectrum of outcomes is broad and there is certainly no ‘one-size-fits-all’ response.

Some firms may decide that remaining true to models that have served them well for decades is actually the right strategy. Maybe they’ll be right – but this has to be a conscious decision, not the result of inactivity or apathy.

However, we firmly believe that the megatrends will drive fundamental changes in what investors of the future need, want and expect. In our view, simply appreciating that this shift is taking place and pursuing a strategy of incremental change will for many not be sufficient.

Jacinta Munro is Partner, Wealth Advisory and John Teer is National Leader, Wealth Management at KPMG.

This is a summarised version of the original KPMG International Report. For both the Full Report and the Executive Summary, see kpmg.com/investinginthefuture.

 


 

Leave a Comment:

RELATED ARTICLES

Are demographics destiny for the stock market?

The most vital question ever put to me as a portfolio adviser

Using past performance is a risky way to invest

banner

Most viewed in recent weeks

Australian house prices close in on world record

Sydney is set to become the world’s most expensive city for housing over the next 12 months, a new report shows. Our other major cities aren’t far behind unless there are major changes to improve housing affordability.

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Latest Updates

Planning

Will young Australians be better off than their parents?

For much of Australia’s history, each new generation has been better off than the last: better jobs and incomes as well as improved living standards. A new report assesses whether this time may be different.

Superannuation

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

Investment strategies

A steady road to getting rich

The latest lists of Australia’s wealthiest individuals show that while overall wealth has continued to rise, gains by individuals haven't been uniform. Many might have been better off adopting a simpler investment strategy.

Economy

Would a corporate tax cut boost productivity in Australia?

As inflation eases, the Albanese government is switching its focus to lifting Australia’s sluggish productivity. Can corporate tax cuts reboot growth - or are we chasing a theory that doesn’t quite work here?

Are V-shaped market recoveries becoming more frequent?

April’s sharp rebound may feel familiar, but are V-shaped recoveries really more common in the post-COVID world? A look at market history suggests otherwise and hints that a common bias might be skewing perceptions.

Investment strategies

Asset allocation in a world of riskier developed markets

Old distinctions between developed and emerging market bonds no longer hold true. At a time where true diversification matters more than ever, this has big ramifications for the way that portfolios should be constructed.

Investment strategies

Top 5 investment reads

As the July school holiday break nears, here are some investment classics to put onto your reading list. The books offer lessons in investment strategy, financial disasters, and mergers and acquisitions.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.