Wealth Management Market & Macro Outlook

Geopolitics and inflation weigh most on minds of wealth managers

Geopolitical uncertainty comes across in a number of economic risks. An escalation of current wars in Ukraine and the Middle East is cited as a threat for 34% of those surveyed. While discussions aimed at ending both conflicts are opening up to some degree, wealth managers will monitor how talks progress, especially as stepped-up hostilities in either region could translate into higher energy prices. 

With a second Trump administration already clearly signaling its interest in making adjustments to trade and tariff policy, US-China relations (34%) ranks among the greatest economic threat for these professional investors. The potential for a trade war between the two economic superpowers is of greatest concern to those in the Asia-Pacific region, where 46% are concerned.  

Should a trade war break out, it is likely to exacerbate inflation concerns, which ranks as their number-two economic risk. In fact, even when inflation was heading downward at the end of 2024, 37% still saw it as an economic threat. 

Of all regions, recognition of the potential risk was greatest in the US, where 50% cited inflation as an economic threat in 2025.  Concern may have been well placed as the US saw inflation increase at the greatest rate in nearly 18 months, with the Consumer Price Index coming in 3% higher for January.

Sentiment among respondents was less certain about the potential presented by a tech bubble (27%) or slowing global growth (23%). However, a surprise in either area has the potential to upset the macro and market assumptions wealth managers have built into their 2025 plans.
 

How the US election impacts the economic outlook

In a year when 70 countries held national elections, one of the most consequential results came in November when US voters closed out the frame in 2024 by electing Donald Trump as President. While the vote was held in the US, the geopolitical and economic impact of Trump’s return to the White House is likely to be felt globally.

Overall, 74% of those surveyed worry that Trump’s economic policies will reignite inflation. Two-thirds globally, and 80% in Asia, are also worried about the potential for a trade war. But wealth managers also see opportunities coming out of an administration that’s set to make significant changes to the US regulatory regime.

In the wake of the election, two-thirds globally think the new administration’s plans to cut taxes will power a sustained market rally, while 69% think protectionist trade policies will spur domestic manufacturing in the US. Another 77% anticipate an uptick in merger-and-acquisition activities, and 64% think regulatory shifts will spur development of innovative investment products.

All of this adds up to investment opportunity, and 57% worldwide (66% in the US) are finding clients are more willing to take on risk. Wealth managers also see the potential for this to disrupt the cash-holding pattern investors stuck with in the 36 months since central banks began hiking rates: Two-thirds (68%) of those surveyed think clients will be more willing to move out of cash. This includes 74% in the US and 76% in Australia.

Not all opportunity will be limited to the US. Given the new administration’s views on alternative energy, 44% believe continued demand for clean energy investment will drive many to seek investments outside the US, with 52% in France and Germany agreeing.

Perhaps the biggest disruption to recent economic norms may be a shift in central bank coordination. After counting on the coordinated efforts of central banks to squelch inflation over the past few years, 54% expected policy at major central banks would continue to diverge from the Fed, as did 64% in France and 63% in the UK. Only 14% of respondents globally see this divergence as an economic risk.
 

Regulatory shifts boost cryptocurrency

Assuming a more favorable regulatory environment for digital assets, 61% say improving political perceptions will make cryptocurrencies more mainstream. As a result, 20% say they are now actively pursuing cryptocurrency investments for their clients. Overall, 38% plan to add to their cryptocurrency offerings, including 50% of those in Germany and 49% in the US.

Many may be relying on product innovation to help spur crypto investments as 64% say Bitcoin ETFs are a game changer for retail adoption. Another 22% say the active ETF product structure will be well suited to providing efficient access to crypto.

In the year ahead, 57% look for Bitcoin’s boom-and-bust cycle to continue. And with greater mainstream adoption, 48% predict its characteristic volatility will decrease. Perhaps most surprising in their outlook on cryptocurrency is the 34% who predict that a major central bank will introduce its own digital currency in 2025.

Soft landing seen as likely in most regions

Despite the potential for a disruption to the economic cycle, 50% of those in the survey pool forecast a soft landing for their local region’s economy. Sentiment runs strongest for a soft landing in Asia (68%) and the US (58%). But even as 46% of those in Europe and 37% of those in the UK share the sentiment, not all are optimistic.

Many in Europe, UK worry about stagflation

A significant 28% of respondents in both Europe and the UK are looking at the impact of high inflation driven by energy prices, coupled with weak economic growth, reduced consumer confidence, a potential recessionary environment, as stagnation is becoming a real possibility for both economies. The concern runs greatest among those in France (43%) and Germany (36%).

Outlook for their local economy

Emerging markets outlook

Looking beyond developed markets, geopolitical concerns continue to worry wealth managers, who rank geopolitical instability (38%) as the top factor driving their thinking on emerging markets. Considering that the Russian/North Korean military alliance and China’s intentions with Taiwan present some of the clearest challenges, it’s not surprising that the issues weigh on the minds of more (50%) respondents in the Asia Pacific region.

Another 24% are monitoring how changing politics in the developed world, which may include tariffs, trade wars and a range of other factors, will impact emerging markets. Similarly, nearly one-quarter (23%) are also looking more directly at how conflict in Eastern Europe and the Middle East could affect emerging market investment. 

With the US economy continuing to outpace others globally, many see the strength of the US dollar as a key factor in EM investing.  Another 33% globally and 45% in France will consider projections of emerging market growth. One-third of those surveyed (33%) are watching for weakness in the Chinese economy. However, there is a significant divide between the 24% in Asia who see it as factor and the 37% in the US.  Another 28% say they are factoring global growth into their equation as well.
 

Opportunities for emerging market investment

Looking at the markets themselves, 31% find that younger, more upwardly mobile demographics in many emerging markets are a key consideration. The potential to find cheaper asset values is a key to emerging market investment for 28% globally and 38% of those in the US. Most interestingly, only a small number are worrying about how (19%) inflation and friend-shoring (19%) could impact emerging markets in 2025.

In terms of where they think the best opportunities lie, Asia ex-China equities come to the top of the list, with 51% globally and 70% in Asia calling out the region’s potential. Latin American equities are highlighted for opportunity by 31% globally and 76% in the region. Despite cooling growth, more are convinced of China’s opportunities (23%) than Eastern Europe (23%) or Africa-specific equities (13%). Almost one-quarter (23%) globally and 38% in the US say they hedge their bets by investing in only broad emerging market equities.

Best emerging markets opportunities 2025