7 Wealth Management Trends to Watch for in 2024

The financial landscape continues to evolve. As we look ahead, 2024 is shaping up to bring continued shifts driven by global economics, intergenerational dynamics, technological innovation and regulatory changes.

To help you stay ahead of the curve in the new year, here are the emerging trends we’re tracking in wealth management.

1. The Great Wealth Transfer

The name stands for exactly what it sounds like: The passing of assets from one generation to the next. In many cases, these are family assets being passed to heirs. But what makes it so great? Simple — the sheer volume and magnitude of the collective wealth transfer that’s on the horizon.

Over the last decades of the previous century, Baby Boomers did well for themselves, enjoying the fruits of a strong economy from the time they entered the workforce until retirement. That foundation of financial stability enabled an entire generation to accumulate massive wealth over time. As a result, their Gen X and Millennial family members stand to inherit trillions of dollars from them over the next 18-20 years.

This intergenerational shift in buying power could put many younger Americans in a better position to own a home or invest, making smart strategies for managing wealth more important than ever.

As Ameriprise Financial suggests, a carefully developed estate plan¹ is an important consideration in preserving family assets and ensuring a smooth transition to your heirs. And for families with profitable businesses, succession planning should be considered an essential part of that transition.

Insight: Although the Great Wealth Transfer will largely take place within family lines, the potential for a positive impact across diverse communities is exponential given the heightened social conscience that defines younger generations. An experienced wealth manager can help younger family members map out a more robust charitable giving strategy.

2. Retirement and longevity risk

In a time when people are living longer than earlier generations, longevity risk — the possibility that an individual may outlive their assets — has become a real concern for those approaching retirement. Rising health care costs are a significant concern, too, as older Americans are particularly vulnerable to the impact of escalating expenses.

The Centers for Medicare and Medicaid Services (CMS) reported that health care spending for the 65-and-older population² accounted for approximately 37% of all health care spending in 2020, with this group representing about 17% of the U.S. population. The increase in health care costs is not going away: Medicare spending grew 8.4% to more than $900 billion in 2021.³

Insight: There are strategies to help mitigate longevity risk. One popular approach to help ensure significant assets (in excess of $1 million or more) can stand the test of time is to work with a wealth management team.

3. Investment strategies and solutions to help navigate change

Inflation is impacting everything from housing and utilities to health care costs. Even the stock market feels the strain. These realities can make it more difficult to plan and budget for retirement.

Over the long haul, financial resilience hinges on the ability to adapt in an ever-changing economic environment. Having the right investment strategy in place to help you withstand constant change is vital.

Insight: Many investors are thinking more carefully about future economic swings and how to help their portfolios weather potential downturns and uncertainty. Although it’s easy to get caught up in the headlines of day-to-day market fluctuations, stocks have historically outpaced inflation and markets tend to recover over time. Playing the long game is key⁴, according to Ameriprise Financial, and an experienced wealth manager can help you stay the course with an investment strategy that meets your needs.

4. Socially responsible investing

More than ever, individuals are seeking investments that not only yield favorable returns but also contribute to the greater good. Socially responsible investing is based on the principle that generating profits and doing the right thing are not mutually exclusive.

An increasing awareness of socioeconomic and environmental issues, such as climate change, is driving a profound shift in priorities. Many investors are proactively committing to promote positive change by considering environmental, social and governance (ESG) funds as part of a diverse investment portfolio.

Insight: A word to the wise, from the U.S. Securities and Exchange Commission (SEC): As with any investment, it’s equally important to understand what you’re investing in with ESG funds⁵. It’s not unheard of for companies to exaggerate the extent of their environmental and sustainability practices, a tactic known as greenwashing.

5. The rise of AI and investment technology

Artificial intelligence, or AI, has ushered in an era of greater productivity and efficiency across many industries. Technology brings new ways to research, assess and invest, but new concerns and challenges lie on the other side of that coin.

We may be just scratching the surface on the potential risks of machine learning when applied to the financial sector. With good reason, the SEC is weighing in on the establishment of an ethical AI framework for investment advisors.⁶

Insight: Ameriprise Financial reports that most forecasts anticipate a 20%-30% compound annual growth rate for generative AI technology⁷ over the next decade. With the right regulations in place, this may be good news for investors.

6. Upsizing (and downsizing) in real estate

The uptick in remote work and time spent at home that began with the pandemic has led to a new trend: upsizing. Families and individuals needed more space for home offices, home schooling and to entertain or relax. The result? People are looking for larger houses. And it’s not a trend restricted solely to people with young families, either.

Upsizing also seems to be gaining popularity among older populations. Upsizing in retirement can take many forms. It may involve moving to a larger home with acreage, buying several smaller homes for personal use and as investment properties, or upgrading an existing home. Downsizing remains a viable option for many empty nesters and retirees — or anyone interested in reducing housing costs and upkeep.

Insight: Bear in mind that real estate activity can have broader implications beyond where you live. Whether it’s to a condo or a bigger home and land, it is best to discuss plans to upsize or downsize with your wealth manager before making a move.

7. Growing adoption of digital assets and blockchain technology

The Crypto Boom of 2017-2018 brought bold predictions that cryptocurrency would rapidly dominate financial markets. However, volatility and risk due to a lack of regulation have fostered mistrust among many investors who might have otherwise considered integrating digital assets into their portfolios.

As the SEC begins to more closely scrutinize crypto asset investments and alert investors⁸ to potential pitfalls, digital assets could find their way into the mainstream again. Regulation of crypto markets could be a good thing for advisors and investors alike. In fact, traditional financial firms are exploring innovative ways to leverage blockchain technology to improve operational efficiency and create new opportunities.

Insight: This is an evolving topic of interest for many investors, one for which a good relationship with an experienced wealth management team can help you navigate where and how (or if!) you want to invest.

The takeaway

Rapidly evolving technologies, regulatory policies and generational transitions will continue to shape society, culture and the financial landscape for the foreseeable future.

So, how can you better prepare for whatever lies ahead in 2024?

Build a relationship with a wealth management team — one that understands your goals and risk tolerance and stays abreast of trends and historical patterns. They’ll also help you review and assess whether your current plans merit reconsideration and fine tuning.

For high-net worth individuals, families and business leaders actively seeking advice about their saving and investment strategies, trust that RBFCU Wealth Management, The Garner Davis Group is here to help.

979-417-0563 | rbfcu.org/wealthmanagement

Information in this article is general in nature and for your consideration, not as financial advice. Please contact your own financial professionals regarding your specific needs before taking any action based upon this information.

This article was last updated October 2023.

Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.

Ameriprise Financial Services has a partnership with this financial institution to provide financial planning services and solutions to clients. The financial institution is not an investment client of Ameriprise but has a revenue sharing relationship with us that creates a conflict of interest. Details on how we work together can be found on ameriprise.com/sec-disclosure.

This information is being provided only as a general source of information and is not a solicitation to buy or sell any securities, accounts or strategies mentioned. The information is not intended to be used as the sole basis for investment decisions, nor should it be construed as a recommendation or advice designed to meet the particular needs of an individual investor. Please seek the advice of a financial advisor regarding your particular financial situation.

ESG factors may cause the Fund to forgo certain investment opportunities and/or exposures to certain industries, sectors or regions.

The fund’s investments may not keep pace with inflation, which may result in losses.

Socially responsible investments focus on green solutions companies, which present increased risk over a more diversified portfolio by limiting investment choices to a specific sector that may or may not perform as well as other industry sectors.

Stock investments involve risk, including loss of principal. High-quality stocks may be appropriate for some investment strategies. Ensure that your investment objectives, time horizon and risk tolerance are aligned with investing in stocks, as they can lose value.

The products of technology companies may be subject to severe competition and rapid obsolescence, and their stocks may be subject to greater price fluctuations.

Investing in cryptocurrency should be considered highly speculative and investors must be willing to risk substantial loss.

Ameriprise does not allow any solicited purchases of securities with cryptocurrency exposure or permit any direct trading of cryptocurrency through specialized exchanges such as Coinbase.

RBFCU Wealth Management, The Garner Davis Group is a financial advisory practice of Ameriprise Financial Services, LLC. RBFCU Wealth Management is a division of RBFCU Investments Group LLC.

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Securities offered by Ameriprise Financial Services, LLC. Member FINRA and SIPC.

Sources

The following sources were last accessed in August 2023.

¹“7 Questions about Estate Planning.” Ameriprise.com, https://www.ameriprise.com/financial-goals-priorities/family-estate/estate-planning.

^{2, 3}“NHE Fact Sheet.” Cms.gov, https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.

⁴“Long-Term Investment Strategies.” Ameriprise.com, https://www.ameriprise.com/financial-goals-priorities/investing/long-term-investment-strategies.

⁵“Environmental, Social and Governance (ESG) Funds – Investor Bulletin.” Investor.gov, https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-1.

⁶Van Buskirk, Leslie, et al. “Establishment of an Ethical Artificial Intelligence Framework for Investment Advisors.” Sec.gov, https://www.sec.gov/files/20230406-iac-letter-ethical-ai.pdf.

⁷“The Transformative Potential of AI: Investor Considerations.” Ameriprise.com, Ameriprise Financial, 14 June 2023, https://www.ameriprise.com/financial-news-research/insights/artificial-intelligence-ai-market-impacts.

⁸“Exercise Caution with Crypto Asset Securities: Investor Alert.” Investor.gov, https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/crypto-asset-securities.