Financial Planning has outlined significant financial trends and policy shifts anticipated under the Trump administration and a GOP-controlled Congress in 2025. Key takeaways for wealth managers include:
Tax Policy: Extensions and Changes
According to Financial Planning, the Tax Cuts and Jobs Act of 2017 (TCJA) is a major focus for wealth managers as key provisions approach their 2025 expiration. With GOP control, lower federal income tax rates and increased exemptions for estate and gift taxes are likely to be extended, benefiting high-net-worth clients. The cap on state and local tax (SALT) deductions will likely remain intact due to cost concerns.
Pass-through business income deductions are also expected to continue, aligning with pro-business priorities. However, Republicans may reduce the law's duration to three to five years to manage its $5 trillion price tag, as noted by tax experts at Deloitte.
Private Markets: Rising Client Demand
Financial Planning predicts that private markets will continue their upward trajectory, with assets projected to reach $15 trillion in 2025 and $18 trillion by 2027. Wealth managers are increasingly giving clients access to these lucrative but complex and illiquid investments. Firms like BlackRock and Invesco are developing exchange-traded funds (ETFs) to simplify private market entry.
Cryptocurrency: New Opportunities Amid Volatility
Under Trump's administration, cryptocurrency regulations are expected to loosen, creating opportunities for advisors and investors. Bitcoin's volatility, marked by its recent surge past $100,000, exemplifies both risks and rewards.
AI's Transformative Role in Wealth Management
According to Financial Planning, artificial intelligence will continue to reshape wealth management in 2025. Rob Pettman, president of fintech firm TIFIN, predicts broader implementation of AI in creating marketing materials, client meeting notes, and more complex functions like alternative asset due diligence.
Retirement and Medicare: What to Expect
The impending $84 trillion wealth transfer from baby boomers to younger generations presents a rare growth opportunity. However, Cerulli Associates predicts 37.5 percent of advisors, managing nearly half of industry assets, will retire over the next decade.
On the policy front, Medicare may see increased privatization under the GOP, with Medicare Advantage becoming the default for retirees. Advisors should educate clients about the differences between Medicare and Medicare Advantage, particularly regarding provider networks.
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