With 2025 underway, it’s clear that financial advisors are entering a year filled with both challenges and opportunities.
Advisors are facing many unknowns with a new administration in place, changing economic factors, and evolving client priorities. In this article, we’ll highlight the key trends and challenges that could shape the year, along with what advisors should put into practice to better serve their clients.
Tax and policy changes
The new administration brings shifts in tax laws and policies. In 2025, several anticipated changes could impact financial planning strategies.
- Expiration of the Tax Cuts and Jobs Act (TCJA): Set to expire at the end of 2025, the TCJA’s conclusion may result in individual marginal tax rates reverting to pre-2017 levels, with the top rate increasing from 37% to 39.6%. Advisors should prepare clients for potential adjustments in their tax liabilities (Bloomberg).
- Standard deduction adjustments: For the tax year 2025, the standard deduction increases to $15,000 for single filers and $30,000 for married couples filing jointly (IRS). These adjustments may influence decisions regarding itemized deductions and overall tax planning strategies.
“With tax law changes on the horizon, advisors who proactively educate clients and model different tax scenarios will earn greater trust” said Matt Garrett, Product Manager of Moneytree.
Staying informed about these changes is crucial. Utilizing tools that offer real-time tax planning capabilities can assist in modeling various scenarios and their potential impacts on clients’ financial plans.
Market dynamics and opportunities
The economic landscape in 2025 presents both challenges and opportunities.
- Inflation and interest rates: Experts predict that strategies benefiting from falling interest rates, deregulation, and faster earnings growth will be prominent. This is especially true within the small and mid-cap sectors, as the market continues to broaden, becoming more of a stock-picker’s market (Financial Planning).
- Longevity planning: With life expectancies increasing, clients require strategies that ensure their assets last throughout retirement. Emphasizing estate planning and long-term care considerations becomes essential.
Advisors should guide clients toward diversified portfolios that balance growth with stability, ensuring alignment with their long-term objectives.
The generational shift
A significant demographic transition is underway.
- Baby Boomers retiring: As Boomers exit the workforce, there’s an increased focus on retirement income strategies, wealth transfer, and healthcare planning.
- Rise of younger investors: Millennials and Gen Z are becoming more prominent in the investment landscape. These tech-savvy clients value personalized planning and are keen on understanding the impact of their investments.
“Engaging younger clients isn’t just about investments. It’s about helping them navigate big financial decisions in a way that fits their values and goals that are important to them,” Garrett said.
Engaging younger clients requires a focus on education, transparency, and the integration of technology to meet their expectations.
New tech and AI
Technological advancements continue to reshape financial planning.
- Artificial intelligence integration: AI offers enhanced efficiency in planning and investment analysis. However, some clients may express skepticism. Balancing AI-driven insights with personalized human advice is key to maintaining trust.
- Digital-first wealth management: The trend toward digital solutions is accelerating. Offering mobile-friendly platforms and personalized dashboards can enhance client engagement and satisfaction (Forbes).
Advisors should embrace technology that complements their services, ensuring it enhances the client experience without replacing the personal touch their clients have come to value.
Moneytree supports advisors with comprehensive goal-based and cash flow planning solutions, catering to diverse client needs. By integrating these tools, advisors can enhance their services and foster stronger client relationships.
Stay ahead of the curve and explore how Moneytree can future-proof your practice.
