The future of asset management

Joseph Schumpeter was Austria’s finance minister after World War I. He was an economist, and a thinker. He was a rival of Keynes intellectually. Schumpeter was focused not on managing stale economies, but on how they evolve

He was obsessed with entrepreneurs. He viewed them not just as businessmen, but as agents of disruption and as the true engine of economic growth.

He came up with this beautiful and bittersweet economic concept called creative destruction.

Creative destruction is the idea that economies advance by destroying old structures and replacing them with new ones.

Think of how leaves dry out and fall off in the winter, only to be reborn again with full vibrancy in the spring. There is beauty in that. Compare it to modern economic policies that favour supporting incumbents at all costs, which is like painting the dead leaves green and taping them to the tree branches over the winter. That’s what the modern-day Federal Reserve would do.

Creative destruction is purer. Creative destruction allows dying ideas to die and better ideas to be born. It allows builders and innovators to build and innovate. It clears a path for them

You have to be willing to suffer through the destruction in order to allow the creating.

Incumbents are optimised for yesterday. They are built to retain clients and to hold on to what they have, and they are trying to do so with legacy systems and legacy infrastructure weighing them down.

Entrepreneurs are nimble and adaptive. They are optimised for disruption. They can take risks. When you ain’t got nothing, you got nothing to lose.

And what a time! What a time for innovators and entrepreneurs in the asset management industry. Once you see the creative destruction and once you see the seasons changing and old leaves turning brown, you can’t unsee it.

There is no money in vanilla equity funds anymore. And when I say “no money” I am aware of the ~$70 billion in annual equity mutual fund and ETF fees. That’s a whole lot of money for “no money”.

But I say there is no money because I am not referring to the incumbents trying to hang on. I am referring to new opportunities. You want to try to go after VOO at three basis points? Didn’t think so.

Passive equity has become the teaser product. Issuers operate them at close to breakeven so that they can make it back on the more profitable stuff like alts or private credit. And as we all know, that ain’t working out so well for anyone.

Ok, that’s the destruction. That’s the bummer. Let’s get to the innovating. Building something disruptive is more fun than trying to keep a melting ice cube from melting, don’t you think?

So, let’s take a look around opportunities to innovate inside asset management.

I’m going to start with real estate’s conversion from project to portfolio item. This deserves its own rung because it is such a huge category. Real estate is still often treated like artisanal finance. Bespoke underwriting. Slow diligence. PDF cemeteries. Opaque fees. Stale valuations. Awkward access. Limited portability. The opportunity is to turn real estate into a cleaner, more standardized, more data-rich, more continuously priced portfolio exposure. That means better property-level data infrastructure, better verification, better securitization rails, tokenized ownership frameworks, portfolio construction tools that combine public and private real estate intelligently, benchmarking that bridges listed and private valuations, and liquidity solutions that do not pretend buildings are Treasury bills but do make them much more investable. A generation of companies will be built just on closing the gap between real estate as a physical asset and real estate as a financial asset. Skyline Standard will lead the way.

Let’s get back to the fund space and look at product proliferation. This is the most visible opportunity and the one everyone sees first. There will be more active ETFs, more derivative-based ETFs, more defined outcome products, more yield-enhanced products, more buffered products, more tax-aware products, more income sleeves, more options overlays, more single-idea exposures, more thematic packages, more volatility-managed products, more long-short retail wrappers, more laddered maturity exposures, more “institutional-lite” products for retail, more packaged alternatives, more hybrid public-private sleeves.

This is where most people begin because the barriers feel familiar. You identify demand, package exposure, find distribution, and launch. But this layer, while real, is also the most crowded. Product creation is becoming easier. Product differentiation is becoming harder. Over 1500 ETFs have launched since the beginning of 2025.

Then comes wrapper innovation. This is where the stakes rise. Not just what exposure sits inside the product, but what legal, tax, operational, and trading wrapper carries it. ETF share classes. Mutual fund and ETF convergence. Semi-liquid funds with smarter liquidity mechanics. Interval funds that behave less like clunky compromise vehicles and more like usable portfolio tools. Evergreen structures. Tokenised fund wrappers. Private market funds that settle faster and report cleaner. Structures built around tax optimisation, customisation, or portability across channels.

Tokenisation, in particular, is replacing traditional equity rails and has the potential to bring customization on a level we can hardly even conceive of.

Product structure innovation can unlock whole categories of assets that can benefit from increased liquidity, better transparency, and issuer competition that will inevitably drive down fees.

Then comes outcome-based investing, which is where the industry starts moving from selling exposures to selling experiences. Income you can live on. Downside protection you can understand. Tax management that works continuously instead of once a year. Retirement income products that compete with annuities without looking or feeling like annuities. Goal-based portfolios for education, liquidity needs, generational wealth transfer, philanthropy, business-owner balance sheets, concentrated stock hedging, inflation buffering, or sequence-of-return risk.

Then comes personalisation at scale. This is where asset management stops being mass manufacturing and starts behaving more like software. AI is rapidly unlocking the ability to do this at scale. Direct indexing is also a huge part of personalisation. Personalised tax lots are part of this. ESG or values-based tilts are part of this. But it gets much bigger. Portfolios tuned to tax bracket, geography, liquidity needs, age, behavioral tendencies, spending profiles, outside assets, business ownership, real estate exposure, even likely panic thresholds. Family-office logic pushed down-market.

Then comes advisory augmentation, where the advisor stops being the sole decision engine and becomes the interface. Startups here build tools that make advisors faster, smarter, more scalable, and more personalized. AI-generated portfolio proposals. Real-time tax-aware rebalancing suggestions. Client communication drafts tuned to market conditions and household context. Meeting prep packets. Automatic suitability explanations. Prospect conversion support. behavioral coaching prompts. Live monitoring of portfolio drift relative to goals. These businesses will not always look like asset managers.

Then comes distribution innovation. This is where the fight shifts from the product to the route to market. Model portfolios are already eating single-fund selection. More flows will be controlled upstream by platforms, sleeves, gatekeepers, and default models. So there will be startups that build next-generation model marketplaces, curation engines, due diligence tools, model customisation layers, embedded investment rails inside banks and fintech apps, portfolio operating systems for advisors, and APIs that turn investment products into modular components. The implication is brutal and important: many managers will no longer win by being selected one account at a time. They will win by being embedded into systems.

Then comes wealth and asset management convergence. The historical divide between “manufacturer” and “advisor” weakens. Asset managers are getting closer to the end client. Wealth platforms are becoming product manufacturers. Advisors are increasingly using centralised models. More of the value shifts toward integrated stacks that combine products, advice, planning, tax, and execution. Startups can build in that seam. Not pure asset management. Not pure wealth tech. The connective tissue. This is where the industry starts to look less like separate businesses and more like one giant blurred machine.

Then comes data infrastructure. Now the stakes go up again. Because once everybody can launch products, personalise portfolios, and distribute through platforms, the scarce asset becomes truth. Clean data. Timely data. Auditable data. Internal data. Proprietary process data. Operational data. Portfolio-through-vehicle-through-client-level data. Unstructured information turned into structured input. Investment memos turned into query able research objects. Earnings calls converted into signals. Real estate operating statements standardised. Credit agreements parsed. Manager commentary indexed. The startup opportunity here is not just data sales. It is turning messy financial reality into machine-readable truth. This layer becomes more valuable as everything above it becomes automated.

Then comes verification and provenance. The Trust Layer. Once AI is generating analysis, models are adapting continuously, and tokenised assets can move instantly, trust becomes the next bottleneck. Was the number real? Where did it come from? Who verified it? Has it changed? Can it be audited? Startups here will build verification layers for private markets, fund reporting, collateral, NAVs, property-level cash flows, credit documents, cap tables, transfer restrictions, and on-chain claims. This layer is boring to tourists and priceless to institutions. The more software-like finance becomes, the more valuable the companies become that certify reality.

Then comes middle-office and back-office automation, which sounds dull until you realise it is where half the industry’s pain lives. Fund accounting. Performance reporting. Shadow books. Reconciliation. Corporate actions. Investor communications. Client onboarding. KYC and AML workflows. Capital calls. Subscription docs. Transfer agency. Distribution calculations. Compliance monitoring. Board materials. Audit prep. Form generation. Portfolio look-through reporting. Regulatory filing support. Many of these functions still run on expensive labor, fragmented vendors, and spreadsheets that should be in a museum. Startups that remove friction here can create enormous value because this is where margins leak and scale breaks.

Then comes compliance as code. This is a much bigger idea than RegTech. It means investment restrictions, investor eligibility, transfer rules, concentration limits, liquidity rules, tax constraints, suitability logic, best execution checks, advertising rules, and reporting obligations get translated into live, machine-enforced systems. Instead of discovering violations after the fact, the system prevents them before the trade, before the transfer, before the onboarding, before the distribution. This becomes even more valuable in tokenised markets and private asset distribution, where the old manual review process does not scale.

Then comes private market modernisation. This may be the richest opportunity set in the whole industry. Private credit. Secondaries. Infrastructure. Real estate. Venture. Private equity. The pitch by the incumbents has been access. In the future the pitch will be usability. Better subscription workflows. Better secondary liquidity. Better reporting. Better valuation tooling. Better benchmarking. Better portfolio integration. Better collateralisation. Better transferability. Better cash flow forecasting. Better cap table management. Better data rooms. Better diligence systems. Better risk analytics. Better tax handling. Better retail suitability. Better advisor workflows. Private markets are still run with too much friction for how important they have become.

Then comes liquidity engineering. This is when the opportunity stops being “make a better product” and becomes “make a previously impossible market possible.” Secondary platforms for private funds. Marketplace infrastructure for interval fund interests. NAV-based trading windows. Better auction mechanisms. Fractional transfer systems. Financing against illiquid interests. Market making for new wrappers. Risk transfer layers for hard-to-trade assets. Insurance-like overlays that turn ugly liquidity into tolerable liquidity. Tools that make illiquid exposures behave more like portfolio components and less like one-way decisions.

Then comes public-private convergence. This is one of the deepest themes in the industry. For decades, the industry treated public and private markets as different worlds. Different data. Different distribution. Different liquidity expectations. Different portfolio language. Different client bases. That wall is weakening.

Startups can build benchmarking systems that compare public and private equivalents. Portfolio tools that blend listed and private exposures. Risk systems that see across both worlds. Indexes that include private sleeves. Transition tools that help allocators move between liquid and illiquid forms of the same economic bet. Product wrappers that hold both. And modernized reporting systems integrate the experience.

Then comes on-chain finance and tokenisation, where finance starts becoming software in a literal sense. Tokenised stocks. Tokenised bonds. Tokenised funds. Tokenised real estate. Tokenised credit. Tokenised fund interests. Transfer agents on-chain. On-chain cap tables. On-chain investor permissions. On-chain NAV publishing. Smart-contract distribution waterfalls. Real-time settlement. Fractionalisation. 24/7 transferability. Portable identity and compliance credentials.

The asset management opportunity is less about putting everything on a blockchain than it is identifying which frictions disappear when ownership, rules, and transfer mechanics become programmable. The strongest companies here will be serious financial infrastructure that grabbed first mover advantage before it was too late.

Then comes AI-native investment research. Continuous ingestion of earnings, filings, transcripts, alternative data, channel checks, internal notes, portfolio exposures, macro context, and market pricing into live research systems. Analyst memory becomes institutional memory. Research becomes cumulative instead of episodic. This can change public equities, credit, private markets, real estate, venture, and macro.

Then comes AI-native operations, where firms are rebuilt around machine labor. Tiny teams doing the work of hundreds. Automated portfolio commentary. Automated client reporting. Automated due diligence summaries. Automated compliance checks. Automated RFP responses. Automated sales enablement. Automated risk flags. Automated board prep. Automated product comparison. Automated internal workflows. The point is not merely cost savings. The point is that an AI-native manager may be able to compete with far larger incumbents because the operating model is fundamentally different.

Then comes autonomous portfolio systems. This is where people start getting uncomfortable. Systems that do not merely support human decisions but make bounded decisions themselves. Rebalancing agents. Tax-loss harvesting agents. Liquidity management agents. Model migration agents. Risk budgeting agents. Hell, I’ll just drop this here:

Yikes.

Then comes gamification. This is where finance starts borrowing not just from software, but from media, gaming, and behavioral design. Retail traders already experience markets differently from institutions. Prediction markets, social investing, live communities, portfolio leaderboards, creator-led investing, simulation-based learning, audience-driven strategies, trading interfaces built like games, financial products sold through narrative and identity rather than classic wholesaling. You might not like it, I might not like it, but clients do like it. No sense in fighting the inevitable.

Then comes financial entertainment. Media personalities increasingly drive flows. Old media is giving way to streamers and social media content. This blog, Bakstack, could not have been possible a couple years ago.

Communities build trust, and trust creates demand. Investment products become content. Content becomes distribution. Distribution becomes trust. Trust becomes assets. A generation of firms will emerge that blend research, audience, product, and platform into one loop. Not a newsletter on top, a fund underneath, and a podcast on the side. One integrated machine.

Then comes the reinvention of trust itself. Every major financial era creates its own trust architecture. Banks did it. Exchanges did it. Clearinghouses did it. Custodians did it. Index providers did it. Ratings agencies did it. The next era will need new trust layers for digital ownership, private asset verification, machine-generated analysis, tokenized transfer, on-chain compliance, and real-time reporting. The startups that build this layer will not just participate in asset management. They will define who is allowed to scale inside it. Again, I am back to our thesis on The Trust Layer.

And then, finally, I’ll bring this home with one last thing:

The barriers have never been lower. The barriers for incumbents to build or reinvent themselves, and the barriers for people with vision and fortitude to build new things. Those barriers do exist, but they are lower than they’ve ever been.

AI helps. Agentics help. Tokenisation helps.

The asset management industry will look completely different in ten years. And the hot trend of 2028 or 2031 is something we aren’t even discussing now. We can build these things now so we can be lucky then.

This is the creative part of creative destruction. These are the bright green leaves we see in the summer on branches that were bare in the winter.

It’s springtime for asset managers.

This article was originally published on BakStak

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