The future of investing: CB Insights report explores how technology is reshaping wealth and asset management
- January 1, 2023: Vol. 10, Number 1

The future of investing: CB Insights report explores how technology is reshaping wealth and asset management

by CB Insights

The past decade has seen digital brokerages, robo-advisers, and micro-investing transform how people manage their money. While these have been important technology developments, they are effectively mainstream at this point. Robinhood launched eight years ago and is now a public company. Every major asset manager now offers a robo-adviser, and apps that allow investments in fractional shares of stocks are a dime a dozen.

In the next decade, the future of investing will be built around a group of key technologies such as:

  • Alternative investing platforms that open access to nontraditional assets such as private equity, real estate, art and crypto for retail investors and their advisers
  • ESG powered by AI that gives retail and institutional investors more complete and accurate assessments of investments’ environmental and social impacts
  • Asset tokenization that converts financial or physical assets into digital tokens via blockchain technology, providing the infrastructure for companies and investors to more efficiently issue, track and trade assets

Global assets under management — the total value of retail and institutional investments held by financial institutions — reached $112 trillion at the end of 2021, according to BCG. For context, that’s 117 percent of the World Bank’s estimate of 2021 global GDP. How that $112 trillion is invested has a significant impact on how individuals build wealth and save for retirement. It also affects how institutional investors — and, at a larger scale, the biggest financial services organizations — operate.

The wealth technology sector is reaching a key point of maturity. Equity funding to wealth-tech startups hit a new record of $18.9 billion in 2021, nearly tripling that of 2020. That funding is now being put to use in tech-driven marketplaces, artificial intelligence and blockchain, driving innovation in areas such as capital markets and asset management that are burdened with inefficient legacy systems.

Meanwhile, public markets recently fell to a new low in 2022, with the S&P 500 down more than 20 percent at the end of September since its peak at the beginning of the year. With struggling stocks, interest rate hikes, inflation and recession fears, both retail and institutional investors are grasping for new ways to generate returns.

The future of investing creates opportunities for the largest financial institutions in the world, including investment banks (J.P. Morgan, Goldman Sachs), investment management firms (Blackstone, State Street), asset managers (BlackRock, Fidelity), private equity firms (KKR), and private companies looking to raise capital.

These financial incumbents are partnering with and investing in fintechs at the forefront of investing’s evolution, including alternatives marketplaces such as iCapital Network, sustainability and ESG reporting platforms like Clarity AI, and tokenization platforms like Securitize.


The traditional investment portfolio of 60 percent stocks and 40 percent bonds may become a thing of the past. Disappointing performance of public stocks, rising inflation and interest rate hikes pressuring the economy are all giving rise to alternative investment strategies. These include a wide range of assets, from private equity to real estate to art.

Alternative investments bring opportunities for enhanced returns compared with investing in stocks and bonds alone. As such, assets under management in alternatives are expected to rise from $13 trillion in 2021 up to $23 trillion by 2026, according to forecasts from Preqin.

Alternative investments have historically been reserved for institutions, as alternative asset managers targeted those who could write the biggest checks. Pension funds, endowments and large institutions can afford the $20 million-plus minimum investment requirements. But that’s now starting to change as tech companies look to the retail market, opening up opportunities to wealth managers, advisers and even consumers.

Blackstone was among the first alternative investment management firms to expand to ultra-high-net-worth, high-net-worth and accredited investors. Blackstone’s retail assets under management quadrupled during the past four years thanks to opening up its real estate investment trust (BREIT), private credit fund (BCRED), and European private credit fund to these investors. Now, competitors including Apollo Global Management are following in Blackstone’s footsteps in bringing alternative funds to wealthy individuals and their financial advisers.

Fintech marketplaces are also making it easier for financial advisers, wealth managers and asset managers to access private market alternatives for their clients. iCapital is a leader in this space, providing a menu of private equity, private credit, hedge funds, structured notes and other alternatives on its platform. iCapital services more than $140 billion in client assets and supports more than 1,100 funds. The company has raised over $700 million in equity funding and has a current valuation of $6 billion.

iCapital’s list of investors include the very asset managers that it’s attempting to disrupt, many of which are marketing their funds on iCapital’s platform. These include Blackstone, BlackRock, Carlyle Group, J.P. Morgan and more. The fact that these legacy players have a financial stake in iCapital proves how significant alternative marketplaces are to the future of the industry.

CAIS is another investment marketplace for financial advisers and accredited investors seeking alternative investment funds, products and education. Investment options include private equity, hedge funds, structured notes and private real estate. CAIS’ platform serves over 6,600 adviser teams and has seen more than $18 billion in transaction volume.

Two other emerging platforms designed for accredited investors are Moonfare and Yieldstreet. Moonfare provides retail access to private equity and venture capital through feeder funds that pool individual contributions in order to bring down minimum investment requirements. Yieldstreet offers a single fund consisting of multiple asset classes like real estate, private credit and art, along with customized portfolios and short-term notes.

Opportunities for non-accredited investors (average consumers) to invest in alternatives lie outside of private market funds and wealth managers., an investing platform that helps people be better investors, also allows users to invest in traditional products such as stocks and ETFs, alongside alternatives like art, collectibles, crypto and NFTs. Republic, a company that operates as a crowdfunding platform, allows anyone to invest in vetted startups, real estate, growth-stage companies, crypto, and more through open-access regulated crowdfunding. Another option is Masterworks, a dedicated marketplace for fractional shares of artwork.

Alto IRA is bringing alternative investments to retirement accounts. The startup offers an alternative individual retirement account with options to invest in art, venture capital, startups, real estate, land and more through partnerships with other fintech platforms like Republic and Masterworks. There’s also a crypto IRA offering, which allows people to trade crypto with their retirement funds directly through Coinbase.


ESG in investing brings together the worlds of financial markets and environmental sustainability. ESG-mandated assets are projected to account for half of all professionally managed assets globally by 2024, according to Deloitte.

Some of the most common applications of ESG in investing are mutual funds and exchange-traded funds. Across the globe, there are now over 1,200 ESG ETFs, according to counts by Trackinsight.

But the current state of ESG is flawed. ESG data and ratings will have to evolve with advances in technology in order to have a tangible impact in the years to come.

ESG (environmental, social and governance) covers the general approach of investing in companies, funds and projects that adopt environmental, social and governance principles. The space also includes the data, information and ratings of companies based on their ESG impact.

While ESG is often an instrumental part of socially responsible and impact investing, they’re not the same things. ESG is more of a framework to identify opportunities and mitigate financial risk of companies and investments. It doesn’t necessarily have to be a vehicle for enacting good in the world. ESG ratings are used by investors and fund managers to select companies that are better positioned against climate and social risks, with the ultimate goal of generating higher returns.

For ESG ratings to have a real impact on the future of investing, they must overcome two key flaws. ESG data and ratings are inconsistent (for lack of standardization) and incomplete (for lack of comprehensive data).

Both of those factors have cascading effects on the legitimacy of the space. Corporate greenwashing (exaggerating claims of environmental sustainability through marketing and advertising) is very much present today. And studies measuring ESG’s impact on the financial performance of investments and companies have seen mixed results.

The first flaw of having inconsistent ratings and reporting will eventually be solved with regulation.

The second problem of incomplete data, ratings and information will be addressed with advances in artificial intelligence. Established financial data and intelligence firms, as well as dedicated ESG ratings and analytics fintechs, are leveraging machine learning and natural language processing (NLP) to collect, structure and analyze ESG data at scale. AI solutions will be critical to the accuracy of ESG ratings moving forward and to the funds that use them.

Machine learning and NLP are also used to power ESG analysis and scoring models. The models are trained using years’ worth of historical data.

MSCI, S&P and Bloomberg are all using AI to tackle the problem of incomplete ESG data and ratings. Each provider covers thousands of companies and hundreds of thousands of securities.

MSCI uses machine learning and NLP for data collection and validation, allowing its ratings, indexes and research to leverage alternative data outside of voluntary company disclosures.

Similarly, S&P uses Databricks Lakehouse to process billions of ESG data points and run machine learning models to derive insights for customers.

In October 2022, Bloomberg announced it is using machine learning smart models and estimates to increase its carbon emissions data set to cover 100,000 companies.

Fintechs specializing in ESG and sustainability assessments are challenging legacy data providers with their focus on AI and scalability. For instance, Clarity AI uses machine learning to analyze more than 2 million data points for ESG ratings, risk assessments, carbon footprints, net-zero analysis and regulatory compliance. The platform covers 30,000 companies and 300,000 funds, which it claims is more than triple those of most competitors.

Once ESG data and ratings become consistent and complete, it will be easier to more accurately test ESG’s impact on investment returns and company performance.


Global capital markets soared in 2021, with both fixed-income markets (e.g., bonds) and global equities reaching all-time highs, according to the Securities Industry and Financial Markets Association. But the ways securities are issued and traded are inefficient. Legacy systems result in too many intermediaries, expensive issuances, slow settlement times, and vulnerabilities to market manipulation and money laundering.

Asset tokenization through blockchain technology can potentially create a more efficient system. It will take time to transition, but some of the biggest players in finance, including Goldman Sachs and J.P. Morgan, are already experimenting with the technology.

Asset tokenization is the process of converting physical or digital assets into digital tokens. These tokens are issued, tracked and traded on a blockchain network.

Anything that has value can be tokenized, including securities, real estate, commodities, art, physical goods, collectibles and intellectual property. There are two types of tokens: fungible tokens that are interchangeable, most often representing divisible shares (e.g., securities); and non-fungible tokens (NFTs) that are wholly unique, often representing the ownership of physical assets (e.g., art and collectibles) or deriving value themselves as rare digital assets.

According to interviews with blockchain executives conducted by Blockdata, tokenizing securities (e.g., stocks, bonds, options, etc.) has the potential to transform capital markets infrastructure in five key ways:

  • Limiting dependence on multiple intermediaries
  • Reducing costs of issuance and trading compared with traditional securitization
  • Reducing settlement times for central securities depositories and securities settlement systems
  • Combining separate processes in the securities lifecycle
  • Enabling alternative forms of finance for all types of organizations at a global scale

Asset tokenization can also unlock liquidity for previously illiquid alternative assets. These include real estate, natural resources, public infrastructure, art, private equity, private credit and more. The total market size of tokenized illiquid assets could reach $16 trillion by 2030, or 10 percent of global GDP, according to research by BCG and ADDX.


The future of investing can be broken down into two fundamental outcomes. The first is new investment opportunities for retail and accredited investors. These include private market investments, sustainable investing and previously illiquid assets.

The second outcome is improved markets. Alternative investments can break the handcuffs limiting retail markets to stocks and bonds. ESG ratings powered by AI can enable more informed financial risk management, and asset tokenization can lead to more efficient issuances and trading in capital markets.

Innovation won’t come without hurdles. Retail investors and their financial advisers need to be convinced that alternatives are worth the risks. The future of ESG will be tied to regulatory clarity from governments, as corporate greenwashing isn’t effectively being deterred today. And the fragmented global financial system can’t switch to blockchain overnight. Financial institutions need to be on board with tokenization, and even the ones that are today are only using it experimentally.

The barriers may point to a long road ahead, but the fact that legacy financial players are making moves now — at the very same time that fintech platforms are maturing — is a promising indicator of where investing is headed.


This article was excerpted from the CB Insights report title The Future of Investing. Download the complete report here.

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