How AI and Tokenization Could Reshape Wealth Management

Thoughts on the Market

The episode explores the transformative potential of AI and tokenization within the asset and wealth management industries. Morgan Stanley r

Key takeaways

• Tokenized real-world assets are projected to grow from $40 billion today to approximately $2.3 trillion by 2030.
• Global Assets under Management (AUM) are expected to reach roughly $250 trillion by 2030, driven largely by market beta.

Main topics

• Tokenization of real-world assets
• AI in wealth management efficiency

Notable quotes

Our base case has tokenized real-world assets growing from roughly $40 billion today to about $2.3 trillion by 2030.

Conclusion

Technological adoption in AI and tokenization will be the critical dif

Transcript preview

Speaker 3 (0:00) Welcome to Thoughts on the Market. I'm Betsy Grasick, Morgan Stanley's Global Head of Banks and Diversified Finance Research. And Speaker 1 (0:07) I'm Mike Cypress, Head of U.S. Brokers, Asset Managers, and Exchanges Research at Morgan Stanley. Speaker 3 (0:13) Today, we're looking at the next phase of growth across asset and wealth management and how tokenization, AI, and changing investor flows could reshape the industry. It's Thursday, October 1st. at 9 a.m. in New York City. Speaker 3 (0:31) Assets under management, or AUM, are near record highs across the globe, with a lot changing beneath the surface. Now, much of the recent AUM growth has come from markets rather than from net new client flows. And meanwhile, fees do remain under pressure. At the same time, technologies like AI and tokenization are creating new opportunities for both asset and wealth managers. Our base case has tokenized real-world assets growing from roughly $40 billion today to about $2.3 trillion by 2030. Mike, let's start with tokenization. What are the use cases that matter most near term? Speaker 1 (1:22) So as we think about it, there's a number of use cases that we see. The most compelling ones really are around cash treasuries and collateral. Take, for example, earning yield. Some tokenized funds allow you to earn interest by the minute or the second that is invested, rather than having to remain invested by that 4 p.m. cutoff that is the case today. Another benefit is allowing collateral to move around. a lot more easily. And this can help support a shift toward 24-7 markets. So if securities can trade 24-7 or derivatives, you may also need the cash leg of that transaction to keep pace. Right now, there are certain futures contracts that do trade over a weekend, but those positions do need to be pre-funded on Friday. So that's going to limit perhaps the full uptake for that of 24-7 until you can get the movement of the collateral to keep pace. And that's where tokenization can come in to help solve a real market need. There's also trap collateral that's just sitting around the world where institutions and corporates just keep pockets of liquidity in different places just in case they need it at a moment's notice. There's a cost to that while it sits idle. But tokenization can allow for more just-in-time movement of money, say with tokenized deposits, tokenized money funds, or stable coins. And another use case is around investors outside the U.S. that may not have as easy access to U.S. markets, but tokenization can help lower barriers, reduce frictions that allow for greater access to U.S. market exposure. Private markets gets a lot of attention, but we think that's maybe a little bit further out. So to put some numbers around this, today there's around $40 billion of tokenized real world assets. So think tokenized stocks, bonds, funds. In our base case, we could see that growing to about $2.3 trillion by 2030, with a vast majority tied to these collateral