Personalization at Scale: The Future of Financial Products
As competition intensifies in the investment world, personalization has become a key strategy. Financial firms now tailor offerings, marketing, and reporting to meet evolving investor expectations. From smart beta ETFs to AI-driven client interactions, this article explores how personalization is transforming financial services across retail and institutional segments.
This is the age of the hyper-personalized investor experience. In the swirling world of sell-side, buy-side, private markets, and GenAI-powered advisors, one theme now dominates the capital markets playbook: personalization at scale. This article explores why personalization has become essential in today’s competitive financial services landscape, driven by factors such as the rise of low-fee index funds, intensifying competition making it difficult to differentiate on returns alone, and heightened customer expectations for individualized service.
Why? Increased competition and need for differentiation
It is harder for managers to compete solely on net returns as investors have increasingly embraced index funds and other products that have lower fees. Fee compression continues to squeeze margins. In 2023, index products attracted 70% of total global mutual funds and ETFs net flows, up from 57% in 2019-2022.i
However, even before the low fees era, retail and institutional investors alike adamantly wanted customized services and experiences. Fidelity found that 82% of investors want personalized products and 62% are willing to pay more for them.ii
“We have better technology in the investment world than any other part of the society - It’s just astonishing what’s available to us. However, it’s available to everybody else too... It’s a little bit like playing poker with all the cards face up. You know what the other guys know. They know what you know. How are you going to get a competitive advantage? Well, by being smarter.... It’s going to get harder and harder. And as a result, the markets are better and better at getting accurate pricing. And that makes it harder and harder for any individual institution, or worse by a long shot, any individual to keep up with, after fees, costs of operations and so on, beat the market.”
- Charlie Ellis, Investment Consultant, Author of Winning the Loser’s Game iii
Moreover, buy-side firms are pushing farther into the individual retail investor segment to unlock growth. As we noted in our previous article, the Great Generational Wealth Transfer is reshaping investment strategies, with $84 trillion expected to pass between generations. Fund managers have taken notice of the upside of reaching the retail investor across several asset classes, most notably private credit, real assets, and actively managed ETFs. And digital native millennial and Gen Z investors put a premium on highly personalized, transparent experiences.
How? Tailored offerings
Firms see an opportunity to offer more targeted investment products, looking to compete on narrower segments of the space by offering investment products that are more targeted to niche needs or interests, like thematic investing, private credit, and hybrid fund structures.
In the retail and family office realm, high-net-worth and ultra-high-net-worth individuals favor personalized, flexible, investment vehicles like smart beta ETFs, direct indexing, and separately managed accounts (SMA), a rapidly growing structure that offers direct ownership and tax planning advantages. Vanguard just unveiled its Vanguard Core Bond ETF (VCRB) — Vanguard’s first actively managed multisector bond ETF, designed with individual investors and financial advisors in mind. They like the ability to personalize their strategies across a wide range of asset classes and the flexibility to rebalance portfolios. According to BNY’s survey, nearly 90% of asset managers and owners have existing exposure to “customized client products,” such as direct indexing, and almost half of respondents plan to increase their exposure to the customized category in the next 1‑2 years.iv
Smarter marketing through data-driven investor engagement
Marketing and communications technology tools like customer relationship management (CRMs) coupled with tactics like data-driven segmentation and dynamic content personalization can contribute to a more tailored client experience. Firms can use marketing automation platforms to segment investors based on behavior, preferences, and investment goals. Highly targeted messaging or hyper-personalized service and outreach are other ways to attract and retain customers, by having higher quality engagement and interaction with investors.
Marketing teams and investor relations managers can deploy AI-powered tools for real-time customization of website content, email campaigns, and thought leadership distribution, all tailored based on an investor’s past engagement. More interactive and self-service communications keep clients engaged. Of course, performance reporting and other time-sensitive requests become the front lines of loyalty-building investor experience.
When? Now. Real-time, custom reporting
Asset managers can further set themselves apart from the competition with rapid, tailored reporting for their clients. Clients like portfolio reporting to be flexible, highly detailed, and on demand. Bespoke reporting requires data transformations, because some customers might want to see information presented in a particular way. Satisfying these needs calls for the seamless flow of data, empowering firms to offer value-added services such as real-time portfolio insights, tailored analytics, and interactive, self-service dashboards that give clients in-depth access to performance metrics.
Who? Digital native institutional and retail investors
Firms also use predictive analytics to better understand the preferences of investors and proactively deliver relevant content, product recommendations, or engagement opportunities. Managers can employ customized allocation rules that align with investors’ specific preferences. For example, they can exclude exposure to assets within certain countries or sectors when multiple investors within the same fund may have differing preferences. One investor may wish to avoid a specific sector while another investor wants to avoid exposure to a specific region. To serve up this level of customization, a firm needs the right data foundation to enable these tailored customer experiences.
The drive to capture retail business entails satisfying investors’ appetite for personalized statements and personalized products at scale, no simple operation. SMAs allow for a tailored investment strategy for a single investor. For institutional asset managers, the administration of SMAs can be onerous if not in command of its datasets, particularly when accounting for and calculating tax liabilities.
Retailization of private markets depends on customization
Meanwhile, buy-side firms are opening access for retail investors to private markets once reserved for institutional investors, high-net-worth individuals, and large family offices. Personalization is inherent in educating and marketing to these investors. Modern tools will be critical in helping firms generate reporting to a massive retail base at a greater scale. AI is poised to optimize much of this. Recently, the Wall Street Journal reported on a wealth management startup using an AI assistant to reach younger digital natives by dispensing financial advice using Gen Z slang. Pensions & Investments found in its recent survey that IAMs are aggressively scaling their AI capabilities for elevated use cases, including personalization. Schroders is releasing ContextAI, which uses large language models to provide sustainability-focused insights to fund managers.v This flexibility presents challenges for accounting systems, which must track evolving payment terms, interest calculations, and performance-based adjustments.
Personalization at scale for a strategic edge
The move to more personalization impacts the way that IAMs operate. It certainly creates a new technological need, another muscle they need to understand the data and investment technology required to tailor reporting to specific customers and personalize the experiences. Many industry experts cite personalization at scale as the number one trend in wealth management for 2025.vi Things have come full circle since those heady days of the 1920s. The era of hyper-personalization in financial products has returned.
Key Takeaways:
Q1: Why is personalization becoming critical in financial services?
A1: Fee compression and commoditization of returns have made personalization essential for differentiation and client retention.
Q2: What strategies are firms using to offer tailored investment products?
A2: They’re leveraging thematic funds, smart beta ETFs, SMAs, and direct indexing to address niche preferences and tax needs.
Q3: How is technology enabling personalized client engagement?
A3: CRMs, AI tools, and marketing automation platforms allow real-time, tailored content and service interactions with investors.
Q4: What role does reporting play in personalization?
A4: Tailored, on-demand reporting gives investors customized insights, fostering loyalty and enhancing the client experience.
Q5: How are private markets adapting to personalization trends?
A5: By customizing repayment terms and structures, and using AI to manage scalable personalization across a growing retail base.
[i] BCG, GLOBAL ASSET MANAGEMENT REPORT 2024 22ND EDITION.
https://www.bcg.com/publications/2024/ai-next-wave-of-transformation
[ii] https://institutional.fidelity.com/advisors/portfolio-construction/the-next-great-portfolio/scaling-personalization-and-investment-innovation
[iii] Morningstar, Charley Ellis: Indexing Is a Marvelous Gift, by Christine Benz and Amy C. Arnott, CFA, Aug 5, 2025. https://www.morningstar.com/personal-finance/charley-ellis-indexing-is-marvelous-gift
[iv] BNY Mellon, The Future of Asset Management
A trends report. https://www.bny.com/corporate/global/en/insights/future-of-asset-management-trends-report.html#product-and-asset-allocation
[v] Pensions & Investments, From admin to alpha: How asset managers are scaling up AI capabilities, June 11, 2025. https://www.pionline.com/largest-money-managers/asset-managers-leverage-ai-research-expand-automated-trading-strategies
[vi] Forbes, ”Wealth Management Trends To Watch In 2025”, Wayne Anderman, Forbes Councils Member.
https://www.forbes.com/councils/forbesbusinesscouncil/2024/10/21/wealth-management-trends-to-watch-in-2025/
Authored By
Greg Muecke
Greg is Vice President of Product at Arcesium where he is responsible for AquataTM, the data platform purpose-built for the investment industry. Greg has spent the last decade building, launching, and managing technology products across the investment lifecycle.
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