Tag Archives: outsourcing investment research

By 2025, volatility will remain a feature of contemporary markets, shaped as it is by inflationary pressure, geopolitical uncertainty, changing regulation, and technological change. Investment management services now mean more than just portfolio construction; it comprises strategies built upon an integrated, governance-based approach that creates sustainable returns. With an estimated USD 145.4 trillion globally subject to professional management, an ever-growing function of investment management services is to help investors know how to invest when they are faced with complexity. Capital flows and risk regimes are changing, and investment management services will help institutions and individuals navigate uncertainty into growth opportunities.

 

The Escalating Role of Investment Management Services in 2025

With increasing market complexity and investors’ ever-growing aspirations, investment management services are now more essential than ever.

Demand from Institutions and Affluent Clients

Large institutions including pension funds, insurers, sovereign wealth funds are increasingly without portfolio oversight and risk management by specialists. Deloitte’s 2025 outlook warns firms that do not incorporate new technologies or diversify their product offering may lag in an increasingly competitive environment. At the same time, high net worth individuals and family offices are looking for investments with bespoke solutions that integrate both traditional and alternative assets, while relying on service providers to help them utilize and monitor bespoke strategies, including modeling, structuring, and governance.

The Rise of Alternatives & Private Markets

Alternative assets have swiftly become a key element of nearly all institutional portfolios. In the McKinsey Global Private Markets Report 2025, although fundraising has been inconsistent, private markets keep attracting significant capital. Accessing alternative investment opportunities involves deep operations knowledge, valuation, and creation of aligned incentive structures, which are all part of a professional investment management offering.

Technology as the Catalyst

In 2025, generative AI, data engineering, automation, and blockchain have moved from pilot projects to mission-critical systems. Deloitte’s outlook envisions innovative firms that embrace AI in their distribution and operations will create separation from firms that do not. Beyond operations, data integration and transparency are strategic differentiators: according to BNY’s “Future of Asset Management” report, 37% of asset managers say integrating data sources is a top priority over the next 24 months.

Core Functions Defining Investment Management Services in 2025

To achieve the desired impact, investment management services include several integrated capabilities. Here is how each capability begins to evolve in 2025.

Core Functions Defining Investment Management Services

Core Functions Defining Investment Management Services

Portfolio Construction & Asset Allocation

Asset allocation will still be the lead indicator of portfolio results. Managers will overlay strategic, tactical, and regime-aware allocation decisions from equities, fixed income, alternatives, and liquidity. By 2025, some firms will be using dynamic allocation techniques that will use AI and regime-switching models to change exposures to reflect macro or sentiment changes.

Advanced Risk & Scenario Frameworks

Risk management is broadening beyond market risk to include liquidity, operational, regulatory, and climate risks. Asset managers plan to boost investment in advanced risk analytics by over 70% in 2025, with stress testing now covering inflation, supply-chain, climate, and geopolitical shocks to strengthen portfolio resilience.

ESG and Sustainability Integration

ESG has become a core construct rather than a mere adjunct. In January-June 2025, sustainable funds gave 12.5% as median returns in contrast to only 9.2% for their traditional counterparts, thereby proving the alpha potential of ESG. However, with altering volatilities, ESG funds saw outflows to the tune of USD 8.6 billion in Q1. Nevertheless, institutional ESG investments are expected to swell to USD 33.9 trillion by 2026, thereby steadily accounting for more than 21.5% of global AUM.

Research, Valuation & Due Diligence

The rigorous practice of fundamental and quantitative research is still core. In private markets, long-horizon value – 5 to 10 years – will depend upon the depth of due diligence, operations research, and proprietary models with state-of-the-art capabilities. In quant strategies, momentum, regime detection, and tail-risk models are already finding multiple uses when combined with ESG sentiment regimes into new innovative frameworks.

Reporting, Compliance & Governance

As regulatory scrutiny and investor demand for clarity and transparency expand, reporting and compliance become strategic assets. Firms are building proficient tech-based reporting engines and governance layers to enhance auditability, ESG metrics transparency, and fee disclosure. In 2025, compliance spend continues to rise as firms cope with the new pace and dynamics the regulatory space is creating across jurisdictions and more granular ESG rules.

Key Trends Shaping Investment Management Services

Several macro- and industry-level trends continue to reshape investment management services.

Core Functions Defining Investment Management Services

Core Functions Defining Investment Management Services

Global AUM Growth & Regional Dynamics

It is estimated that global AUM will be USD 145.4 trillion by 2025, an approximate doubling from levels in 2016. Looking further ahead, PwC predicts that global AUM will by 2028 reach USD 171 trillion, especially driven by alternative and tokenized assets.

Regionally:

North America remains the largest, underpinned by strong institutional flows.

Europe is innovating concerning ESG and sustainable finance, which also brings new regulations demanding deeper disclosures.

Asia-Pacific is currently the fastest-growing region on the back of increasing wealth and the foundation of institutional capital expansion. Major AUM growth expected from Asia in the projection by PwC.

ETF & Passive Vehicle Expansion

Global ETF AUM grew by 27% in 2024, reaching USD 14.6 trillion, and is projected to grow more than double to 30 trillion by 2029. The increasing release of passive and semi-passive vehicles tends to contrast the older standing traditional active managers, as such, expecting a justification of values from these newer real-time offerings, insights, and nimbleness.

Consolidation, M&A, and Outsourcing

From the industry consolidation perspective, it is going premium as firms seek scale in distribution, infrastructure, and alternatives. PwC states that activity in deals will rebound in 2025, while smaller managers will outsource those non-core functions to focus on alpha and client relationships.

Data Integration & Transparency

Data remains the central heart. In 2025, organizations will prioritize integrating disparate systems, ensuring data lineage, and enabling end-to-end visibility. The firm capable of seamless external-internal data infusing ahead (market, ESG, sentiment, alternative) will enjoy a powerful advantage in insight and execution.

Strategies & Best Practices for Investment Management Providers

To be successful within investment management services, firms must take forward-thinking approaches built on flexibility, technology, and a client focus.

Multi-Asset & Regime-Aware Portfolios

Blending equities, bonds, alternatives, and liquid assets helps manage volatility. Regime detection (inflation, rate, or geopolitical shifts) enables dynamic allocation—using AI to de-risk in stress and capture upside in recovery.

Client-Centric Customization & Reporting

Clients demand tailored mandates- tax-aware, legacy-focused, ESG-tilted. Firms offering flexible, transparent reporting and personalized insights build stronger, longer-lasting relationships.

AI, Automation & Model Scaling

AI enhances execution, optimization, risk, and client engagement. While 60% of firms use AI in distribution, only 11% scale it deeply. Success starts with pilots, data governance, and strong model validation.

ESG as Strategy, Not Add-on

Sustainability is integral to portfolio design and risk management. Firms now embed ESG into thematic and transition strategies, focusing on clarity, metrics, and resilience amid volatile flows.

Outlook for Investment Management Services (2025–2028)

Investment management services are likely to develop in response to macro trends, changing client preferences, and advances in technology.

Democratization of Alternatives

Digital platforms will democratize retail access to previously closed alternative asset classes –fractional private credit, tokenized real estate, and niche strategies.

AI-First Decision Architectures

We may see predictive analytics, scenario engines, and AI-based optimization increasingly form the basis of selection allocation decisions, although there may be some human decision-making involved. Traditional firms that develop these AI-first practices will make it harder for incumbents.

ESG Scrutiny & Verification

With pressure from regulators and investors for accountability, sustainability claims will need to be scrutinized. Disclosure, third-party verifications, and metrics to validate impact will be necessary.

Cross-Border Capital & Emerging Market Growth

Emerging markets are becoming sources of capital and destinations for capital. Managers with more local presence and offerings may start to find new flows in Asia, Latin America, and Africa.

Magistral collaborates with investment firms to offer a complete suite of investment management services. They are research and valuations, AI-based analytics, ESG analysis, fund administration, outsourced CFO, and compliance capabilities. By shifting operational burden, we allow clients to focus on strategy, growth, and investor relations. This helps in improving resilience, scalability, and international competitiveness.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

Prabhash Choudhary is the CEO of Magistral Consulting. He is a Stanford Seed alumnus and mechanical engineer with 20 + years’ leadership at Fortune 500 firms- Accenture Strategy, Deloitte, News Corp, and S&P Global. At Magistral Consulting, he directs global operations and has delivered over $3.5 billion in client impact across finance, research, analytics, and outsourcing. His expertise spans management consulting, investment and strategic research, and operational excellence for 1,200 + clients worldwide

 

FAQs

What are investment management services?

These are professional services that manage portfolios, allocate assets, conduct research, and ensure compliance and risk oversight for institutions and individuals, aiming to optimize returns while controlling risk.

Why are investment management services important in 2025?

They provide expertise, scale, and technology to help investors navigate complexity, allocate capital dynamically, integrate ESG, and meet escalating regulatory demands.

How do investment management services integrate ESG?

By embedding ESG into risk frameworks, portfolio construction, research scoring, and client reporting, rather than treating sustainability as a separate overlay.

What role does technology play in investment management services?

In 2025, AI, big data, and automation drive efficiency, predictive modeling, client engagement, risk control, and scalable operations across all layers of service delivery.

Introduction          

An Investor Profiling summarizes an investor’s financial goals, situation, time horizon, and risk tolerance. It can assist individuals in making appropriate investment decisions. How much risk one should be willing to assume is determined by an investor profile. For example, a more conservative portfolio may be suitable if someone needs to preserve their money and have a short time horizon. If someone wants to expand their monetary liquid asset (cash) and has a longer time horizon, a more aggressive equity-based portfolio may be appropriate. The most essential quality of an investor is temperament, not intellect quoted to Warren Buffett.

The first step in creating a wealth plan is to analyze the ability to take financial risks. Risk tolerance is determined by duties, objectives, personality, and various other factors. A risk profile is created to accurately understand an individual’s ability to assume financial risk as part of their investment portfolio. There are two crucial components of an investor’s profile:  risk appetite and risk tolerance. Risk tolerance is the amount of risk that a person’s finances can endure, whereas risk appetite is the amount of risk that a person is willing to take.

Importance of Investor Profiling

Risk Profiling is vital for an investor. Before investing in the market, one thing which usually troubles every investor is risk. People are concerned about losing their investment capital or receiving less than expected returns; nevertheless, the risk is generally a mathematical figure, such as volatility, that can directly impact your investment capital.

Each investor’s tolerance for market volatility will be different. This disparity is caused by various variables such as income, obligations, age, etc. The quantification of investor profiling is risk-carrying capability and capacity.

Investment decisions are made on the risk-reward trade-off that an investor is prepared to make in the face of precarious financial markets. It is critical to assess your financial position before making an investment. Take into account your financial goals, risk tolerance, and time horizon to help you determine the investments that are best for you.

Risk factors involved in Investor Profiling

The three major risk factors involved in investor profiling consist of Risk need, Risk-taking ability, and Behavioral loss tolerance.

Risk factors involved in Investor Profiling

Risk factors involved in Investor Profiling

Risk need

The amount of financial risk that someone, as an investor, can safely accept depends on their circumstances. An investor who may be short on funds during retirement and wants to sustain their monthly cash flow may need to take certain risks to achieve their end goal. As a result, risk requirement is about how much risk you “need to take” as an investor. This capability varies depending on their age and other things. For obvious reasons, the risk-taking capacity decreases as age increases. If someone has a target goal and can save according to that, then he will need an annual return. The rate of return will define how much risk one can need to achieve their target. During investor profiling, financial advisers must calculate realistic potential returns and market risk environment for all assets based on historical growth rates and the current market situation. Failure to accomplish a goal should motivate you to save more money or work for extended periods.

Risk-Taking ability

Risk Capacity refers to an investor’s ability to take risks given his existing and ongoing financial status. That is; his or her net worth in relation to liabilities, financial ambitions, and time horizon for investing. It has the potential to reduce exposure to growth assets. One such sub-factor is the investment horizon. For instance, if someone has five years to reach their objectives, one must invest in safer assets because growth assets have high short-term volatility. Risk capacity, or dealing with financial loss, might also influence risk-taking. In terms of liquidity, if the need for liquidity is low in the stage of capital accumulation, then the risk-taking ability is high and vice versa.

For example, if someone is receiving a pension or has a future income or assets to sustain, and their objective is not fulfilled, they have a higher risk-taking capacity than otherwise.

Behavioral Loss Tolerance

Behavioral Loss Tolerance defines an investor’s psychological capacity to cope with market swings. This covers the reactions and responses to various market conditions, such as a correction phase. Behavioral loss tolerance is measured by exams, interviews, and questionnaires and specifies the utmost uncertainty one can accept. The amount of awareness regarding items and their experience over market cycles is determined by financial knowledge and investor experience.

Higher ratings on these criteria imply that investors can progress to growth assets. Risk composure shows the likelihood of acting irrationally in response to a perceived crisis, leading to losses. A trigger-happy investor sells stocks at the first hint of a market drop, whereas the patient investor holds on.

A better investor profiling strategy is feasible when all three components are reconciled and linked together. The investor’s risk appetite cannot exceed the risk tolerance of the aim. Higher risk-taking capacity may be ignored when both the need and the behavioral loss tolerance are low. When risk-taking capacity and behavioral loss tolerance are Higher, a lesser risk needs may be dismissed.

Combining all of these factors yields a genuine risk profile, which should be used to establish a suitable asset allocation mix or strategy, which may require the assistance of a professional financial adviser.

Types of Investor Risk Profile

Conservative

The protection of capital is the main priority of the investor, and they are ready to take minimal risks in exchange for limited or poor profits. The possible asset allocation is equity of 0-10%.

Types of Investor Risk Profile

Types of Investor Risk Profile

Moderately conservative

The moderately conservative investors are ready to take on a little amount of risk in exchange for the possibility of long-term gains. The possible asset allocation is equity of 10 – 30%.

Moderate

Investors are willing to accept a moderate amount of risk in exchange for potentially larger long-term rewards. This type of risk profile is most secure for the investor. The possible asset allocation is equity of 40 – 60%.

Moderately aggressive

To maximize prospective profits over the medium to long term, investors are willing to take on a high level of risk. The probable asset allocation is equity of 70 – 90%. 

Aggressive

The investor is willing to take significant risks to maximize long-term prospective returns and is aware that a major portion of their cash may be lost. The possible asset allocation is equity of 90 – 100%.

Magistral’s Process for Investor Profiling

A risk profile indicates the level of risk that an individual is capable and willing to tolerate and accept. The risk profiling process usually starts with analyzing and discussing the investor’s circumstances and the goals the investments or portfolio should achieve.

Standard Process for Risk Profiling

Standard Process for Risk Profiling

Investors may have various purposes, they may never have thought about or stated their aims in this way before, and they may not be able to capture encapsulate in terms of quantity or time.

Magistral makes sure to entail and enumerate each and every detail related to the client’s needs, and risk considerations during the investor profiling. The process for investor profiling is as follows:

Define Goals

Here we understand what the goals of clients are, in both the short term and long term. Moreover, we also focus on the goals aligned with the current financial status. By having a broad picture, we can then pave the correct way in order to maneuver in the right direction.

Risk Profile Questionnaire

In order to understand the risk-bearing capacity and the willingness of the client to take risks, it is imperative to know the levels of risk exposure of the client. This is done by sending a “Risk profile Questionnaire” to the client. After, filling it out, our team of experts analyzes the questionnaire in order to ascertain the optimum risk exposure of the client.

Scoring the Questionnaire

By having the requisite filter channels, within each category of questions and taking into consideration of various factors, we score each level of questions in tandem with the client’s requirements.

Analyzing and Examining

Careful Scrutiny and analysis of the answers with respective weightage to the client’s needs. We make sure to understand the various needs of the client needs in order to make an optimum risk profile.

Summary Close

Careful Scrutiny and analysis of the answers with respective weightage to the client’s needs. We make sure to understand. While onboarding the client we also deliver a summary of the procedure and the rules of engagement with clients.

Conclusion

Investor profiling is required for determining the optimal investment asset allocation for a portfolio. Because risk appetite is influenced by psychological characteristics, loss-bearing ability, investor age, income and costs, and other factors, each person has a unique risk profile.

Magistral consulting can help you complete a quick risk assessment to determine which risk group you belong to. We can perform the entire investor profiling process and then use this information to determine what percentage of your portfolio should be invested in which asset class.

Why Magistral consulting?

-We provide an exhaustive investor database which is helpful in finding the right kind of investor and beneficial in filtering out the information in concurrence with the existing market scenario and also providing tailor-made support in tandem with client requirements.

-Magistral consulting ensures analyst support at every step of Investor profiling. We have a dedicated team of experts for handling respective operations. In accordance to the client’s demands and specifications, we offer customized services. Considering various stakeholders’ concerns and implementing their diverse proposals.

-We provide a service of target company profiling. It is crucial for us to meet the specific  expectations of our customers by recognizing their requirements.

-It also provides Marketing and Communication support. We have a proficient team having experience in a variety of sectors and indeed the ability to handle different tasks effectively. We make sure to understand each and every client’s needs in a comprehensive manner and provide tailor-made services in an efficient manner.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modeling, Portfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com