The U.S. wealth management industry is poised to grow by about 5% annually over the next five years, while certain segments of the investor population are positioned to see the biggest boost, according to a new report from McKinsey & Company.

Three investor sub-groups, in particular, are showing signs of “significant and lasting growth,” the report found.

This includes women, new investors who opened brokerage accounts for the first time during the Covid-19 pandemic and hybrid affluent investors who are working both with traditional financial advisors and self-directed accounts.

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That’s as 2021 was a mixed year for the U.S. wealth management industry overall, with record-high client assets of $38 trillion but the slowest two-year revenue growth since 2010, at a rate of 1%.

“While we would say the industry has been resilient, we would also say it’s not been unscathed,” said Jill Zucker, a senior partner at McKinsey and one of the authors of the report.

“Really, the message for wealth managers is this is certainly not a moment to be complacent,” she said.

Women already control about 33% of investable assets — or $12 trillion — in the U.S.

And that is poised to increase over the next decade, with baby boomer males expected to die and leave money to their female spouses, who are often younger and have longer life expectancies.

By 2030, it is expected that American women will control much of the $30 trillion in investable assets owned by baby boomers.

Younger affluent women are also poised for growth as they increasingly take interest in their finances. About 30% more married women are making financial and investment decisions compared to five years ago, McKinsey noted.

While women tend to lack confidence with regard to investments decisions, they do not lack competence, Zucker noted.

It will be important for financial advisors to anticipate their different needs, such as emphasizing the well-being of the family over investment performance.

“Women are looking for something slightly different from their relationship with their wealth management institution,” Zucker said.

More than 25 million new direct brokerage accounts have been opened since the beginning of 2020. Many of those new accounts are owned by first-time investors, as Americans were able to save more money during the pandemic.

The adoption has been fueled by developments in the financial industry, including the elimination of online brokerage commissions and increased access to fractional shares.

The high rate of growth amid the pandemic might not be here to stay. But there still will be accelerated expansion in the next 10 years, according to McKinsey, in part due to the low median age of 35 for these engaged investors.

More affluent investors are working with both traditional financial advisors and self-directed accounts.

In 2021, one-third of affluent households — those with more than $250,000 and less than $2 million in investable assets — were considered hybrid. That marks an increase of 9 percentage points in three years, according to McKinsey.

The growth is due to a combination of a desire for human advice and the affordability and ease of direct investing, according to McKinsey.

“There’s just a desire to experiment that we’ve seen across other aspects of people’s lives throughout the pandemic that we were not seeing in wealth management historically,” Zucker said.

Wealth managers who offer both direct brokerage and advisor offerings will be best poised to benefit from this trend, the research found.

The pandemic may have lasting effects to how affluent investors choose to get their wealth management advice, with only 15% looking forward to returning to in-person or branch visits. About 40% of high-net-worth investors with more than $2 million in investable assets said they prefer phone or video conferences for wealth management meetings.

There has also been an uptick in the share of wealthy and younger households interested in consolidating both their banking and investment accounts. About 53% of those under 45 and 30% of those with $5 million to $10 million in investable assets indicated they prefer to consolidate those relationships, according to McKinsey.

Those preferences may be driven by low management fees, the opportunity for high yield on deposits and the ease of transactions across the different kinds of accounts, the research found.

Alternative assets — such as private equity, private debt, real estate, infrastructure and natural resources — are showing up more often in individual portfolios. About 35% of 25- to 44-year-old investors are showing an increased demand for these assets, according to McKinsey.

Moreover, investors are also turning more to digital assets, including cryptocurrencies, tokenized equities, bonds debt, stablecoins, art and collectibles. Investors are adding these assets for multiple reasons, including the ability to gain exposure to new technology, inflation protection, experimentation or speculation.