The wealth management industry is massive and competitive. New and better solutions are being released every day as standalone software solutions or on the blockchain.
Blockchain is already improving sub-sectors in finance, allowing developers to release solutions addressing pressing challenges like high settlement times or transaction fees. In Western Europe alone, assets under management rose five percent to €25.2 trillion in 2020, according to a McKingsey market report. It is projected to grow faster in the years ahead as the economy recovers from the coronavirus pandemic.
The Wealth Management Industry Needs an Overhaul
Although rapid digitization has opened up finance, allowing more investors to access financial advice, there are still challenges. Their resolution would take wealth management a notch higher.
The primary objective is financial inclusion through a reliable gateway bringing together qualified independent financial advisors and all investors, including high net-worth individuals. In this arrangement, both parties can access various assets ranging from equities, real estate, bonds, and cryptocurrencies like BTC and ADA, widening their investment scope.
Nonetheless, some hurdles prevent financial advisors from proposing digital assets as investments in the current wealth management environment. This is because there are few dedicated platforms for managing client relationships and reporting responsibilities.
The problem is further compounded by the absence of platforms dedicated to businesses and regular investors to diversify from stocks, bonds, or real estate to crypto. Existing ramps are designed for individual investors. Because of accreditation requirements in the U.S., for example, some of them are barred from investing in some asset classes in traditional finance.
These hindrances automatically bar thousands of qualified independent financial advisors and private bankers in Europe and other parts of the world from compliantly offering valuable financial advice to investors even if they were willing.
Digitization limitations mean onboarding clients, making investment decisions, or following up may, in some instances, rely on slow manual checks and data input from sometimes slow computer systems.
Furthermore, regulatory clarity is usually the main obstacle to innovation, preventing wealth management platforms from offering crypto-assets as investment vehicles alongside other heavily regulated asset classes like bonds and real estate. The same regulatory issues prevent interested investors from investing in digital assets in some jurisdictions like Algeria or China.
Blockchain in Wealth Management
However, high-performance and open-source blockchains like Cardano allow creators to overhaul the current wealth management infrastructure and democratize investment access while complying with regulators’ demands.
Notably, the blockchain allows creators to build KYC compliant solutions that adhere to stringent European and local regulatory requirements, enhancing collaboration in the industry.
Moreover, the tokenization feature in distributed ledger technologies (DLTs) with smart contract capability makes it easier to inject liquidity into traditional assets initially thought to be illiquid. These assets are more accessible and comparatively cheaper in the secondary market with digitization and liquidity.
Blockchain enables quick asset tokenization, simplifies legal requirements via KYC, and creates liquid on-chain marketplaces for fractional ownership. As such, the technology has helped democratize access, opening up lucrative financial opportunities. These are benefits that financial advisors can snugly fit in their trade, opening up more investment opportunities.
The Ledgity Solution
Ledgity is one of the first projects to leverage blockchain technology to provide wealth management services through their mobile application. It is built by a team of experienced wealth management experts with headquarters in France. The platform releases a digital solution dedicated to independent financial advisory (IFA) and is a cryptocurrency wealth management platform for users to grow their wealth efficiently and confidently.
Ledgity aims to redefine the trillion-dollar industry by bridging the high-performance cryptocurrency industry with other investment asset classes like real estate, bonds, and life insurance in traditional finance via a secure, easy-to-use mobile interface.
The platform’s creators are digitizing processes, creating a new transparent and liquid digitization infrastructure for private bankers and IFAs to offer advice related to legacy investment instruments like equities while also recommending potential digital assets to investors.
Ledgity leverages Cardano’s features to release a permissioned decentralized exchange liquid marketplace that uses the automated market maker (AMM) model, effectively linking cryptocurrencies with traditional finance.
By unlocking the investment capacity of advisors and investors, Ledgity helps democratize access to crypto-asset investments for all users from a secure platform built by experienced wealth management experts. Ledgity’s clients will be free to use the application since they won’t apply any threshold. Investors can also contact any of the over 5k financial advisors Ledgity plans to onboard by the end of 2022.
Since regulatory compliance is crucial, Ledgity is registered and licensed by France’s top regulator, the Autorité des marchés financiers (AMF), as an investment advisor, insurance broker, and digital asset service provider. They have also partnered with Fireblocks, a regulated digital asset custodian to safeguard investor assets, and Genius X, a business accelerator program.
As the wealth management industry evolves, financial advisors and investors need to stay on top of emerging technologies. Blockchain is poised to revolutionize finance, finding use in wealth management. Ledgity is creating a decentralized network of financial advisors by taking advantage of blockchain’s unique features to create customized, compliant, and secure solutions linking the multi-billion crypto world with traditional finance.
This story was prepared in partnership with the Genius X team.