Before Shopify, starting an online store was very expensive and complicated. Only big companies could afford to do it. But then Shopify came along and changed everything. They made it easy for anyone with a product to create an online store and reach customers all over the world. This opened up a huge new market, and now Shopify is worth over $100 billion.
Running a Registered Investment Advisor (RIA) firm is even harder than e-commerce. But RIAs manage over half of all the wealth in the US. There are more than 15,000 SEC-registered RIAs handling over $100 trillion in assets. Becoming a financial advisor today requires a long list of qualifications and licenses.
The wealthtech industry is very fragmented. Custodians can create lock-ins and impose many requirements. This has led to smaller RIAs being bought by larger firms with more resources. But as wealth is transferred from older generations to younger ones, this strategy will be challenged. Younger investors are not happy with traditional finance and want something different.
Wealth management is on the verge of being revolutionized, just like e-commerce was by Shopify. On-chain rails are set to change the financial advisory business. A survey found that 20% of Americans own cryptocurrency. Holding assets on-chain can change the way people see traditional assets. Advisors can now work with clients on assets that always remain under the client’s control.
Traditional RIAs work with traditional custodians. Clients have to set up new accounts to work with an advisor. But self-custody allows a single wallet to interact with multiple advisors. This reduces the time it takes to get advice and allows assets to be viewed without custodians.
Tokenized assets are changing the investment landscape. Fractional ownership and increased liquidity are possible with tokenization. This opens up access to different asset classes on-chain. Service providers can focus more on generating value for clients rather than operational tasks.
A new type of RIAs will emerge to serve crypto-native clients. Just like anyone can start an online store with Shopify, financial professionals will be able to advise clients on-chain. This will give investors more options for advice to meet their financial goals.
In conclusion, the rise of online shopping transformed the e-commerce industry, and now the financial advisory business is set to undergo a similar transformation. The introduction of on-chain rails and tokenized assets will provide clients with more options and transparency in managing their wealth. As the industry evolves, investors can look forward to a more open and verifiable world of expert financial advice to choose from.
