Crypto-Downpour Advisors Could Leave Billions In Fees On The Table: Broadridge

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“Great moments come from great opportunity, and that’s what you have here tonight.” Herb Brooks, head coach of the 1980 United States Men’s Olympic Hockey Team, wasn’t talking about cryptocurrency, but that aptly sums up the unique opportunity wealth managers currently have to increase their income, expand their business volumes and develop closer relationships with their existing customers thanks to the new asset class.

The time of dreams

According to a new study from Broadridge Financial Solutions, using a five-year model, financial advisors and wealth managers are expected to receive up to $ 4.6 billion in additional fee income from cryptocurrency. And the impact is likely to be even greater as advisers develop new relationships due to cryptocurrency’s appeal to a large audience. According to Gemini research, the average age of crypto investors is 38, while the average “crypto-curious” individual is 44.

And just as offering cryptocurrency is a long-term business decision, there are significant cost ramifications if a business consciously chooses not to offer it. The disruption is real and companies will eventually have to include it as an investment option. It’s not a question of if, it’s a question of when.

This is because managers and advisers can lose existing clients and assets if investors do not view them as having a viable cryptocurrency solution. Wealth managers may lose assets under management as part of one of the largest generational wealth transfers as young investors show increased interest in cryptocurrency and may seek advisors who provide access to the D class. ‘alternative assets. According to the Gemini study referenced above, 77% of crypto holders in the United States are under 45, and many in this group will be the next generation of wealth. Gemini also predicts that an additional 20 million adults in the United States will enter the crypto market “very soon”, adding additional urgency to advisers’ decision-making.

Merger on the crypto highway. This is a new asset class with unique characteristics and business models will need to change to support it. This is why wealth managers should take into account the time and effort it will take to integrate the components necessary for processing cryptocurrencies.

A company’s next steps depend on how it wants to integrate cryptocurrency into its customer portfolios. Choosing a liquidity provider will have an impact on the coins you can provide to your customers. Regardless of how you plan to deliver the crypto, your source of liquidity should align with the cryptocurrencies included in a planned offering. No platform provides access to all parts, but the best suppliers offer a wide variety of parts and have the ability to remain nimble to expand into new parts as they come to market.

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When deciding on custody, you will need to assess the security, the costing model, and the ability to meet your service needs. Other guidelines include developing an understanding of how instant settlement works and considering the impact on customers of maintaining cash balances with the vendor.

Choosing the liquidity provider and custodian will help you determine whether you plan to offer an exclusive investment product, direct access to coins, a recently launched ETF, or the next breakthrough product. It will also help determine which partners need to be leveraged and what your target operating model will look like.

Adding cryptocurrency as an investment option can take six to 12 months, depending on the infrastructure. Many organizations lack internal subject matter expertise, struggle to know where to start, and are unsure of what questions to answer. Some look to partners with in-depth subject matter expertise to help them define technology, operational risk, and the compliance ecosystem, and to help them train advisors.

There has never been a more critical time to find the right talent, the right partners, and the right tech ecosystem that will allow you to capture your share of the billions of fee income currently at stake.

Uday Singh and Mike Tropeano Photo Illustration by Staff

Uday Singh is Managing Director, Head of Broadridge Consulting Services. He leads his Broadridge Consulting team to address challenges in the banking, asset services and wealth management industries. It generates positive results through data-derived strategies. His pioneering work in data collection metrics has both reduced cycle time and improved decision making.

Mike Tropeano is Senior Director and Engagement Manager for the Broadridge Wealth Advisory Practice. He is responsible for providing clients with actionable insights and thought leadership to address technological and operational challenges. His background includes cryptocurrency, managed services, digital transformation, and straight-through processing.

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