What Affects Client’s Choice of a Wealth Manager?
There are three qualities that top the list: competence, reliability, and low cost of service.
Competence. Only the capability (or incapability) of fulfilling investing objectives can fully illustrate the wealth manager’s professionalism to their potential clients. As of now, a metric to measure a wealth managers’ effectiveness is lacking; there are some indirect characteristics such as reputation, assets under management, and the brand existence period. This is why one of the inclusive metrics of competence might be the ability to achieve clients’ investing goals.
Reliability. This includes the technological protection of a wealth manager, their financial stability, and morality. Practically, there is an indirect metric of financial stability that is shown in credit ratings; other than that, a client has to rely on the reputation of a brand.
Cost of Service. Management expenses usually consist of manager’s fee in the form of a small share in assets under management. A client must have at least $5 million in liquid assets to be eligible for a traditional wealth management service. Managers prefer to work with HNWIs (High Net Worth Individuals) so to be compensated higher (the same amount of work is required to manage both lean and loaded portfolios so why deal with the first case?).
How Does Blockchain Make Wealth Management Reliable?
Blockchain emerged as the underlying technology of Bitcoin. While Bitcoin disrupted the payments sector, blockchain started to show significant promise in redefining how entire industries operate.
The blockchain is a ledger that can store data in the accurate chronological order and protect it from forgery. This is due to the fact that the right version of the database is determined by a consensus of the majority of network participants.
The blockchain is the basic technology for the development of trustless applications with distributed trust. Simply put, a client doesn’t have to trust one party to trust the whole system because it is maintained by many actors that are incentivized to approved the correct transactions. Only the transactions that meet the consensus are added to the blockchain.
Applications built on Blockchain are called smart contracts and can inherit the features of decentralized trust. This eliminates the necessity to entrust client’s assets to a wealth manager. Smart contracts open up the possibility to replace legal protection with a technological one. With the power of smart contracts, for instance, a client can easily limit the set of assets that the wealth manager can use to form an investment portfolio.
What is Wealthman?
Wealthman is a wealth management Platform that contains a stack of protocols facilitating the building of trustless wealth management services that deal with on-blockchain digital assets. It aims to provide a permissionless secure environment for programming, execution, and marketing of individual investment management services.
Historically, all sensitive business processes of investment management (storage and exchange of assets, and the evaluation of the effectiveness of asset management) require trust in the central parties such as banks or exchanges that executed them. This is due to the effect of scaling which can minimize the transaction expenses. However, this threatened the security with the losses of money due to the placement of trust into a central party.
Our protocol replaces the central party that has all the control with the decentralized control in the form of smart contracts over business processes.
By using our protocol, any wealth manager will be able to get more trust than the behemoths of the market who pour loads of money into their image. This is why Wealthman is expected to quickly gain acceptance and support of market participants.
The Wealthman Marketplace
The wealth management marketplace requires some metrics of effectiveness to be quantitatively comparable. This will allow users to weight up the efficiency and costs of wealth managers or their algorithms.
In traditional circumstances, it is problematic to evaluate the efficacy of wealth managers. Wealthman has a solution to that as well: it conducts measurement procedures that show how wealth managers achieve financial goals of their clients within the Platform. It works as follows:
1. Users of Wealthman protocol leave investment goals- and results-traces on the blockchain,
2. The participants of the network come to the methodology using the PoS consensus (a way to measure the achievement of investment goals),
3. The efficiency evaluation process takes place using the data from the step 1 and the methodology from the step 2.
The key to high positions in the ranking of this marketplace lays in being outstandingly efficient and providing the best value-for-money ratio. Such marketplace of wealth management services is going to be the first ever solution of this kind on the global market.
For additional information about Wealthman, please visit: www.Wealthman.io