Blockchain

How Blockchain is Key to Democratising Asset Management 

The bottom half of adults collectively own less than 1% of total wealth, while the richest decile (top 10% of adults) owns 88% of global assets, with the top percentile alone accounting for half of total household wealth[1]. This inequality has been sustained by financial systems that restrict access to premium systems and services to only those who have significant amounts of capital.

The consequence has been demands for new platforms able to grant individuals increased access to decentralised, democratic and transparent forms of wealth management. Innovation within this sector is one of the keys to bridging the wealth divide and restoring confidence in the financial sector.

Pushing the frontiers of finance

Technology has shown throughout history that it can be instrumental in sponsoring unprecedented change in finance. Over the last decade, blockchain has dramatically changed how people think about currency, art, privacy and the future.

However, despite the recent rise in products and services which offer retail investors access to markets, there have been limited attempts to use blockchain as a way of democratising wealth management systems.

The first step in helping bridge the global wealth divide, and meet growing demands from smaller retail investors for accessibility and transparency, requires a concentrated effort to decentralise and democratise the wealth management sector.

Through fully realising the potential of blockchain technology, platforms such as Nous Systems can produce decentralised automated systems capable of inserting increased levels of accessibility, transparency, and efficiency into a sector which has remained largely unchanged for decades.

Opening up access

In order to access the exclusive wealth management products and services offered by institutions such as large hedge funds, individuals are typically required to have a minimum investment of between $200,000 and $1,000,000.

These figures reflect the large costs that come with traditional asset management, including a large asset management fee of around 1-2% of the amount which you have invested. The costs associated with traditional hedge funds prevent the majority of people without access to vast sums of capital from gaining access.

Blockchain technology has the ability to reduce or sometimes all-together eliminate these excessive costs. Removing the reliance on paper, and on multiple third parties to enforce the terms of contract, means platforms such as Nous Systems are able to provide its services to anyone with as little as $100 and an internet connection.

Prioritising transparency

However, granting access to these systems alone will not produce the fundamental changes needed within the wealth management sector. The last few years have shown that the next generation of investors will demand transparency above all else. The Robinhood scandal in 2021 demonstrated this, with the trading platform being fined $70 million USD for providing misleading information to its users1.

Users were increasingly frustrated by the lack of transparency around the platform’s actions, and the event fuelled suspicions that it was one rule for small investors, and another for large hedge funds. To maintain the confidence of future retail investors, asset management platforms must be transparent with investors and show that they prioritise the best interests of their users.

Decentralised automated asset management platforms are able to use innovative smart contracts capable of governing the creation and management of contracts and funds to facilitate more open and transparent investment infrastructure, whilst minimising the risk of arbitrary intervention and potential manipulation.

Leveraging the power of blockchain

Whilst the integration of new technology in traditional asset management remains slow and un-adaptive to the modern practices and challenges of wealth management in the 21st century, decentralised platforms powered by blockchain technology are able to fully utilise the latest advancements in AI to deliver better services than those currently offered by large hedge funds.

The nature of blockchain technology gives programmers the ability to easily incorporate the latest updates onto their systems. With a low entry barrier, Nous Systems not only enhances access to these advanced AI systems, but is able to use advancements in blockchain technology to ensure investors are getting efficient returns on their investment.

Creating the future of asset management

It is clear that traditional finance is in retreat. A new generation of smaller retail investors are waking up to the reality that the current system is not capable of changing to meet their needs, and instead decentralised platforms represent the future of asset management.

Organisations such as Nous Systems are able to provide a more democratic, transparent, and efficient alternative method of wealth management that matches the needs and priorities of small retail investors. Through opening up access to smaller investors, these platforms are taking the first steps towards reforming and revitalising the world of asset management.

 

[1] https://www.businessinsider.com

 

Sheba Karamat

Sheba has 20 years’ experience in growing and running recruitment businesses, placing executives with financial and digital tech backgrounds into organisations such as Disney, Aviva, BBC, Barclays, News UK and Penguin Random House. Heavily involved in the sale of her previous recruitment business to James Caan CBE, the Dragons Den entrepreneur. Founder and CEO of Coin Rivet and mother to four amazing children.

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