Other likely impacts include:
• Easing the transfer of assets from one advisor to another, making this process virtually instantaneous. Clients will simply use their private keys to blocks holding their asset-ownership data to move data from one advisor’s blockchain location to another’s. This convenience would make it a lot easier for clients to fire advisors and get started with new ones.
• Reducing or eliminating rigors regarding know-your-customer (KYC) rules relating to clients’ identities. Among the blockchain applications that are spawning various startups is identity-protection solutions. A byproduct of enhanced identity protection might be improved access to identity-related data by fiduciary advisors authorized by clients who provide their private keys—the same technical tool used for holding bitcoin securely while enabling transfer in transactions.
• In the distant future, escalating the existential threat that artificial intelligence (AI) may pose to advisors. Access to blockchain data by AI devices could create a brave new world of DIY robo-advising. Instead of asking Alexa for a restaurant review, we could ask her highly evolved descendants for financial advice derived by analyzing blockchain data. Instead of calling their advisor, clients sitting in their living rooms could just ask: “Should I roll-over my 401(k)?” This scenario’s plausibility is heightened by the proliferation of IOT (Internet of things) devices, everyday appliances equipped with modems, computer processors and connectivity. If you’re in the kitchen when you have a thought about your strategic asset allocation, you could ask your refrigerator to advise you. If you’re in your car when the analysis is completed, the fridge could send it to your car. You could then tell your car to place trades (which won’t be unsafe because the car will be driving itself).
Does this mean blockchain will make it easier for toasters to replace human advisors? Well, toasters do have the advantage of making toast. Seriously, though, advisors could compete by acquiring intelligent tools to locate and cull blockchain data. They could then analyze and interpret this data for clients with empathy and compassion that may not be possible for Alexa’s descendants.
Also, human advisors will still be able to demonstrate value by showing clients how to meet life goals and linking advice to lifestyle preferences—skills essential to competing with other human advisors today. To prepare for this scenario, advisors who haven’t already would be well advised to start learning about concepts underlying blockchain and its evolving applications—and about its means of transferring value: bitcoin.
Eric C. Jansen, ChFC, is the founder, president and chief investment officer of Westborough, Mass.-based AspenCross Wealth Management (AWM), which teaches clients how to make smarter financial and investment decisions and to use disruptive technology to help them live the lives they want. AWM provides cryptocurrency educational services to clients nationwide, and recently began accepting bitcoin as payment for financial planning services.