The Future of Wealth Management: Integrating Cryptocurrency Into Your Portfolio
These include the rapid pace of technology innovation, the shortage of sufficient talent, and steadily changing client priorities.
Goal-based behavioural change practices offer effective ways to define goals, track and monitor progress and generate results (such as outcomes for segment A or SWOT analysis for segment B); data analytics aid prognostics. Naturally, financial goal-setting requires caution, especially when dealing with those who have limited means: selling an heirloom gold necklace, for example, can have severe consequences and is best carried out with professional aid. Facebook encourages broad ‘liking’ by using banners to contrast real-world experiences with a previously imagined goal. Finally, wealth managers can engage in good practices that promote goal-setting. Using Kaplan’s suggestion, they should build on existing goals and assist clients in identifying the next step in their current list. Successful wealth managers facilitate clients in setting goals, tracking performance and generating results, and use data analytics for prognostics.
Cryptocurrency is a form of digital currency
Cryptocurrency is a type of virtual money that uses computer networks to facilitate the exchange of value. This new form of currency is often, but not always, unregulated and not controlled by a central authority. Its value is determined strictly according to supply and demand.
Enthusiasts for cryptocurrency are fond of pointing out that it cuts out middlemen such as banks, allowing people to send money around the world in a flash for a fee that wouldn’t cover the cost of the postage: in theory, at least, cryptocurrency has the power to ease global poverty through remittances and refugee aid.
But such cryptocurrency values are notoriously volatile and are viewed as a risky form of speculation. They might be used for illicit transactions. They are susceptible to hacks and data breaches, which explains why many hesitate to add a little crypto to their portfolio. And given how unregulated this industry still is – regulators are at present debating how to regulate it in the future, with significant implications as a precedent for how exactly these crypto assets will be bought and sold – their vulnerabilities explain the longstanding criticism of cryptocurrencies as a vehicle for money laundering.
It is a store of value
Stores of value are any object that can maintain its purchasing power over time, ie, you can put your money in the bank and be confident that your savings will still buy the same basket of goods next year as they do now. From differences in silver purity to labor time at the mint, each store of value can either succeed or fail by one metric: fugibility. Defined as ‘the quality of not being capable of being represented’, when it pertains to stores of value, fugibility translates to the ease with which it can be replaced by identical goods. Because of the fugitive nature of most stores of value, those that are the most successfully traded across markets are more securely stored in that way.
The pace of technological change is transforming such industries as wealth management, with both front-end digitisation and cheaper apps on offer that improve customer experience with multichannel support.
Despite some recent challenges with macroeconomic uncertainty, the distribution industry has shown resilience to date, but—with AUM growth levels slowing and operating profit margin pressures intensifying—tougher cost cuts will be required, some quite radical. Ideally they would achieve a mix of short-term tactical moves (such as cost cuts) and structural approaches (facility size, footprint, etc) that would survive cycles.
It is a form of investment
Cryptocurrency is an investment, and it can also be used as a means of payment for items bought on the internet. Because cryptocurrencies are investments, their value can go up or down over time. Understand the risks ahead of time.
Some cryptocurrencies are bought by investors hoping to see a rise in their price and sell to make a profit; others may be bought as an inflation hedge. Cryptocurrencies are bought and sold on exchanges, such as Coinbase, and some brokerage accounts allow you to purchase them directly.
Beyond that, the IRS will tax you on holding a digital asset for less than a year or more than a year before you sell it or use it, as a capital gain or ordinary income, respectively. Diversifying your cryptocurrency portfolio is essential. As with buying any assets, educate yourself as much as you can before buying cryptocurrency. Read articles on the Internet about it for an understanding of how it works and what it is useful for.
