In the field of wealth management today, there is intense competition, with robo-advisors, trading firms, and other competitors constantly expanding their product offerings to compete with traditional independent Registered Investment Advisers (RIAs).
Historically, RIAs have been forced to sit on the sidelines and watch capital flow out of their control, but Flourish Crypto — the digital asset partner to Flourish Cash — intends to change that by allowing RIAs to participate in the rapidly developing crypto industry.
Flourish Cash, a cash management account for individuals and RIAs that pays 0.24 percent in an FDIC-insured account, currently manages more than $1 trillion in assets. Currently, 400 RIAs use their product offerings.
Flourish Crypto, a subsidiary of insurance giant MassMutual, hopes to enable these RIAs to offer their clients exposure to digital assets.
“When their clients ask how to gain exposure to digital assets, investment advisors really only have three options,” Ben Cruikshank, CEO of Flourish, told ULTCOIN365. “Either recommend an investment vehicle that frequently trades at discounts or premiums to NAV with high management fees, direct them to a retail exchange where they would no longer generate revenue for managing their money, or simply tell them it is not an option.”
Initially, bitcoin will be the only asset available for trading, but ether will be made available to clients in the coming weeks, if all goes well.
Flourish chose to vet different custodial providers to take ‘physical’ possession of their clients’ crypto assets after receiving overwhelming feedback from potential users.
This is where Paxos enters the picture. Paxos is required to keep all customer assets bankruptcy-remote and separate from corporate assets as the custodian for Flourish Crypto. Paxos is one of the few companies in the crypto industry that meets both SOC 1 Type 2 and SOC 2 Type 2 standards, and it was the first company in 2015 to receive a New York State Department of Financial Services Trust Charter for Digital Assets.
Furthermore, the vast majority of retail exchanges today do not provide 1099s to their users to assist them in filing their taxes. According to Cruikshank, this is also where Flourish believes they can differentiate themselves and introduce crypto to a completely new demographic of investors.
“We decided that it was imperative to invest in cryptocurrency itself and to begin laying the groundwork for ways we can incorporate it into our business,” said Tim Corbett, CIO at MassMutual, in a statement released today. This includes company-wide offerings and technology initiatives, such as today’s launch of Flourish Crypto, a cryptocurrency investing solution designed for Registered Investment Advisors (RIAs) and their clients.”
Not only MassMutual sees the potential for crypto and RIAs.
According to Matt Hougan, chief investment officer at Bitwise, the financial advisor market is a huge opportunity for the digital asset industry and is rapidly growing.
“By most estimates, it’s as big as the institutional market and many times bigger than the self-directed retail market,” Hougan said. “It’s a difficult market to serve because it necessitates education, support, and a national distribution team, but I believe the crypto industry has been overly focused on the institutional market and not on the advisor market, which has built a large swath of the ETF ecosystem into the multi-trillion-dollar market that it is today. That is one fact that I believe is widely overlooked.”