How Wealthman Will Disrupt Wealth Management ©

decentralized wealth management
What Affects a Client’s Choice of Wealth Manager?
There are three qualities that top the list: competence, reliability and low cost of service.

Competence. Only the capability (or incapability) to fulfil investment 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 only indirect characteristics such as reputation, assets under management and the brand existence period. This is why one of the included metrics of competence might be the ability to achieve clients’ investment goals.

Reliability. This includes the technological protection of a wealth manager, their financial stability and their 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 a manager’s fee in the form of a small percentage of the 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 as to be compensated more (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 accurate chronological order and protect it from forgery. This is due to the fact that the right version of a database is determined by a consensus of the majority of network participants.

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 in order to trust the whole system because it is maintained by many actors who are incentivised to approve correct transactions. Only transactions that meet the consensus are added to the blockchain.

Applications built on a blockchain are called smart contracts and can inherit the features of decentralised trust. This eliminates the necessity for clients to entrust their 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 which deal with on-blockchain digital assets. It aims to provide a permissionless, secure environment for the programming, execution and marketing of individual investment management services.

Historically, all the sensitive business processes of investment management (storage and exchange of assets, and the evaluation of the effectiveness of asset management) required trust in the central parties that executed them, such as banks or exchanges. This was due to the effects of scale, which can minimise transaction costs. However, this threatened security with the risk of losses due to placement of trust into a central party.

Our protocol replaces the central party having control with decentralised control in the form of smart contracts over business processes.

By using our protocol, any wealth manager will be able to obtain more trust than the behemoths of the market who pour vast amounts of money into their image. This is why Wealthman is expected to quickly gain the 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 weigh 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 this as well: it conducts measurement procedures that show how well wealth managers are achieving the financial goals of their clients within the platform. It works as follows:

1. Users of the Wealthman protocol leave traces of investment goals and results 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 step 1 and the methodology from step 2.

The key to high positions in the rankings of this marketplace lies in being outstandingly efficient and providing the best value-for-money ratio. Such a marketplace of wealth management services is going to be the first ever solution of this kind on the global market.