The more people get interested in wealth management, the more brokers get into the malicious practices. The sphere needs a fundamental change, and blockchain has the potential to fight most of the existing problems.
Wealth management is no longer the prerogative of the top businessmen or professional investors. The acquisition of financial literacy increases the demand for this service. Nevertheless, the rise of the wealth management popularity has led to the increased incidence of dubious practices. Decentralized solutions like Wealthman can change the situation and bring back the trust in financial services.
Even the credible wealth management companies with strong reputation may be involved in frauds and manipulations. The recent example is the case of Wells Fargo. This California-based multinational financial services company has found itself in the heart of a scandal when whistleblower letters accused the employees of Wells Fargo of manipulating customers to their own benefits. The company is known for both high sales goals and payouts that exceed the average values in the industry.
Wells Fargo has already been under Justice Department and U.S. Securities and Exchange Commission investigation: it started in September 2017 when four financial advisers described the wealth company’s management problems in the letters to these government institutions. The recent news only confirms the poor quality of financial management. Brokers and advisors made lots of risky decisions against their customers’ interest to get higher fees. Employees of Wells Fargo did not take into account the requirements of their clients; the offers were prompted by the amount of bonuses that brokers would get from the sold products. On a case-by-case basis, even the asset allocation could be changed without informing the customer.
The situation in Wells Fargo is a big scandal that has attracted lots of attention of retail investors. However, the truth is that this company got caught, but lots of its rivals keep doing the same things. The sphere of wealth management needs a fundamental change and blockchain-based solutions have the potential to build trust in these services.
Brokers and wealth managers can easily manipulate the current regulation system to their profit. Customers have to rely on brand’s reputation and recommendations. Unfortunately, office in a classy city district does not make wealth managers more professional and devoted to the customers. The investigations led by Justice Department or some other institutions of the kind do not really change the industry. On the contrary, every case gone public shows to other companies the weak points of the system and stimulates the further development of fraudulent schemes.
The change that wealth management really needs is the creation of transparent trustless environment where it will be impossible to hide any actions against customer’s interests.
Wealthman is a wealth company that works on exclusive wealth management infrastructure that prevents any malicious practices. The full disclosure of management effectiveness will become an important instrument in defending the investors’ interests.
Designated parties will not be able to influence the evaluation of wealth management effectiveness on the Wealthman platform. The optimal portfolio computation or embellished asset exchange history will no longer confuse investors.
Decentralized wealth management has the potential to give new impetus to the development of the sphere. The elimination of dubious practices is just the first step made by blockchain. In the future we will be able to use intelligent robo-advisors that operate more data than any human can and have no reasons for cheating on customers.