Planners at the T3 Advisor Conference were posed that challenge in presentations that sought to explain the importance of distributed ledger technology and its future impact on the financial industry. For those stumped (quick answer: blockchain is a digital shared ledger that tracks online transactions) there’s plenty of time to learn how it works, says Magdalena Ramada, senior economist at Willis Towers Watson.

While no advisor needs to become a blockchain expert, it’s not to be ignored either, Ramada adds. “You need to know what it is, and how it will affect the financial services ecosystem.” Financial institutions, particularly banks and custodians, are examining blockchain technology for ways in which it can be used.

Schwab, for instance, has a group exploring blockchain applications. As a result, the more immediate impact of blockchain will be on the firms that develop technology tools for advisors, Ramada adds.

“At some point they will need to adapt their business models,” she says, noting Vanguard’s recent decision to launch a blockchain network. “They are built to only serve the financial system that exists right now.” There are several benefits for advisors once blockchain technology becomes more prevalent in financial services, says Zohar Swaine, head of New York-based consultancy Mink Hollow Advisors.

For example, proxy voting will become more transparent, as well as private placements, he says. “Blockchain enables instant transactions and eliminates the middleman,” Swaine says, noting that some professions in wealth management were endangered as a result of the technology. Read more from financial-planning.com…

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