MassMutual is launching a crypto investment platform for RIAs that will allow advisors to access, report, trade and plan using digital assets, according to an announcement. Called Flourish Crypto, the Massachusetts Mutual Life Insurance Company is making the new technology available to the more than 400 RIAs already using Flourish and has a number of renowned integrations.
Flourish Crypto debuts less than a year after Flourish was purchased by MassMutual. Initially positioned as an acquisition to provide financial planning and cash management solutions to advisors and their clients, Flourish is now opening the door to turnkey crypto investing.
Flourish’s offering will put advisors in the driver’s seat when it comes to providing financial advice and support around digital assets, said Ben Cruikshank, director of Flourish. With “tens of millions of Americans” already investing in crypto, “many advisers feel like they’ve been left out,” he said.
“The solutions available simply do not meet customer demand. These are not efficient ways to access this asset class and really, most importantly, they do not allow [advisors] to compete with start-up retail trading platforms and exchanges, ”explained Cruikshank.
RIAs using the platform will be able to support customers directly owning the cryptocurrency, plan and report on digital assets using integrations with third-party financial planning and reporting providers, to demonstrate discretion or offer the service as a customer-directed account and have visibility into crypto balances, statements and 1099-B, depending on the announcement. Advisors will also have access to compliance resources, such as sample ADV language and risk disclosure, through a partnership with Compliance Solutions Strategies. Flourish Crypto To Use Paxos Trust Company As Custodian And Platform Has Integrations With Major RIA Technology Providers Including eMoney Advisor, Orion and Envestnet | Tamarac.
“At MassMutual, we believe cryptocurrencies are increasingly a part of the financial landscape, both as an investment strategy and as a technological innovation,” said Gareth Ross, Head of Technology and Experience. company at MassMutual, in a press release. “We have invested in Bitcoin for our own general investment account and are also laying the groundwork for other cryptocurrency offerings and products.”
Bitcoin could turn out to be a form of “digital gold” or an inflation hedge, MassMutual CIO Tim Corbett added in a blog post. The company, he said, wants to see “thoughtful and prudent regulation” and believes “volatility will decrease as more institutions take up positions in the space.”
For now, Flourish only supports Bitcoin, but may add Ethereum “in the next few months,” according to Cruikshank. More “regulatory clarity” is needed before adding additional cryptocurrencies, he added.
With a growing number of educational, technology and compliance-focused resources for advisors interested in digital assets, advisers can only blame their own “laziness” for not working with digital assets, said Ric Edelman, Founder of the Digital Assets Council of Financial Professionals. The DACFP has already certified more than 300 advisers around the world in its digital asset education program. He has a waiting list of over 1,000, according to Edelman.
“There is now no legitimate reason for advisers not to engage in this asset class, on behalf of their clients,” Edelman said of advisers who are still reluctant to engage in crypto. . “More and more, advisers will be taken to task by clients, as well as regulators, for not being committed [with digital assets]because they have a fiduciary duty to provide their clients with diversified portfolios.
If MassMutual is able to deliver on Flourish Crypto’s promises, it will be a major development for advisers, Edelman added. The lower expenses and increased control offered by direct ownership, for example, will appeal to some advisers. “He will find his place within the RIA community,” he predicted.
With the crypto market still open, advisers face unique challenges. One of them is billing. Edelman suggested an approach that would average cryptoassets throughout the quarter based on a daily snapshot. “I don’t know if you make a lot by looking at the prices by the hour or by the minute,” he said. Per-second billing is an idea launched by Flourish Crypto competitor Onramp Invest as advisers seek to capture the volatility of digital assets.
The custodian selected by Flourish Crypto raises another consideration for advisers. Paxos is not just a guardian, he launched its own stablecoin, called Pax Dollar (USDP), which is pegged to the US dollar. While stablecoins offer some benefits to holders of digital assets, advisers should be aware that custodians also issue tokens, said Edelman, who has invested and has accounts with Choice, a crypto-custodian competitor, a partner of Fidelity. Investments Fidelity Digital Assets.
“You always want independence from your guardian. Ideally, you separate out conflicts of interest and work with a custodian that is fully focused on child care, ”he added.
To respond to criticism, Paxos has had a New York Department of Financial Services Trust charter for crypto since 2015 and is authorized to hold both crypto assets and US dollars, according to a company spokesperson. The company has obtained approval from the NYDFS to issue the USDP and noted that “stablecoin reserves are not commingled with other client cash held by Paxos.”
Flourish Crypto chose Paxos as their custodian because the company is “a great partner” and “a top custodian,” Cruikshank said.
Custody issues aside, MassMutual’s adoption of digital assets should be a wake-up call to any still-uncertain crypto advisers, Edelman said.
“When you have one of America’s largest insurance companies moving very aggressively into the digital asset space, that’s a clear sign that this asset class has gone mainstream. It won’t be long before it becomes ubiquitous and becomes an integral part of client portfolios, ”he concluded. “There really are no more valid excuses for advisers to reject this asset class, either from an investment thesis perspective or from a practice management perspective. “