Tokenized assets have the potential to revolutionize wealth management with lower fees and increased transparency, but they have yet to gain mainstream adoption. Regulatory uncertainty and security risks are significant hurdles. However, the future impact on accessing asset classes like real estate is promising, according to Nader Souri of BNY.

While tokens may not change portfolio construction principles, their programmability could reshape advisory work by emphasizing financial planning over hands-on investment management. Advisors will need to rethink their value proposition as tokens enable peer-to-peer trading and automatic execution based on conditions. Market segmentation may shift towards more self-guided investors.

Custodians, asset managers, and wealth firms are seeking clearer rules on how tokenized assets should be supervised and integrated into the financial system. Regulatory bodies like the International Organization of Securities Commissions warn of potential risks, including ties to the crypto market and confusion over ownership of underlying assets. ETFs and mutual funds still dominate, lacking clear benefits for advisors to adopt tokens.

The road to tokenization faces uncertainty and challenges, with regulatory clarity and infrastructure maturity key to widespread adoption. Until the benefits of tokens become clear and the infrastructure improves, advisors and clients may continue to rely on traditional investment vehicles like ETFs and mutual funds.

Read more at Yahoo Finance: Tokens Are the Future. But How Soon Will We Get There?