MassMutual’s Flourish Crypto to Give RIAs Direct Bitcoin Exposure

Initially bitcoin will be the only asset available for trade, but the hope is to make ethereum available to clients over the coming weeks.

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Ben Cruikshank

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key takeaways

  • Flourish Crypto will give independent Registered Investment Advisers (RIAs) a simple, secure and compliant way to offer direct bitcoin exposure to their clients
  • The MassMutual-owned firm aims to provide RIAs with the flexibility needed for trades, transfers, billing and integrations to open up an emerging asset class to a new demographic of investors

Today, there is immense competition in the field of wealth management with robo-advisors, trading firms and other competitors constantly expanding their product offerings to compete with traditional independent Registered Investment Advisers (RIAs).

Historically RIAs have been forced to sit on the sidelines and watch capital flow out of their sphere of control, but Flourish Crypto — the digital asset partner to Flourish Cash — intends to change that by allowing RIAs to take part in the rapidly emerging crypto industry.

Flourish Cash, a cash management account for individuals and RIAs that yields 0.24% in an FDIC insured account, currently handles over $1 trillion in assets under management. Roughly 400 RIAs currently use their product offerings.

As a subsidiary of insurance giant MassMutual, Flourish Crypto hopes to empower these RIAs to offer their clients exposure to digital assets. 

“Investment advisors are really left with three choices when their clients ask them how to gain exposure to digital assets,” Ben Cruikshank, head of Flourish, told Blockworks. “Either recommend an investment vehicle that often trades at discounts or premiums to NAV with high management fees, tell them to go to a retail exchange where they would no longer generate any revenue for managing their money, or simply tell them it is not an option.” 

Initially bitcoin will be the only asset available for trade, but the hope is to make ether available to clients over the coming weeks.

Based on overwhelming feedback from potential users, Flourish opted to vet different custodial providers to take ‘physical’ possession of their clients’ crypto assets.

This is where Paxos comes in. As the custodian for Flourish Crypto, Paxos is required to hold all customer assets bankruptcy-remote and separate from corporate assets. Paxos is one of the few companies in the crypto industry that meets both SOC 1 Type 2 and SOC 2 Type 2 standards, and the first company to secure a New York State Department of Financial Services Trust Charter for Digital Assets, in 2015.   

In addition, a vast majority of retail exchanges today do not provide 1099’s to their users in order to help them file their taxes. This is also where Flourish feels they can differentiate themselves and open up crypto to an entirely new demographic of investors, according to Cruikshank.

Tim Corbett, CIO at MassMutual, said in a statement released today: “We decided that it was imperative to invest in cryptocurrency itself and to begin to lay the groundwork for ways we can incorporate it into our business. This includes offerings and technology initiatives across the company, such as today’s launch of Flourish Crypto — a cryptocurrency investing solution built for Registered Investment Advisors (RIAs) and their clients.”

It’s not only MassMutual that sees the opportunity for crypto and RIAs. 

Matt Hougan, chief investment officer, Bitwise, previously told Blockworks that the financial advisor market is a huge opportunity for the digital asset industry and growing fast.

“By most estimates it’s as large as the institutional market, and it’s many times larger than the self-directed retail market,” said Hougan. “It’s a hard market to serve in that it requires education and support and a national distribution team, but I do think the crypto industry has perhaps been overfocused on the institutional market and not on the advisor market, which built a huge swathe of the ETF ecosystem into the multi-trillion-dollar market that it is today. That’s one fact that I think is not commonly understood.”

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