The integration of blockchain and artificial intelligence (AI) technology in financial planning and portfolio construction holds immense potential for efficiency, accuracy and security in the industry.

The use of blockchain and AI in this field could revolutionize the way financial advisors build portfolios and manage client information.

Financial planning

In the field of financial planning, the integration of AI and blockchain technology could provide a much-needed upgrade. AI algorithms could analyze vast amounts of data to assist in making informed decisions regarding investments, taxes and insurance.

The algorithms could make real-time adjustments to financial plans, automate updates to plans based on changing legislation and reduce the risk of errors and fraudulent activities – all in a matter of seconds. This would lead to more efficient and accurate financial plans, freeing up time for financial advisors to focus on providing personalized advice and improving client relationships.

By utilizing the secure and transparent platform provided by blockchain, AI algorithms could also analyze and securely store sensitive financial information such as Social Security income information and tax information. This could allow for faster and more accurate calculations, potentially leading to financial plans that automatically adapt in real time without the need for manual updates.

Portfolio construction

Traditionally, portfolios have consisted of a mix of stocks, bonds, cash and sometimes a few alternative investments. However, with the advent of non-fungible tokens, the future of portfolio construction could be changing.

NFTs allow for the fractional ownership and sale of any asset through smart contracts stored on a blockchain, potentially enabling portfolios to hold unique assets such as music albums, real estate, direct-held businesses, watches and artwork.

These new investment opportunities would allow clients of financial advisors to not only own unique assets, but to generate income from them in various ways.

  1. Through NFT staking, a process in which holders lock up their NFT assets on a platform or protocol, clients could earn rewards for holding onto their assets and helping secure a network.
  2. Owning unique NFT assets that represent actual assets can also lead to passive income streams, such as rental income or royalty payments.
  3. By fractionally selling assets through NFTs, clients have the opportunity to liquidate fractions of holdings and receive lump sums of cash – a process which, previously, may not have been possible with certain assets.

All of this opens up new possibilities for investment and brings us closer to a future where the average person’s portfolio may resemble that of a hedge fund or venture capital fund. By exploring these cutting-edge technologies, financial planners and investors alike may be able to create a more diverse and secure investment portfolio with an extremely wide array of assets.

Source: CoinDesk