Wealth managers are ‘rapidly adopting’ digital asset strategies, with the diversification potential of digital assets driving discussions, research from Brava Finance has found.

Its study of wealth managers across 13 countries, including the UK, showed that 92 per cent saw digital asset adoption as a strategic priority, including 50 per cent saying it was an ‘urgent and immediate’ priority.

Almost all (92 per cent) wealth managers said they were developing a digital asset strategy, with 16 per cent stating that they already had a well-defined strategy in place.

More than eight in 10 (84 per cent) wealth managers already had some allocation to digital assets.

Over a third (36 per cent) held between 1 per cent and 2 per cent in their investment portfolios, while the same proportion held between 2 per cent and 3 per cent, and 6 per cent held between 3 per cent and 4 per cent.

In the past 12 months, 84 per cent of wealth managers had increased their exposure to digital assets, and all said they will increase their allocation to digital assets over the next 12 months.

The research indicated that all allocations would have increased in five years’ time, with the largest growth in the 2 per cent to 3 per cent range, rising from 36 per cent of wealth managers being in this range to 46 per cent.

Recent record valuations in Bitcoin stimulated digital asset discussions among 98 per cent of wealth managers, including 28 per cent who had ‘serious, strategic conversations’ due to strong Bitcoin performance.

However, 88 per cent of wealth managers said they were concerned about Bitcoin’s recent fall from all-time highs, resulting in 82 per cent looking for alternatives, such as stablecoins.

The positive performance of some digital assets and the support voiced by US President Donald Trump for cryptocurrencies were the two key reasons wealth managers gave for considering digital assets.

These factors were followed by the improving regulatory environment and the increasing number of traditional financial firms entering the market.

More than half (52 per cent) of wealth managers were motivated to develop their digital asset strategies by the potential to improve risk-adjusted returns, while 36 per cent were seeking a diversified source of yield for their clients.

Almost all (96 per cent) wealth managers agreed that digital assets were an effective way to diversify investment portfolios, including 18 per cent who strongly agreed.

The greatest barriers to wealth managers’ strategies being built were regulatory uncertainty, custody and security, a lack of internal knowledge, volatility, and ESG and reputational concerns, according to the study.

“Wealth managers around the world have recognised that certain digital assets such as stablecoins are both robust and stable,” Brava CEO and founder, Graham Cooke, said.

“They are now seeking to build digital asset strategies that will help them to deliver a diversified source of yield and improve risk adjusted returns for their clients.”

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