September 2019 – Information about on Security Token Offerings usually refer to two target groups. Companies with financing needs and investors looking for new, lucrative investment opportunities. But the topic is also highly interesting for asset managers and investment advisors. Why should have financial product distributors have a look at digital assets resp. STO too? We have compiled the three most important arguments for you.
How can financial product distributors benefit from Security Token Offerings (STO)?
They can open up new target groups.
Many advisors have three groups of clients:
- People whose professional careers are coming to an end or have already been completed and who want to increase the assets they have acquired.
- Parents who are already preparing their assets for transfer to their children and grandchildren by building their own portfolios.
- Heirs – mainly from the so called “generation Golf”, born between 1965 and 1975 – whose more or less expected money comes.
With the distribution of STO completely new people can suddenly be addressed. Those who are not necessarily interested in classic investments such as funds. For example, tech-savvy investors aged between 20 and 45 – a target group with long-term potential.
And remember: STO can be traded globally. In this respect, private and institutional investors from all over the world are also coming into focus.
They can convert reduced costs into higher returns.
Traditional underwriting processes are expensive and still involve paperwork today. By the way, this also applies to processing and follow-up. This results in high administrative costs, which are basically no longer up to date.
The drawing of digital securities is – of course – digital. All processes, such as distributions, are stored on the token in the form of smart contracts. This considerably reduces the previous administrative effort.
Another point speaks in favour of cost efficiency. The accompanying costs of an STO are significantly lower than those of an IPO, for example. The fact that there are no intermediaries such as banks or brokers is reflected in the calculation. As a result, the lean structure is reflected in the returns. A fact that everyone takes advantage of.
They position themselves as highly innovative entrepreneurs.
Finger on the pulse of the times, always up to date and always on the lookout for the best offer: Investors should expect nothing less from their advisors. With the sale of STOs, sales persons sets a highly innovative signal. Both to its customers and within the industry. Because now is the time to position yourself as a first mover.
The innovation factor is also a real booster when it comes to communication. As a completely new instrument, STOs are reported in the press and online media, which leads to increased public awareness.
It is absolutely worth keeping an eye on STOs as digital securities issues in sales! Please do not hesitate to contact us about possible forms of cooperation.