Mzwandile Mtshali, Executive of PPS Advisory Services and Enablement
Creating an effective financial plan was complicated enough before the arrival of cryptocurrencies, non-fungible tokens (NFTs) and blockchain technology.
Of course, you could ignore such developments; our capacity to process novelty is indeed finite. But these technologies are gaining real momentum. And they are likely to change the way the world works, regardless of our readiness.
One way that might happen is through the large-scale adoption of working and socialising in virtual realities – collectively known as the metaverse.
You have seen it before
The concept of the metaverse is an extension of what video gamers have been doing for years: completing tasks using an avatar in a digital environment.
But in the case of the metaverse, your virtual reality (VR) headset takes you inside those digital playgrounds, allowing you to experience the landscape in 3D.
Decentraland is one example. Its community of creators is building (read coding) an environment in which you can meet friends or work colleagues in wildly imaginative landscapes and structures. Perhaps its main attraction is the ability to buy digital real estate within that space, minted as NFTs, using cryptocurrency.
To be sure, the investment case for digital land is leaky at best. Investors hope that more people, and therefore more businesses, will congregate and transact in these virtual worlds. Maybe then they could rent or sell their “land” to brands who need store frontage, advertising space or a place to hold virtual events.
Meet me in the metaverse
Buying digital land may prove to be ludicrous. But, that is not all there is to be done in the metaverse.
Imagine this: It is time for your bi-annual meeting with your financial adviser. You are travelling abroad, so instead of your usual face-to-face meeting, you agree to meet him in the metaverse.
At a coffee shop, perched at the foot of the Himalayas (because you can), your conversation kicks off with small talk around the watch his avatar is wearing, an NFT designed by Omega. You ask what it is worth. He tells you it is halved in price just this morning. You laugh and think, good icebreaker.
To matters at hand, he conjures a 3D visualisation of your financial plan. You easily tinker with your income, expenditure and risk assumptions and agree that more offshore exposure is needed in your investment portfolio. A biotech fund in the Netherlands looks like a promising solution.
The avatar of the fund’s portfolio manager (you are a big spender) joins your table to explain the underlying investment strategy. You like what you hear and make an investment there and then, no paperwork is required thanks to the wonders of financial assets stored on decentralised blockchain technology. You proceed to make similar frictionless tweaks to your insurance and healthcare cover.
Some parts of that hypothetical client experience trump what is possible in the real world. The obvious downside is that you will not be able to incorporate the body language of your adviser, nor that of the portfolio manager, into your decision making – the avatar graphics are not there yet.
A parallel economy
Several industries stand to benefit from the proliferation of the metaverse as a medium of interaction and transaction, including:
- Digital infrastructure (connectivity, semiconductors, cloud and edge computing)
- Consumer tech (VR and AR headsets)
- Gaming, art, music and sports
Who are the companies in this space? The big tech names already have exposure to the metaverse: Google, Apple, Microsoft and Meta are making eye-watering investments. But purer metaverse plays like Fastly, Unity Software, Matterport, Roblox and Autodesk are also interesting.
Note: we are not recommending you buy these shares. Rather, read about them. Knowledge of what they do will improve your grasp of how the metaverse is pieced together, who the key players are and where the potential investment opportunities lie.
The success of any financial plan is often contingent on the willingness of the client to engage with it. In that context, the channel matters.
At PPS, we are working hard to provide leading financial, health and wealth services to our clients across the continuum that spans face-to-face, virtual and robo advice.
Our digital innovation drive is creating an integrated, omnichannel experience that gives our clients the freedom to choose their preferred medium of engagement, as well as their level of autonomy in developing their financial plan.
Will the metaverse become another PPS channel? Ultimately, that depends on whether you want to meet us there. We believe it is worth thinking about.