Connected into a virtual 3D environment, an advisor walks her client through a dynamic visualization of a financial plan. They discuss potential life goals, explore career and family paths and plot out different strategies to achieve financial independence. The conversation shifts from job promotions to children to retirement. The simulated world around them switches between several interactive videos, each tied to different triggers in an underlying financial model.

The meeting goes well, and the client agrees to work with this advisor. Taking off the VR headset, the client places a thumbprint on the small panel on the side of the device. With a few spoken phrases of consent and the electronic signature of the thumbprint, software begins its journey to realize this financial future.

In 15 seconds, five different accounts are opened on three different custodians. Each account is funded and invested in hundreds of holdings, with no transaction cost. The smallest account is a mere $0.25, a symbolic investment for college of the client’s future daughter, not yet born. The $0.25 is split into 15 asset classes, each holding diversified ETFs as well as digital shares of alternatives. The journey has begun.

Technology That Works Together

The future described in the example above is surprisingly close. Several key technologies can shape this interaction, and their first iteration is already being used today. Let’s start with the mode of interaction – virtual reality.

Over the last four years, virtual reality (a world seen via a headset) and augmented reality (a world rendered on top of what we see) received billions of dollars of financing for research and development. An entire ecosystem of manufacturers and software providers, with firms like Facebook, Google and Microsoft, is racing to build interactions inside a virtual world. Today’s virtual experiences are still rudimentary, but the feeling of presence that they evoke is unlike that of any other technology.

An advisor and client have a valuable and special human relationship. Virtual reality will allow the advisor to literally take a client on a journey through a simulated financial model, made understandable and empathetic by triggered simulations. What would it be like to buy that house? Just ask and see!

The second part of the experience is the connection between account opening, electronic signature, custodians and immediate trading. Such a frictionless environment may be a decade away, but the infrastructure to make it happen is already being built. The key technology underlying this future is the digitization of currency, and thereafter, all asset classes.

As the largest digital currency, Bitcoin is the center of attention. Imagine a world where each unit of monetary value was infinitely divisible and transferred without any marginal cost. Imagine also that any holding, whether it is an ETF, a stock, or even a quantitative hedge fund interest, can be treated no different than a digital photo or mp3. Today, bank consortiums are working on exactly this project by leveraging the infrastructure underneath Bitcoin, called the Blockchain.

The Blockchain is a store of information, but unlike a traditional ledger, which derives authority from a single financial institution or government, its authority is distributed between all of its participants. It may be public, supporting the libertarian bend of Bitcoin’s founding, or private, reflecting the structure of a self-governing organization within the financial industry. But regardless of how it will be implemented, using the Blockchain as infrastructure for both legal contracts and trading will massively de-risk our economic system and drive to zero the marginal cost of doing business.

In the example above, the thumbprint acts as a password for identity management on the Blockchain. Once authenticated, a contract with the advisor and each relevant custodian can be executed immediately via an Application Programming Interface. These APIs are how different packages of software talk to each other. Successful contracts then kick off smart algorithms that understand asset location, structuring the appropriate taxable and tax-deferred accounts based on the conversation and initiating money transfers and trades.

Of course, all of this is tracked, recorded and digitally evidenced. A CRM tracks the client’s profile and has digital evidence of all operational activity, as well as a recording of the virtual reality conference. In turn, the advisor is a fiduciary, having vetted the software, set up the rules by which money moves and investments happen, and automated just enough of the practice to serve as many clients as possible with personal financial guidance.

Implications for Wealth Management

Why must we think about the future so carefully? Our commitment to understanding the DNA of innovation comes from the desire to build a lasting wealth management enterprise that helps as many people as possible live a better life. Our toolset is finance, which at its best empowers clients to achieve their financial goals. Institutions that nurture such a culture outperform over the long term—a lesson we’ve learned from the massive value creation by Google, Amazon and Apple.

Technology trends discussed in this column are the underlying reason for symptoms like Robo-advice or Data Aggregation. The latter are a consequence of underlying shifts in the economy and human behavior. When a new technology breakthrough happens, like digital currency or virtual reality, entrepreneurs rush to build companies using these technologies. In the process, they reimagine what an industry is capable of achieving.

By following closely and understanding how innovation is born, and the forces driving it, we can lead where the industry goes and how it gets there.

See Lex Sokolin’s most recent blog, How Tech-Enhanced Speech Will Change Wealth Management

Lex was also a member of the IA 25 for 2016; see his extended profile: Lex Sokolin: Fintech Futurist – The 2016 IA 25