Professional Adviser: The next evolution in fund structure: What tokenisation means for advisers

By: Justin Hayer, Director of New Business Incubation

For years, the digital representation of real-world assets on distributed ledgers has hovered on the edge of financial services. Tokenisation was seen as a future-facing concept but not necessarily immediately relevant to advisers focused on day-to-day portfolio management. That perception is changing fast. 

As advisers look for new ways to broaden investor access to private markets, tokenisation is emerging as a practical enabler. By embedding ownership and transfer rights directly into digital assets, the technology can enable fractional investing, faster settlement, and 24/7 trading—all while maintaining the safeguards and regulatory oversight on which wealth managers depend. 

This shift isn't about reinventing the financial system overnight. It stands to gradually modernise its infrastructure to make the investment ecosystem more efficient, transparent, and inclusive.

A regulatory shift underway

Momentum is already building across major financial centres. In the US, the Securities and Exchange Commission has opened the door to unified platforms where traditional and tokenised securities can coexist, paving the way for integrated trading and settlement environments. 

In the UK, the Financial Conduct Authority's Digital Securities Sandbox (DSS), developed with the Bank of England, is testing how regulated tokenised funds could operate within the current legal framework. The initiative allows participants to tokenise real assets within a controlled, non-live environment, exploring whether distributed ledger-based recordkeeping can improve efficiency, transparency, and security across financial markets. 

Elsewhere, Singapore's Monetary Authority is moving quickly through Project Guardian, a cross-industry collaboration investigating tokenised funds and cross-border settlement models. Europe, too, is taking shape under the Markets in Crypto-Assets (MiCA) regulation and the DLT Pilot Regime, designed to bring blockchain-based trading firmly into the regulated fold.

The takeaway for advisers? Tokenisation is no longer a fringe experiment. It's entering the financial mainstream, and the infrastructure to support it is being built.

What this means for wealth managers

For wealth managers and advisers, tokenisation could fundamentally broaden the universe of investable assets. By making high-value assets divisible into smaller digital tokens, it becomes possible for investors to access opportunities once reserved for institutions.

Consider private equity or private credit, areas that typically require very large minimum investments. Tokenisation could lower those thresholds dramatically, opening the door to a far wider client base. It's an evolution similar to what ETFs did for equities two decades ago: greater accessibility.

 At the same time, tokenisation is prompting a shift in the traditional operating model, including programmability, composability, and settlement speed. Fund administrators, custodians, and transfer agents are already evolving their behaviours to improve efficiency and transparency, including the adoption of emerging technologies, enhancing automation, and integrating new data layers. As these functions become increasingly programmable and near-instant, advisers will need to understand how tokenised products interact with existing portfolio systems, and how this evolution affects liquidity, valuation, and risk reporting.

That doesn't mean advisers have to become blockchain experts. But familiarity with tokenisation's basic mechanics—and its implications for transparency, fees, and liquidity—will become an increasingly valuable part of the adviser toolkit.

Early pilots and models taking shape 

Across global markets, pilot programmes and regulatory sandboxes are already testing different models of tokenisation. Some experiments are mirrored funds, which run in parallel to existing structures but use blockchain for record-keeping. Others are hybrid share-class models, where traditional and tokenised units coexist within one fund. And a smaller number are exploring fully on-chain funds, where everything from issuance to transfer occurs natively on distributed ledgers. There's no shortage of experimentation seeking to make the industry more efficient and beneficial to all parties involved.

For advisers, keeping an eye on these developments is more than just professional curiosity. Many of today's pilot initiatives will evolve into the fund structures of tomorrow. Being conversant in how they work will help ensure advisers remain on the front foot as they face an increasingly digitised client base.

The bigger picture: Integration, not disruption

Tokenisation won't magically transform poor-quality assets into good investments. But it will change how wealth products are built, traded, and distributed. Combined with advances in artificial intelligence and digital identity, tokenisation could streamline onboarding, compliance, and personalisation, making it easier than ever to deliver bespoke portfolios at scale.

The real potential lies in tokenising not just fund ownership, but the underlying private market assets themselves, allowing near real-time rebalancing of traditionally illiquid exposures. This marks an evolution that can enable a revolution—a step toward digitally native markets where ownership, settlement, and reporting are more efficient and transparent.

For advisers, the opportunity lies in preparation. Understanding the fundamentals now will support better client conversations on access, liquidity, and diversification later.

The technology is ready, regulation is catching up, and those who engage early will be best placed to harness tokenisation as a tool for building more inclusive and resilient portfolios.