Cost lever
Costs of tokenized funds: where savings of up to 70% arise.
The cost lever of tokenized funds does not come from technology romanticism but from fewer intermediaries, fewer retrocessions and less reconciliation.
In brief
The potential of up to 70% lower distribution and settlement costs arises mainly from three blocks: elimination of transfer agent fees, reduction of retrocessions and less reconciliation effort through a shared data base. It is not a guarantee. The robust figure depends on the distribution model and the specific fund.
In short
01
The biggest point of attack is the classic chain of transfer agent, distribution and downstream reconciliation.
02
T+0 settlement reduces time, coordination and sources of error, but does not replace a clean distribution of roles.
03
The concrete saving has to be calculated per fund, share class and distribution model.
The cost lever
Where the potential comes from.
Todayaddressable distribution and settlement costs
24 to 57 bp p.a.
Transfer agent feesof which reducible
2.3 to 7.6 bp p.a.
Retrocessions and trail commissions
6 to 29.3 bp p.a.
Reconciliation and operational matching
0.4 to 2.6 bp p.a.
remains
15.4 to 17.5 bp p.a.
All values are indicative ranges, not fixed values and not a guarantee. Reference base: addressable distribution and settlement costs, not the TER and not total fund costs. The robust figure for your organisation is produced in the readiness assessment. Model your case in the cost calculator
How it works today
Classic fund settlement spreads costs across transfer agent, distribution remuneration, reconciliation, manual coordination and technical interfaces. Many of these costs are not individually spectacular, but they add up across volume, duration and share classes.
At the same time, settlement often remains on T+2 logic while data sets have to be reconciled across separate systems.
What tokenization changes
Tokenized fund shares can bring subscription, holdings and settlement onto a shared technical base. That lowers the need for downstream reconciliation. In suitable setups the transfer agent can be eliminated and the cost logic of the distribution chain renegotiated.
The cost lever therefore does not come from a single smart contract, but from a shorter operational chain.
What Wallberg does
Wallberg breaks the existing cost block down into roles, fees and process costs. We then examine which components can be replaced, reduced or redistributed through tokenized settlement.
The result is not a marketing figure but a range for your specific organisation. Only then is it decided whether a go-live makes economic sense.
Context
How the cost lever is derived
Transfer agent
Potential saving where subscription, register checks and holdings are processed directly in the tokenized architecture.
Retrocessions
Potential reduction where digital distribution and the shared data base require fewer classic remuneration stations.
Reconciliation
Less coordination because KYC status, subscription, settlement and holdings reference a shared data base.
The limit
Up to 70% is a potential, not a fixed value. Product, distribution, volume and partner costs determine the robust figure.
Frequently asked
The key questions at a glance.
Are costs guaranteed to fall by up to 70%?
No. The figure describes a potential from transfer agent fees, retrocessions and reconciliation effort. It has to be calculated concretely per fund.
Which costs remain despite tokenization?
Licensed partners, custody, register keeping, payment rails, KYC, operations and the audit of the outsourcing remain cost-relevant.
When does tokenization make economic sense?
When the reduced process and distribution costs exceed setup, partner and operating costs. That threshold is exactly what the readiness assessment calculates.
Further reading
Cost calculator
Estimate your fund’s saving potential as a range instead of a blanket figure.
For ManCos
The ManCo page with the footnote and audience logic behind the cost lever.
Transfer agent
Why the transfer agent is the central point of attack.
Tegernsee Lab
The running system for KYC, subscription and settlement in T+0 (in German).
The next step
A conversation instead of a brochure.
In a free 30-minute briefing we walk you through the lab live, and you tell us where your organisation stands. You then decide whether a fixed-fee readiness assessment is the right second step.
Free of charge · with live demo
office@wallberg-advisory.de