Exclusive: Why the $18T retirement industry now sees blockchain as key to survival
Investing.com--One of the most conservative corners of global finance, overseeing roughly $18 trillion in U.S. retirement assets, is confronting an unavoidable reality: its infrastructure is obsolete, and blockchain is no longer a future experiment. It is becoming a prerequisite for survival as non-traditional competitors move into long-term savings.
That warning comes from Robert Crossley, head of industry advisory services at Franklin Templeton, which recently interviewed 52 U.S. retirement plan sponsors, recordkeepers and asset managers that collectively oversee how retirement assets are administered, transferred and recorded.
That warning comes from Robert Crossley, head of industry advisory services at Franklin Templeton, which recently interviewed 52 U.S. retirement plan sponsors, recordkeepers and asset managers that collectively manage $18 trillion of assets and oversee how retirement assets are administered, transferred and recorded.
In an exclusive interview with Investing.com’s Yasin Ebrahim, Crossley said the findings suggest the retirement industry is being pushed toward modernization by a convergence of forces: new competitors moving into long-term savings, rising pressure to deliver more personalized outcomes, and the rising cost of operating through fragmented, siloed systems.
The U.S. retirement system was designed around fail-safe processes and long-term stability, making it one of the most conservative corners of finance. That design, however, is increasingly at odds with the pace of technological and economic change reshaping how people work, save and invest.
“The problems and challenges of the retirement system today are almost impossible to solve within the current architecture, the current constraints, and the current incentives of the system,” Robert Crossley, head of industry advisory services at Franklin Templeton, told Investing.com.
Crossley pointed to three forces converging to make modernization less a choice than a necessity, arguing that blockchain-powered infrastructure is now increasingly viewed as one of the more realistic ways to restructure how data, assets and benefits such as 401(k) account balances, contribution rights, and vesting rules move across the system.
First, competition is no longer confined to traditional retirement incumbents. Neo-brokers and fintech platforms such as Robinhood are expanding beyond trading into rollovers and long-term savings. These new incumbents are building direct relationships with savers that retirement providers historically controlled, particularly at rollover and job-change moments.
Second, the employment model the system was built around is breaking down. Frequent job changes and a more fragmented, on-demand labor market make the idea of a single workplace serving as the anchor for retirement saving and benefits decisions less realistic.
“The average length of time that a Gen Z has in her career is just over two years versus eight and a quarter for a baby boomer, and the model of a single workplace being the focal point for all of your retirement saving decisions and all of your benefits decisions no longer holds in the same way,” Crossley said.
Third, the economics of delivering better outcomes are getting harder to defend. Fragmented data, layered intermediaries and manual processes make personalization and portability not only difficult but also expensive to deliver at scale.
“Standing still is not an option anymore,” Crossley said. “Because we are going to be either disintermediated or our advantage is going to be eroded by nontraditional competitors.”
A common assumption in the tokenization debate is that retirement systems move on-chain because savers begin demanding tokenized versions of the funds they already own.
The misconception, Crossley suggests, lies in confusing the existence of technology with the conditions required for adoption. This misreading also surfaced in the late 1990s, when Nobel laureate Paul Krugman, a prominent economist, underestimated the internet’s impact by overlooking the role of enabling infrastructure and user interfaces.
Today’s retirement infrastructure remains built around fragmented, siloed accounts, with different providers controlling different parts of an individual’s financial life on systems that rarely talk to each other. In an on-chain environment, a digital wallet is software that can hold and control tokenized value (crypto today, but potentially securities, cash and retirement entitlements such as 401(k) balances and contribution rights). It becomes the interface through which assets, liabilities and benefits are accessed.
“If the wallet becomes the default way people hold value and access financial services,” Crossley said, “then everything exists in the same place and is controlled from the same place.”
As that transition begins, on-chain infrastructure is likely to resemble a new financial operating system, making tokenized assets a consequence rather than the starting point. Put simply, wallets come first. Tokenized fund shares come later.
That shift is already gaining momentum. Roughly a third of Americans aged 25 to 35 already have a digital-asset wallet, while about a quarter of those aged 35 to 45 do as well, according to data cited by Franklin Templeton.
This is also why Crossley says the industry’s focus is moving away from one-off “tokenized products” toward deeper infrastructure partnerships that actually deliver the technology’s benefits.
“Instead of thinking about where I can get a certain product from, there’s a widespread recognition for much deeper strategic partnerships to bring the technology,” he said, arguing firms increasingly need partners who can co-build solutions rather than simply sell wrappers.
In a wallet-driven system, whoever controls the wallet relationship while still supporting legacy accounts is likely to gain a decisive edge.
“The whole wealth management industry will compete to service wallets,” Crossley said. “The wallet will become the center of your life… Anything that sits in a wallet is software. Assets become programmable, and benefits become programmable.”
That programmability, he argues, is what opens the door to concrete, near-term use cases for bringing retirement infrastructure on-chain.
The retirement system’s move toward blockchain is unlikely to come through a wholesale replacement of existing infrastructure.
Instead, it is likely to take the form of a phased transition that blends legacy systems with new on-chain capabilities to address the most acute inefficiencies from fragmented data and reconciliation-heavy workflows to the high operational costs of administering benefits at scale.
As wallet-based infrastructure becomes more common outside retirement, he says providers will increasingly connect into that ecosystem rather than build it from scratch, expanding the practical use cases over time.
The most immediate use cases, he argues, sit in benefits administration, where complexity, cost and manual reconciliation remain deeply embedded. “It probably starts with tokenization of benefits in some shape or form because that’s where there’s great inefficiency,” Crossley said. By embedding rules directly into digital records, or tokens, that update automatically when a participant changes jobs, contributions or eligibility, administrative processes can be automated, reconciliation across recordkeepers and providers simplified, and both operational risk and costs reduced.
The efficiencies from automation will expand beyond back-office workflows to how retirement assets are held, accessed and moved. As wallets become more common across payments, investing and savings, retirement providers will not need to build a wallet ecosystem from scratch. “When that infrastructure already exists outside, then it’s a matter of connection rather than reinvention from the ground up,” Crossley said.
The future of the retirement industry is one in which accounts and wallets will coexist. Retirement platforms would continue to support legacy account structures while gradually piloting wallet-based experiences for participants who prioritize portability and user experience. In Crossley’s view, the pace of that shift may be faster than traditional providers expect. “A conservative estimate is probably three to five years,” he said, arguing that adoption could accelerate as wallet UX and compliance tooling mature.
Despite the momentum around tokenization, the biggest blocker is not the technology itself, Crossley said, but the industry’s inability, and in some cases reluctance, to change safely inside a conservative system designed to avoid mistakes.
The most dangerous misconception, he argued, is believing that doing nothing remains a viable alternative. “Standing still is not an option anymore,” Crossley said, warning that retirement providers risk being disintermediated as wallet-based platforms expand into long-term savings and reshape how people access financial services.
Despite evidence that the technology is capable, integration with today’s retirement infrastructure remains difficult. The current system relies on legacy recordkeeping platforms, fragmented data, long-term vendor relationships and governance processes built for stability rather than speed. Understanding how blockchain technology fits into this operating model without breaking operational and compliance processes remains a major barrier to adoption.
Regulation adds another layer of friction. Retirement products are heavily regulated to protect savers and ensure system stability, but uncertainty around how new technologies fit within existing rules continues to slow progress. Firms want clearer guidance on what is permitted, what is expected and how responsibility is allocated before deploying infrastructure that touches custody, consumer protection and benefits administration.
Franklin Templeton’s approach, Crossley said, is to build bridges to the future by prioritizing education, regulatory engagement and the gradual adoption of blockchain-enabled processes inside existing systems so the industry can modernize without breaking what already works.
For investors assessing whether retirement infrastructure is truly moving on-chain, Crossley said the clearest signals will not come from new token launches, but from the spread of digital wallets, the advance of neo-brokers into long-term savings, and the convergence underway across wealth management.
First, watch wallet adoption and the firms building wallet-based rails. Crossley argues wallets are becoming the primary interface for managing financial life, creating the base layer that makes tokenized assets workable at scale.
Second, track the push by competitors without legacy retirement infrastructure. Neo-brokers and neo-banks are expanding beyond trading into rollovers and long-term savings, using modern technology stacks to build broader relationships with the same end user. Crossley said incumbents should treat this as an immediate competitive threat, not a distant trend.
Third, follow the broader platform shift across wealth management. Crossley expects more firms to bundle investing, saving, spending, insurance, and digital assets into connected ecosystems. In his view, the growth of these horizontal platforms, built around capabilities rather than standalone products, is what will accelerate the retirement system’s transition from siloed accounts toward a wallet-compatible model.
Ultimately, the retirement industry’s move on-chain will be decided long before most savers notice it. By the time tokenization feels obvious, distribution and customer relationships may have already migrated, and incumbents that failed to modernize will be fighting for survival rather than shaping the next system.
