Only 15% of investment advisers were willing to recommend cryptocurrencies and digital assets to their clients highlighted a study by BitWise Asset Management. It found that many financial advisors, a huge 85%, aren’t investing in cryptocurrencies for clients. This is despite the digital assets sector transforming into a full-blown investing mania over the past two years.
Financial advisors are being very careful. Experts say that financial advisors’ own trading rules restrict or limit them from holding cryptocurrencies for their clients. They can suggest only regulated investments. There is still a thick fog over cryptocurrency, in terms of regulation and consumer protection. As such, many advisers prefer to stay clear of digital assets.
Advisors see the volatility and risk of cryptocurrencies as an issue. But then young investors who can afford to take big risks are not deterred. It is also different for investors who have spent years building a nest egg. Russell Wayne, a financial advisor at Sound Asset Management, says he has taken time to understand how crypto operates. He thinks digital assets are too risky for his clients. Wayne highlighted that risk is manifest as bitcoin is currently down about 36% from the high of November 2021. He said he wants to make sure that his clients don’t call and say “What the hell did you do?”
But there is no denying that clients are curious about cryptocurrency. 94% of advisors, who participated in the Bitwise survey, revealed that they received questions about crypto. Adam Koos, the founder of Libertas Wealth Management Group, says he is not comfortable carving out a large percentage of his client’s portfolios and putting it into crypto. Koos believes cryptocurrency is a great asset to trade but is much harder to justify as part of a stable portfolio.