Learn Crypto or your customers will

The rise of cryptocurrencies over the past decade has been nothing short of remarkable, with bitcoin alone surpassing a market cap of over $1 trillion by 2021. Yet, despite this rise in popularity, many financial advisors remain hesitant or even averse to cryptocurrencies. This has created a growing disconnect between advisers and their clients who have invested in these digital assets.

The reasons for this disconnect are many. Some advisors are skeptical of cryptocurrencies, viewing them as a speculative bubble or simply failing to understand the underlying technology. Others may be put off by the lack of clear regulations or guidance from regulatory bodies. Whatever the reason, the result is the same: advisors are often ill-equipped to advise their clients who own crypto assets.

This disconnect can be particularly problematic for clients who have invested heavily in cryptocurrencies without the guidance of a financial advisor. While some may have enjoyed tremendous success, others may expose themselves to unnecessary risks or missed opportunities. As such, it is imperative for advisors to become more informed and engaged in the world of cryptocurrencies to better serve their clients and help them make informed investment decisions.

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Furthermore, a recent Coinbase survey of over 2,000 Americans in February 2023 found that 76% of Americans believe that cryptocurrency and blockchain are the future, while 20% of all Americans currently own crypto. In addition, 67% of Americans believe that the current financial system needs major changes or a complete overhaul. These statistics show the growing popularity and acceptance of cryptocurrencies among the general public.

Despite these trends, the Bitwise/VettaFi survey also showed that in 2023, 76% of financial advisors said they definitely would not or probably would not invest their clients in crypto. This highlights the need for financial advisors to become more informed and engaged in these assets to better serve their clients and help them make informed investment decisions. As cryptocurrencies continue to gain mainstream acceptance and become more integrated into the financial landscape, advisors who remain disconnected from these assets may find themselves at a disadvantage. It is crucial for financial advisers to take these surveys seriously and adapt to the changing landscape of the financial industry.

As a financial advisor, I met with a client late in 2016-2017 for our normal annual review. At the time, I didn’t see much attention to cryptocurrencies. But during this meeting, my close client surprised me with news about his situation. It turned out that in 2015 he had become interested in Bitcoin and started investing in it without mentioning it to me.

Over the next few years, he had snowballed a $500 investment into a Bitcoin mining facility that netted him an asset of around $500,000 in equipment and coins. As his advisor, I was surprised when he asked me what to do about it and had no idea how to handle the situation. I then realized that if my client was exposed to potential property, tax, security, liability and business issues, I had no idea how to help because I did not understand the technology that had just created this situation.

It was a wake-up call for me to take this emerging asset class more seriously and educate myself to better serve my clients. How could I be a counselor if I didn’t understand how to help? Being an advisor is not about just understanding the things you agree with, but understanding how you can help some of your clients through a variety of situations. This experience taught me the importance of staying informed and educated about new investment opportunities.

There are a few ways that financial advisors can work to close the gap between them and their clients when it comes to cryptocurrencies and other new investment opportunities.

1. It is critical for advisors to stay informed and educated about cryptocurrencies and their potential benefits and risks. This may involve attending seminars and webinars, reading up on the latest news and developments in the industry, and engaging with other professionals who are knowledgeable about cryptocurrencies.

2. Advisors can proactively reach out to their clients and have open and honest conversations about their interest in these technologies. By understanding clients’ interests and preferences, advisors can better tailor recommendations and provide guidance on the best way to invest in cryptocurrencies.

Finally, advisors can work with experts in cryptocurrency and blockchain technology, such as lawyers, accountants and other financial professionals, to provide comprehensive and well-informed advice to their clients. This can help ensure that clients have access to the full range of expertise and resources necessary to make informed investment decisions.

By taking these steps and closing the gap between themselves and their clients on cryptocurrencies and other new investment opportunities, financial advisors can position themselves as trusted and knowledgeable partners in their clients’ financial journeys.