- One study found that most financial advisers are not directing their customers towards cryptocurrencies.
- Crypto recommendations can lead to impairment of reputation among councilors, experts told Business Insider.
- But things like Bitcoin ETF have helped advisers to be comfortable, paving the way for the greatest adoption.
While cryptocurrency blooms in recent months and push further into the main stream, a corner of the financial industry remains on the guard.
A recent Cineshare study of 250 financial advisers found that 62% do not think that Bitcoin’s recommendation matches the responsibility of the confidence to act on a client’s best interest.
The study, which responded between November and December last year, also reported that many are concerned that clients underestimate the risks of a cryptic investment. Over half – 53% – respondents rank instability as a high challenge when it comes to digital assets, making some discourage customers to put money in space.
“Customers trust us to secure their financial future. We can’t roll dice. If that’s all we will do, then they don’t need us. They can go to a casino”, Kashif A. Ahmed Said a certified financial planner and president of the American private property, said.
For him, there is no way to justify the addition of cryptocurrencies to a client’s portfolio if his main use is “pure speculation,” he told Business Insider.
Others agreed.
“There are different roles that investments in a portfolio can play: it can be high -risk return potential. It can be at risk. It can be protected from inflation,” said Noah Damsky, a certified financial advisor and the founder of property councilors Marina. “Crypto does not really have any specified purpose. I think it can turn too much, but that’s just speculation.”
Reputation
Bullets can be quick to point out that cryptocurrency speculations have been massively lucrative lately. Bitcoin climbed at about 114% to 2024, exceeded by even steep profits between some meme coins.
But while profits have aroused enthusiasm among councilor clients, Cryptocurrency also have a history of extreme instability. For financial advisers, ignoring this risk can come at a high cost: a damaged career.
55% of Coinshare respondents mentioned the fear of reputation damage when recommending digital assets. For a career that depends on a reputation and the ability to build confidence with clients, this is not a random concern.
“In our case, we need to be a little more discreet about it because we are really responsible,” Ahmed explained, adding: “If we deceive your financial future, then there can be no recovery time for you, or not? “
Other obstacles can also prevent councilors from embracing cryptosphere.
Christina Lynn, a wealth strategy in the Mariner advisory firm who specializes in the psychology of financial planning, described a wide range of uncertainties that advisers should take into account. These include regulation and changes in tax treatment, as well as the concerns of custody and confidence.
Learning for cryptocurrencies can be a steep challenge in itself.
Understanding the industry requires a study of several different components, Lynn said, including blockchain basics, sign differences, portfolio implementation strategies, compliance rules and client concerns.
“It’s not something you can get a one-hour webinar and get caught to speed. You need centered hours of study to really understand this technology and various products and services there,” Lynn said.
While she believes it is worth it, it is understandable why some advisers can question the value of the passage with this, only for a very small allocation of 1% -5% in cryptocurrencies.
Changing attitudes
However, there are some who may be ready to get on board and start directing clients to cryptocurrencies.
In Lynn’s opinion, January 2024 may have scored a significant pivot in the sense of councilors towards digital assets. This month’s big change was the presentation of Spot Bitcoin ETF which gave credibility to digital assets. Finally, the councilors had a lens through which they could see crypto from a traditional perspective.
The survey data also suggest this change that is happening. According to a small survey/vettafi issued in January, the part of councilors reporting cryptocurrency allocations on customer accounts were dropped at a high 22% time last year, double the norm in 2023.
“I think we’re going through the point when councilors can simply remove it as if they are not appropriate or a passing trend,” Lynn said.
As the crypto market matures, it expects councilors to find benefits from learning to work with Crypto. This can help the industry build confidence and strengthen the customer’s pleasure, which means stronger retention and references. This can provide a real service to clients who can have gaps of knowledge about the digital property tax and assets planning.