Personal finance advisors are caught flat-footed by the Bitcoin Boom

Despite growing interest among retail investors, most financial advisors are either unwilling or unable to handle crypto-related inquiries from clients, several advisors and analysts told Decrypt.

“I talk to other financial planners all the time – 99.99% of them strongly disagree with me,” says Jim Kreider, a Texas-based certified financial planner who often recommends Bitcoin to his clients. “You think bitcoin is tulips and beanie babies and it's worthless.”

This uncertainty can create problems for the financial advisory industry. If Main Street interest continues to grow – recently with Bitcoin regularly breaking high price marks and other cryptocurrencies rising alongside – then advisors who do not use or discuss crypto may lose clients.

“If you're a consultant who can't give it and can't talk about it, you might want someone who's willing,” says Matt Apkarian, associate director of product development at Cerulli Associates, a research and consulting firm. Study the financial advisory industry.

even if Most of it Analysts Agreeing that retail has played a smaller role in the current bull market than in previous cycles, several advisers told Decrypt that they saw a big bump in demand recently.

“I'm talking about this year, and especially this week with the crypto market going up, we've seen more inquiries than ever before,” said Jonathan Barrett, a New Jersey-based financial advisor.

“When it was a booming alternative asset class, not many people had heard of it and were very skeptical,” he added. But the idea of ​​a decentralized currency has become increasingly popular, and demand has increased.

Retail enthusiasm seems to be growing since Election Day. Commonly cited indicators, like no Google searches App store ranking for crypto-related terms and the Coinbase app (among other crypto apps) The sky is high.

“Retail is jumping,” said Theresa Morrison, a Tucson-based certified financial planner. “I wouldn't say the final price movement is the result of retail, but that's what creates the demand and that's where they start to come in.”

Morrison and Kreider are members. Bitcoin Financial Advisors NetworkA group of “Orange” financial planners who present themselves to investors as “willing and committed to incorporating Bitcoin” into their financial plans. According to Kreider, there are only a few consultants in the country who are Bitcoin bulls.

“There are literally six counselors like me in the country, and I'm friends with all of them,” Kreider said.

Recent research shows that most financial planners do not recommend or discuss cryptocurrencies with their clients. In July, Cerulli Associates published survey Of the 1,500 financial planners, only 2.6% have recommended crypto investments to clients and only 13.7% have used or discussed crypto with clients.

January survey At Bitwise/VettaFi, only 11% of advisors have crypto assigned to their client accounts, while 88% have submitted a crypto-related inquiry within the past year.

This is because many financial planners are affiliated with large institutions that have a blanket ban on discussing or advising on crypto. Morgan Stanley in August broke with Other Wall Street giants are allowing its advisors to offer BlackRock's iShares Bitcoin Trust and Fidelity's Wise Origin bitcoin fund to individuals with a net worth of more than $1.5 million.

Alex Shahidi, managing partner and chief investment officer at independent wealth advisory firm Evoke Advisors, said advisors may be hired to advise on crypto because of the complexity of the technology.

“There's a steep learning curve,” Shahidi said. “It's a new technology. It is a new concept.

“At some point, it gets to the point where you have to invest time in educating yourself,” he adds. “That doesn't mean you're for it or against it, but you at least want to move the learning curve.”

Many advisors are skeptical that crypto will provide real-world utility.

“There are still a lot of people who think it's a Ponzi scheme and are going to zero in on it,” Apkarian said. He pointed to Cerulli's 2023 survey, which asked advisors who don't use crypto or their clients about the reasons for their stance. The most common answer is “they don't consider it suitable for inclusion in portfolios,” he said.

But as interest continues to grow, some independent advisors have at least softened their stance on Bitcoin.

“I think Bitcoin has some potential,” said Zhang Financial's Charles Zhang, whose Barron's took on the country's top independent wealth advisor in 2024, 2023 and 2021. Predictions.

Zhang advises clients with at least $1 million in their accounts to invest no more than 1% of their portfolios in Bitcoin, but to avoid other cryptocurrencies.

“Every client has a different level of risk,” he said. “If you're a risk taker and add bitcoin as part of diversification, that's understandable. But some people are very conservative, and maybe they should buy only gold.

Zhang expects Bitcoin demand to increase in the long term as it continues to gain legitimacy, citing ETF approval and regulatory risk as positive signs.

He also gets a boost when many of his colleagues come to welcome him, he added.

“Once advisors feel comfortable and engaged, it completely changes the game,” says Zhang.

Edited by Andrew Hayward.