Survey finds: Advisors hesitant to discuss crypto with clients 😬

Exploring the Barrier to Crypto Conversations with Financial Advisors

Only a small percentage of financial advisors engage in discussions about cryptocurrency with their clients frequently due to apprehensions about potential legal liabilities and associated expenses if investments go south.

89% of financial advisors have never provided advice on cryptocurrency.
Concerns about a lack of professional indemnity insurance (PI) coverage are a significant deterrent.
Other factors include scams in the crypto space, limited information, absence of historical performance data, and unclear regulations.

Reasons Behind Financial Advisors’ Reluctance to Discuss Crypto

Several reasons contribute to financial advisors’ hesitance, including:

Scams prevalent in the crypto space.
Limited information compared to traditional assets.
Absence of historical performance data.
Lack of clear regulations.

CoreData believes that the majority of advisors’ reluctance presents an opportunity for advisory firms to specialize in or enhance their understanding of the emerging crypto asset class.

Interest in Professional Advice on Cryptocurrency

67% of crypto holders express interest in receiving professional advice on cryptocurrency, with high demand from individuals holding crypto due to their belief in value appreciation or concerns about inflation.

Youthful, digitally savvy generations are expected to drive the demand for digital assets, including cryptocurrencies.
Building expertise in blockchain-based assets will future-proof advisory practices in Australia.

Morgan Stanley’s Move on Bitcoin ETFs

Morgan Stanley is considering allowing its 15,000 brokers to actively recommend Bitcoin ETFs to customers, potentially broadening its customer base while increasing liability exposure.

Currently, Morgan Stanley offers Bitcoin ETFs on an unsolicited basis.
Other financial institutions like Raymond James Financial and Vanguard have concerns about cryptocurrency suitability for long-term portfolios.
LPL Financial, with over 22,000 brokers, is evaluating Bitcoin funds to offer to customers.

Hot Take: Embracing Crypto in Financial Advisory

As the crypto market expands and digital assets gain popularity, financial advisors must adapt their practices to cater to the rising demand for cryptocurrency guidance.