Monetary advisors wrestle with placing their shoppers in cryptocurrencies


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About five years ago, financial advisor Michael Bisaro received questions about Bitcoin from some of his clients.

“There was a murmur in the background,” said Bisaro, president of StraightLine Group, a Troy, Michigan firm that ranked 92nd on CNBC’s list of the 100 Best Financial Advisers in the US in 2021

However, nowadays it is one of the most talked about assets in his company.

“That is the subject you are currently working on,” he said.

Despite this interest, Bisaro has not yet invested any of its customers’ money in cryptocurrencies. He fears the space could change too drastically in the near future.

“Governments like to be in control of the money and they will do anything to keep that control,” he said. “They could easily spend their own digital dollars, and that could be a monstrous disruptor for those currencies.”

Another obstacle for Bisaro is how slow the financial services sector and Wall Street have been in developing products that will enable people to access the digital assets.

The first exchange-traded U.S. Bitcoin futures fund only became available last month, more than a decade after the coin first appeared.

“The industry has clearly had trouble developing a regulated product that is filled with unregulated assets,” he said.

With the excitement surrounding cryptocurrencies in full swing and the more serious discussion about their future, financial advisors find themselves in an uncomfortable and sometimes vulnerable position.

On the one hand, they don’t want to just dismiss the innovation and risk losing their finger on the pulse of the times while their customers watch others make big profits. On the other hand, so many unanswered questions remain unanswered, from regulatory to practical questions, even how to buy and hold the coins. As a result, most advisors stay on the sidelines.

While more than 80% of financial advisors are asked about cryptocurrencies, only 14% of them currently use or recommend it, according to a study conducted and compiled by the Financial Planning Association.

“We’re sure to get questions,” said Matthew Young, President and CEO of Richard C. Young & Co. of Naples, Florida, which ranked number 5 on CNBC’s FA 100 list.

But like Bisaro, he is reluctant to invest his clients’ money in the assets. “I tell customers, ‘I’m not against cryptocurrencies, but I see them as speculation rather than investment,'” said Young.

For those persistent in seeking exposure, he said, “I’m telling them to buy it yourself.”

The future of cryptocurrencies is still too uncertain for him to add to his clients’ portfolios, most of whom are close to or retired.

“These cryptos are not yet regulated,” he said.

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Other advisors have taken small steps into the new room.

“We spent most of our energy educating customers about what cryptocurrencies and the blockchain are,” said Mark Mirsberger, CEO of Dana Investment Advisors, in Waukesha, Wisconsin, which ranked # 1 on CNBC’s FA 100 list . (Blockchain is a kind of ledger, a recording method on which Bitcoin is exchanged. Many believe that the future of financial transactions will take place on it.)

Over time, as the regulation and security of digital assets becomes more robust, Mirsberger believes many more financial advisors will add these to their clients’ portfolios. “We see the sector as rapidly evolving and growing,” he said.

Still, he’s cautious about claims that the assets will replace more traditional ones like stocks and bonds.

“Although I think that many industries and companies will see opportunities to benefit from the use of blockchain, I do not see most investors in such a way that they will need a direct exposure to cryptos in 10 years”, said Mirsberger.

Mark Mirsberger

Source: Dana Investment Advisors

Ivory Johnson, a certified financial planner and founder of Delancey Wealth Management in Washington, DC, is more optimistic.

He got his first questions from his clients about Bitcoin after investing 5% of their portfolios in the currency in 2020. He said he didn’t get a pushback.

“They acclimatized pretty quickly,” he said, adding that he believes the digital currency will only get more popular and that his allocations for it will increase too. The advent of a US government-backed digital currency, he said, would not affect the value of Bitcoin.

He said advisors would regret ignoring the coin’s rise.

“I think we’ll look back in 10 years and think that the people who didn’t buy it were stupid,” he said. “Consultants have to get on board.”

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