Despite the growing interest among retail investors, a significant gap remains between them and most financial advisors. These advisors often find themselves at odds with the emerging world of cryptocurrencies. Jim Crider, a Texas-based certified financial planner, stands out as an exception, frequently recommending Bitcoin to his clients. However, his views are in stark contrast to the majority who view Bitcoin as worthless, similar to tulips and Beanie Babies.
Potential Problems for the Financial Advisor Industry
If the demand from main street continues to grow, with Bitcoin repeatedly breaking all-time high price marks and other cryptocurrencies surging, advisors who don't use or discuss crypto may face the risk of losing clients. Matt Apkarian from Cerulli Associates highlights this concern, stating that if advisors can't offer or talk about crypto, clients will seek those who can.Recent Trends in Interest
Although retail played a smaller role in the current bull market compared to previous cycles, several advisors have noticed a significant increase in interest recently. Jonathan Barrett of Barrett Financial Advisors said this year, especially the past week with the crypto market surge, they have seen more requests than ever. The idea of a decentralized currency is becoming more common, leading to a spike in interest.Retail enthusiasm has grown since Election Day. Indicators like the number of Google searches for crypto-related terms and the App Store ranking of the Coinbase app have skyrocketed. Tucson-based certified financial planner Theresa Morrison noted that retail is jumping in, and it creates interest that leads to more people coming in.The Bitcoin Financial Advisors Network
Morrison and Crider are part of the Bitcoin Financial Advisors Network, a group of "orange-pilled" financial planners. Crider said there are only a handful of Bitcoin bulls like him in the country. This shows the limited number of advisors with a positive stance on Bitcoin.Research on Financial Planners
Recent research shows that a large majority of financial planners do not recommend or discuss cryptocurrencies with their clients. Cerulli Associates' survey in July found that only 2.6% had recommended crypto investments, and just 13.7% had ever used or discussed it. A January survey by Bitwise/VettaFi showed that only 11% of advisors had allocated crypto in customer accounts, despite 88% having fielded a crypto-related question.This is partly due to many financial planners being affiliated with institutions that have blanket prohibitions against discussing or recommending crypto. Morgan Stanley's decision to permit its advisors to pitch certain Bitcoin funds in August was a notable exception.Complexity and Skepticism
Advisors may be reluctant to recommend crypto due to the complexity of the technology. Alex Shahidi from Evoke Advisors said there is a steep learning curve. It's a new technology and concept that requires time to educate oneself. Many advisors remain skeptical that crypto will provide real-world utility. Apkarian pointed to Cerulli's 2023 survey where the most common reason for not using or discussing crypto was that it was not considered suitable for inclusion in portfolios.Independent Advisors' Softening Positions
Despite initial skepticism, some independent advisors have softened their positions on Bitcoin. Charles Zhang of Zhang Financial advises clients with at least $1 million in their account to invest no more than 1% in Bitcoin and avoid other cryptocurrencies. He considers each client's risk level and believes Bitcoin has potential as it gains legitimacy with ETF approval and reduced regulatory risk. Zhang expects demand for Bitcoin to increase in the long term and believes it will change the game when more advisors embrace it.