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Almost Half of Advisors Plan to Use Crypto: Cerulli

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What You Need to Know

  • 80% of advisors report they are being asked about cryptocurrencies.
  • Only 14% of advisors use or recommend crypto now.
  • Forty-five percent say they plan to use crypto in the future by client request.

Nearly half of advisors indicate they expect to use cryptocurrencies at some point in the future — driven mainly by client requests and new product development, according to new findings by Cerulli Associates.

Cerulli found in its new white paper, ”Cryptocurrency: Navigating a Frontier Asset Class for Advisors and Asset Managers,” that 80% of advisors report they are being asked about cryptocurrencies, while only 14% are using or recommending crypto.

“Only 7% of advisors report that they currently use cryptocurrency based on their own recommendation, with a slightly higher 10% reporting they use cryptocurrency by client request,” Cerulli states. “In the next two years, advisors expect their use of cryptocurrency to change — 45% expect they will be using cryptocurrency at some point per clients’ requests.”

Matt Apkarian, senior analyst at Cerulli, said that while investors’ interest in crypto grows, advisors remain skeptical of the asset class. “Many simply don’t understand or believe in the cryptocurrency as an investment. Advisors commonly believe that the definition of an investment involves the expectation of real return. Given the fact that crypto assets do not represent claims on a stream of income, advisors often believe that the assets lack the ability to be valued, or that they lack growth expectations.”

Apkarian added that product development for cryptocurrency is occurring rapidly, for both investment products and platforms used to access cryptocurrency.

“There will be payoff for cryptocurrency providers that devote time and resources toward advisor education,” Apkarian said. “Advisors owe it to their clients to understand the world of cryptocurrency, so at the very least they have reasoning to support their viewpoint for not including it in their portfolios — a simple lack of understanding of cryptocurrency is not doing the client justice in assessing investment opportunities available.”

Ric Edelman, founder of the Digital Assets Council of Financial Professionals, told ThinkAdvisor on Monday in an email that Cerulli’s findings confirm his firm’s research.

“Firms and advisors are slow to adapt to new technologies and investment opportunities, and crypto is the intersection of both,” Edelman said.

“That’s a detriment to everyone — the firms, their advisors, and most importantly their clients. But there is a sliver of hope: advisors and firms are increasingly realizing that this new asset class is here to stay and can’t be ignored,” he continued. “Within a couple of years, crypto will be a routine part of all diversified portfolios. And the sooner the advisory field understands this, the better off they and their clients will be.”

Many advisors, Edelman said, are “already getting the knowledge they need to properly advise clients; over 2,000 have enrolled in our Certificate in Blockchain and Digital Assets already.”

Advance sales of his new book, “The Truth About Crypto,” which is to come out in May, are strong, he said.