What You Need to Know
- Advisors don't have to love Bitcoin. But those who aren't at least discussing it with their clients are making a mistake.
- Advisors stand to lose credibility with clients if they can't answer questions about crypto.
- Crypto is projected to generate $5 billion in advisory fees over the next five years.
Advisors don’t need to suddenly become cryptocurrency boosters and owners and they’re even free to hate crypto if they want to — but they can no longer ignore it, according to Ric Edelman, a crypto expert who founded the Digital Assets Council of Financial Professionals five years ago.
Edelman left Edelman Financial Engines, the RIA he and his wife, Jean, founded in 1986 (as Edelman Financial Services), where he was chairman of financial education and client experience, in late 2021 and has been focused on educating the industry and consumers about crypto since then.
“I believe that this conversation on digital assets is the most impactful way that we can improve client outcomes and wealth creation for themselves and their families,” he said Thursday at the Wealth Management EDGE conference in Hollywood, Florida.
Crypto is projected to generate $5 billion in advisory fees over the next five years and it is in the best interest of advisors to try and get their share of that wealth, even if they hate Bitcoin and other cryptocurrencies, he said.
“What I’m not trying to do is persuade you that you need to fall in love with Bitcoin, you need to own Bitcoin [or] you need to recommend Bitcoin,” he explained. “My focus instead is simply to get you to recognize the importance of understanding Bitcoin and recognizing that this is a real asset class, the first new one in 150 years … and because it’s new and different, we’ve got to pay attention to this.”
There are too many advisors today who are not up to speed on crypto and that is just not acceptable any longer, he said, adding: “How can we, as a fiduciary, trying to serve our clients’ best interests, have a complete lack of understanding and knowledge [and] awareness of the first major new asset class in 150 years?”
Edelman’s “goal,” he said, is to “help you understand this so that you can figure out what you want to recommend to your client about it [and] how to communicate with your client about it.”
He polled the room, asking advisors which of them had discussed Bitcoin with clients, and few hands went up.
“This is the problem that I’m having,” he said, explaining: “This is a dynamic environment…. We need to understand that this technology is revolutionary,” allowing businesses to operate faster, cheaper and safer with greater transparency and greater inclusion on a global basis.
“The United Nations says this technology is the number one way we are going to eliminate poverty on a global scale,” he also noted.
“Already the annual transaction volume of Bitcoin alone — forget about the rest of crypto — just Bitcoin … is $3 trillion a year,” he said. “That’s three times more than American Express.”
Additionally, the crypto exchange platform Coinbase has been the number one free downloaded app for Apple mobile devices, he said.
“Coinbase has more account holders than Charles Schwab, more than TD Ameritrade, more than Interactive Brokers, more than E-Trade combined,” he said, adding: “This is not something that we can deny…. If you continue to ignore this, you will continue to lose credibility with your clients, let alone referral capability and AUM opportunities.”