Financial Advisors Are Hesitating To Use Cryptocurrencies
Financial advisors have been wary about incorporating cryptocurrencies into their clients’ portfolios. They are unlikely to be able to ignore the alternative asset for long.
According to a study by Cerulli Associates, 45 percent of advisors anticipate using cryptocurrency in the future to respond to client demands.
Meanwhile, only 7% of advisers say they’re now employing these assets based on their own recommendations, while 10% say it’s due to client demands.
A survey of the financial planning associations and the journal of financial planning said that 49 percent of advisors said that clients had inquired about cryptocurrencies in the coming six months.
Last year market capitalization was increased to $3 trillion and this year market capitalization falls down to $ 2 trillion.
The free-float market capitalization shows the amount of cryptocurrencies accessible for trading in the market is approx $ 1.3 trillion.
Matt Apkarian, senior analyst of Cerulli associates says that “if advisors are not including or having any sort of their point of view on it then they are creating a disadvantage for them and it may lead them to lose their clients.
For other assets, advisors are still more confident.
Private equity consists of 20.9 percent of advisors and other investments like debt, natural resources, and infrastructure consists of 20.6 percent.
Cerulli found the reason behind financial advisors not using these assets is like some of them may be shy and they need time to understand cryptocurrency others may be worried, and moreover, their platform may not show cryptocurrency as an investment option.
Apkarian said that there’s a shortage of regulation of this asset and acceptance of the bitcoin trade will still take some more years.
However single investors may be allowed to use cryptocurrency outside of their advisor relationships with the help of platforms like Robinhood and Coinbase.
Apkarian said that it’s the job of advisors to keep track of their client’s exposure to crypto even though they don’t have control. Further Apkarian mentioned that the least they can do is to look that their clients are well aware of what they have in outside assets.