Despite interest, financial advisors are moving slowly in utilizing or recommending cryptocurrency to clients.
The latest Cerulli Edge report analyzes trends in mutual fund and exchange-traded fund (ETF) products as of May 2024, finding that 13.7% of advisors are using or discussing cryptocurrency with their clients, and only 2.6% are making recommendations for the digital asset. Another 36.4% say they expect to discuss or use crypto with their clients in the future, but over half of advisors say they never anticipate doing so.
Cerulli’s research highlights a continued rebuttal of cryptocurrencies from the advisory industry—even if recent reports show advisors are reconsidering. A separate survey in March by Franklin Templeton Digital Assets and conducted with the Digital Assets Council of Financial Professionals (DACFP) found that 35% of professionals from registered investment advisor (RIA) firms plan on recommending digital assets to their clients within the next six months, an increase from 21% in December 2023.
With the Securities and Exchange Commission (SEC) approving Spot Bitcoin ETFs and industry behemoths like BlackRock treading closer into the crypto space, it’s likely advisors are opening up to the idea of cryptocurrencies. As a result, the industry could see a push for alternative assets in the short-term, notes the DACFP.
“For more than a decade, financial advisors have largely been omitting bitcoin and other digital assets from their portfolio recommendations. That has now changed, and based on our research, we expect independent RIAs to move $150 billion of client assets into spot bitcoin ETFs over the next two years,” said DACFP Founder Ric Edelman, in a statement. “It is essential that all advisors increase their knowledge of this new asset class so they can properly serve their clients.”
Among advisors who recommend crypto allocations, 7% have suggested it to their clients and 29% have mentioned it to at least half of their clientele. Sixty-seven percent of advisors who suggest it recommend allocations of 1% to 3% of assets. Among those who do not recommend crypto, 41% say they plan to at “some point in the future.”
SEE ALSO:
- SEC Approves 11 Spot Bitcoin ETFs, Opening Floodgates
- Crypto and Cybersecurity Among Top SEC Priorities for 2024
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
