How to Attract Crypto Investors as ClientsAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Cryptocurrency is growing in popularity, with more than 10% of those surveyed in a recent CNBC poll saying that they've invested in crypto. Investors cite the ease and excitement of trading, as well as the potential for short-term earnings, as their reasons for buying cryptocurrencies. While many are drawn to crypto for the immediate benefits, survey data shows that 60% of crypto investors are interested in long-term growth as well.
This presents an opportunity for financial advisors to attract these investors as clients. Crypto investors are focused on an asset class that is volatile but showing long-term potential, and few of them have a personalized financial plan. Advisors need to understand how crypto markets work and how to make crypto part of a balanced portfolio to take advantage of this opportunity.
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Benefits of a financial planner over an investment advisor
While the distinction between the titles financial planner and investment advisor isn't clear cut, marketing yourself as a financial planner has several benefits, especially for crypto clients. These clients need a long-term, holistic strategy that considers their personal financial goals and guards against the volatility of crypto markets.
Investment advisors tend to focus more narrowly on investments, which is probably where a crypto investor's attention already is. Considering investments as part of a lifelong, big-picture plan is essential for financial security.
How a planner can help crypto investors
A good planner can help crypto clients get the most out of their investments. Investors should have a plan to minimize their tax burden. Investors can offset taxes on other assets with crypto losses while avoiding wash-sale rules. However, legislators are working to change this policy, so advisors need to stay up to date on the best tax strategy for crypto investors.
Advisors can also help crypto investors work their digital assets into their future planning. Long-term investments, including crypto, are an essential part of any retirement plan, especially as company pension plans are becoming increasingly rare. The excitement factor of crypto investing can be a great way to motivate younger people to invest for the future. One survey found that fewer than 66% of millennials have any retirement savings at all, but interest in crypto can help inspire more optimism about an investor's financial future.
The individualized, decentralized nature of cryptocurrency can add complications to estate planning. There is no way to access these assets without the associated private keys, so investors need to have a plan for how to securely pass these to their loved ones. This becomes especially important when crypto is a substantial portion of a client's wealth.
Since a will becomes public after the person dies, these documents can't be used to list crypto private keys. Instead, those with a significant amount of their wealth in cryptocurrency can leave private keys with a trusted friend or family member, transfer their crypto assets to a trust or use a multi-signature digital wallet instead of a traditional individual one. Financial advisors should understand all these options so they can help their clients make the best decision for their situation.
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