Cryptocurrencies are now becoming fundamental components of the global financial landscape, and the financial advisory industry is still playing catch-up.
According to a survey conducted by Bitwise and VettaFi, 96% of financial advisors reported receiving inquiries about crypto—a significant increase from 88% the previous year. However, despite the growing demand for crypto, there remains a noticeable gap between what clients are eager to explore and what their advisors are ready to offer. In fact, 71% of advisors admit that their clients are taking matters into their own hands when it comes to cryptocurrency, bypassing traditional financial advice altogether.
This widening gap, known as the “crypto gap,” is not just a fleeting challenge—it represents a fundamental shift in how clients are approaching their investments. As of June 2023, Millennials and Gen Z investors are leading this shift, with 23% of millennials and 17% of Gen Z owning cryptocurrency, according to Statista. Millennials, in particular, are noteworthy, with one in four owning cryptocurrency, signalling a strong affinity for digital assets.
Also, as 22% of client portfolios now include cryptocurrencies—double the figure from the previous year—advisors are confronted with a critical decision: adapt to the demands of an increasingly crypto-savvy client base or risk being sidelined in a financial landscape that is being shaped by technological innovation and client-led change.
Why Advisors Can’t Afford to Ignore Crypto
For financial advisors who continue to dismiss or neglect crypto, the cost could be more than just a missed opportunity—it could mark the beginning of their irrelevance. As client demand shifts and institutional adoption strengthens, embracing cryptocurrency is no longer optional. It’s essential for advisors who want to stay competitive in a rapidly evolving financial landscape.
1. Clients Are Demanding It—Advisors Must Step Up or Fall Behind
Crypto is no longer a niche interest. Investors are increasingly looking to digital assets for growth potential and portfolio diversification. Bitcoin and other cryptocurrencies have shown low correlation with traditional asset classes, offering a valuable hedge against market volatility.
Financial advisors who fail to engage with digital assets risk falling behind in an industry where adaptation is key to staying competitive. According to a survey, 13.7% of financial advisors are already using or discussing cryptocurrency with clients, and a further 26.4% expect to do so in the future.
As more investors look to digital assets for both growth potential and portfolio diversification, advisors who ignore this trend risk losing their clients’ trust and business.
Bitcoin and other cryptocurrencies have shown low correlation with traditional asset classes, offering unique opportunities to reduce overall portfolio risk. Advisors who proactively guide clients—whether through direct crypto exposure or simpler vehicles like Crypto ETFs—can strengthen relationships, expand their expertise, and stay ahead of industry trends.
Ignoring crypto means risking client dissatisfaction and potential business loss. Advisors who engage with digital assets stay ahead of industry trends, strengthen client relationships, and expand their expertise—all crucial for long-term success.
2. Institutional Adoption is Cementing Crypto’s Legitimacy
Crypto’s legitimacy as an institutional-grade asset is no longer up for debate. Institutional players are leading the way in integrating digital assets. BlackRock and many other major asset managers worldwide have launched at least one crypto-focused ETF in the last few years.
Beyond investing, the Big Four firms—EY, PwC, and KPMG—are hiring blockchain specialists to provide auditing services for crypto firms.
As EY’s Jeanne Boillet put it, crypto’s role in modern finance is a “no-brainer”—and financial advisors who fail to recognize this shift risk falling behind.
The Benefits of Proactive Learning in Crypto Education
Proactively engaging in crypto education not only helps advisors stay relevant but also empowers them to guide in key areas where digital assets can add significant value to client portfolios.
Here are some of the most important ways that financial advisors can leverage their crypto knowledge:
Alternative Investment Strategies
Millennials and Gen Z investors, known for their tech-savviness, are increasingly seeking alternative investment opportunities. Cryptocurrencies and blockchain-based technologies resonate with these demographics due to their innovative nature and potential for high returns. Advisors who understand the nuances of digital assets can design alternative investment strategies that align with the interests and values of these clients.
Only 25% of crypto investors reportedly possess a basic understanding of financial principles—a stark contrast to other sectors. This knowledge gap highlights the need for skilled advisors who can offer informed guidance. Digital assets also provide diversification benefits that traditional investments often lack, making them essential for modern portfolio strategies.
RELATED: Why Crypto Needs to Fix Its ‘Dangerously Low’ Knowledge Gap
By including digital assets as part of a diversified portfolio, advisors can help clients balance risk while capitalizing on emerging financial opportunities. This proactive approach positions advisors as trusted partners in navigating the complexities of today’s investment landscape.
Retirement Planning
Cryptocurrencies present a unique opportunity for retirement planning, allowing clients to diversify their portfolios beyond traditional assets like stocks and bonds. Advisors who understand the intricacies of crypto can assist clients in incorporating digital assets into self-directed IRAs, 401(k)s, or other long-term retirement accounts. This enables clients to gain exposure to emerging asset classes with significant growth potential. By educating themselves on the regulatory aspects and potential benefits of holding digital assets within tax-advantaged retirement accounts, advisors can help clients capitalize on the long-term growth of these assets while securing their retirement goals.
Wealth Transfer and Estate Planning
The complexities of wealth transfer and estate planning are heightened when digital assets are involved. Cryptocurrencies are treated differently from traditional assets in terms of both taxation and inheritance, requiring careful planning to ensure a smooth and compliant transfer to heirs. Financial advisors with crypto expertise can guide clients through the legal processes surrounding the transfer of digital assets, helping them navigate potential challenges such as private keys, wallets, and tax implications.
As more individuals accumulate wealth in the form of cryptocurrencies, integrating these assets into estate plans is becoming increasingly important. Advisors who proactively educate themselves in this area can ensure their clients’ wealth is passed down efficiently and in compliance with both local and international laws, offering peace of mind for both clients and their heirs.
Expanding Professional Value
As cryptocurrencies continue to reshape the finance sector, advisors who commit to continuous education in this area will upgrade their professional value and secure relevance in an increasingly competitive market. Proactively education on digital assets, blockchain technologies, and their applications in wealth management gives advisors a competitive edge, allowing them to design comprehensive, future-proof strategies that blend traditional investment techniques with the opportunities presented by cryptocurrencies. By diversifying expertise and embracing the changes that cryptocurrencies bring, advisors can become more versatile, opening up new avenues for client engagement and business growth.
In Conclusion
Cryptocurrency has transitioned from a speculative asset to a mainstream investment class, and ignoring this shift could undermine an advisor’s relevance in the industry. Advisors who invest in learning about and integrating cryptocurrencies into their client offerings will secure their place in the future of finance. The need for advisors to embrace crypto is no longer a question of “if” but “how quickly.”
Incorporating digital assets into client portfolios, managing risk, and offering tax strategies are just the beginning. By proactively engaging with crypto, financial advisors can provide comprehensive financial advice that aligns with modern investment strategies, ensuring that they remain relevant and valuable to clients in an increasingly digital world.
Disclaimer: This piece is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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