13 May

Only 1% of financial advisors regularly discuss cryptocurrency with their clients, primarily due to worries about potential legal liabilities and associated costs in case the investment doesn't yield the desired results. According to CoreData’s “Australia’s Crypto Investors” report, an astonishing 89% of financial advisors have never offered advice on cryptocurrency.

The report highlights that a significant reason for advisors' reluctance to discuss cryptocurrency is the lack of coverage by professional indemnity insurance (PI). Without PI coverage, advisors face the possibility of significant legal expenses if clients allege that their advice resulted in financial loss or harm.

Why Don't Financial Advisors Talk About Cryptocurrency?

Advisors' reluctance is also influenced by a number of other issues, including as the ubiquity of scams in the cryptocurrency market, the dearth of information in comparison to traditional assets, the lack of historical performance data, and the unclear laws.

In contrast to conventional investments, bitcoin presently lacks regulatory body guidance and research house ratings. The blockchain has historical data, but the history of cryptocurrencies is still relatively new, and their future is yet unknown.

However, CoreData thinks that advice companies have a chance to specialize in or deepen their grasp of this developing asset class because most advisers are reluctant to investigate the cryptocurrency market.

The survey uncovered that 67% of cryptocurrency holders are interested in receiving professional advice on the topic. The greatest demand for guidance came from individuals who hold cryptocurrency because they believe in its potential for value growth or have concerns about inflation.

The survey emphasized that for advisors looking to enhance their capabilities in this area, crypto-assets present an opportunity to establish a distinctive service for their business. It stated that practices investing in developing expertise in this domain stand to expand their assets under management among both curious investors exploring crypto and seasoned holders who have accumulated wealth through blockchain technologies.

As younger, digitally literate generations become a larger segment of the market, the demand for digital assets, such as cryptocurrencies and tokenized real-world assets, is predicted to surge. Consequently, acquiring proficiency in blockchain-based assets emerges as a crucial strategy for ensuring the resilience of advisory practices in Australia.

Brokers Will Be Able to Promote Spot Bitcoin ETFs at Morgan Stanley

As previously mentioned, one of the top financial firms, Morgan Stanley, is looking at the idea of increasing the number of Bitcoin ETFs it sells by enabling its roughly 15,000 brokers to actively recommend these products to clients.

As of right now, Morgan Stanley only accepts unsolicited requests for Bitcoin ETFs, so clients who are interested in investing must approach their advisors on their own.

The company could be able to increase the number of clients it serves by allowing advisors to aggressively suggest these products, but doing so would also put it in more risk.

A number of financial organizations have declined to provide cryptocurrency products because to worries about their suitability for long-term portfolios, including Vanguard and Raymond James Financial.

In February, LPL Financial, the leading independent brokerage boasting more than 22,000 brokers, revealed its intentions to assess Bitcoin funds for potential inclusion in its offerings to customers.

May 2024, Cryptoniteuae

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