Cryptocurrency: How Advisors Can Get Up to Speed
Education and resources so your clients don't end up knowing more than you.
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Education is the foundation of the financial advisor-client relationship. Advisors need to be educated--not just before they start their practice, but on an ongoing basis throughout their career. In turn, the most effective financial advisors educate their clients, empowering them to make sound financial and life decisions.
However, rapid expansion of the cryptoasset markets hasn’t afforded advisors the kind of grace period for educating themselves on this new and novel asset class that they have had with traditional investments.
In addition, the growth of cryptoassets has been driven primarily by retail investors. That has led to a dynamic where in some cases clients have a better understanding of the asset class than their financial advisors do.
Lack of education on cryptoassets has been a consistent topic of conversation with other financial advisors. Meanwhile, as SEC Commissioner Hester Peirce shared in our recent interview, being well-informed about cryptoassets falls under the fiduciary responsibility financial advisors have to their clients. But as I mentioned in my previous piece about the current regulatory landscape of cryptoassets, there is a steep learning curve when it comes to this emerging asset class.
It goes well beyond knowing the difference between cryptocurrencies and cryptoassets. In this column I’ll outline the broad areas for exploration and provide some reference links for a mix of books, articles, research, and podcasts to help get you started.
This is hardly an exhaustive list, but it gives an indication of the work that financial advisors have ahead of themselves to get up to speed with cryptoassets.
So where to start?
As with any research conducted by financial advisors, the source of information should always be considered--especially in a new and novel asset class such as crypto currencies.
There are plenty of “crypto-experts” who have been able to build reputations on hype and speculation, making it hard for advisors to trust their messaging. Add to the fact that legacy advisor industry organizations have trod cautiously around education and certification efforts involving cryptosystems, and much of the media coverage treats crypto planning as ”hopium.”
At the same time, advisors should be sure to be open to different trains of thought--especially opinions that differ from their own--in order to really gain a depth of understanding of all aspects of the cryptoassets space.
With that in mind, here are some resources that I can recommend.
Diving into a new and fast-moving asset class like cryptoassets can be intimidating, but not getting up to speed with cryptoassets will leave financial advisors at risk of not being able to meet the needs of their clients and, more importantly, not upholding their fiduciary responsibilities. Beginning with a strong understanding of the basics will prove useful in all aspects of a financial advisor’s practice now and in the future and, using the resources above, advisors can have a clear starting point.
Tyrone Ross is the CEO and Co-founder of Onramp Invest and Founder of 401stc, a storytelling consultancy. He is a graduate of Seton Hall University, and was also a 2004 Olympic Trials qualifier in track and field in the 400 meters. He was recognized by Investment News 40 under 40 (2019), and WealthManagement.com as a top 10 advisor set to change the industry in 2019. Financial Planning.com named him as one of 20 people who will change wealth management in 2020. He was recently named as one of Investopedia’s Top 100 financial advisors, and Think Advisor’s 2021 IA25: VIP’s Pushing Advisors Forward. The views expressed in this article do not necessarily reflect the views of Morningstar.