Research

Advisors Prepare as Crypto is Poised to Transform Wealth Management

Jun 24, 2021
Trend 1

Interest in Cryptocurrency is Client-Driven

Insights and Actionable Intel

  • Clients are driving advisors toward cryptocurrency
  • Clients have many reasons for their interest: it’s new, exciting, has a high return potential, and perhaps most of all, they have FOMO (fear of missing out)
  • Many advisors see cryptocurrency as speculative and volatile
  • Because the asset class is new, advisors should be careful about changing clients’ fundamental asset allocations
  • Take Action: Ask your clients, do you need risk to achieve your goals?


Trend 2

Advisors are Early in the Process of Incorporating Cryptocurrency into Their Offerings

Insights and Actionable Intel

  • 11%* of firms report they are already investing in cryptocurrency on behalf of their clients; most of the rest say not this year or it’s unlikely this year
  • Cryptocurrency is like the Internet in the 1990s in its potential to transform the industry
  • Take Action: Cryptocurrency and blockchain are new and complicated so it is critical to engage in continuous learning to stay current on the potential benefits and pitfalls of this volatile asset class until it becomes mainstream


Trend 3

Cryptocurrency’s Negative Environmental Impact Will Collide with ESG Values

Insights and Actionable Intel

  • The process of mining bitcoin is energy intensive, by some estimates using 1-2% of the world’s energy
  • Its energy usage is exponentially growing; as the puzzles becoming more complex, the computing power required increases
  • Bitcoin miners claim that they use wasted energy rather than generating new energy
  • Bitcoin and cryptocurrency’s large energy usage runs counter to the effort to avert climate disaster and ESG investment strategies—at some point these two concepts will collide in investors’ minds
  • Take Action: The average investor may not be aware of energy required, so include this information in client discussions around including cryptocurrency in their portfolios so that they can make informed decisions


Trend 4

Most Advisors Believe Cryptocurrency is Here to Stay

Insights and Actionable Intel

  • While it’s still speculative, most advisors believe cryptocurrency investments will become viable over the long term
  • Many firms express concern and confusion about the government regulation in the space and the legality of cryptocurrency trading
  • Take Action: Train advisors on how to deal with the emotion of something so volatile over which they have no control
F2 Strategy Research is the propriety research division of F2 Strategy, a leading global strategy consulting firm, delivering intellectual and advisory-based research on technology and business issues impacting the RIA, wealth, bank/trust and family office industries. With expertise spanning across the wealth management sector, we provide an unfair advantage to our clients and partners by illuminating industry gaps and delivering insights to help their businesses make great decisions.

Survey Information: The data in this report is pulled from a survey conducted by F2 Strategy in June 2021. The survey includes responses from 18 RIA, Wealth Management and Asset Management firms representing $7 trillion in assets.

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