Risk Keeping Financial Advisors Away from Cryptocurrencies

Risk

No Risk, No Risk No Risk. That’s the going theme of many wealth managers and advisors (except roboadvisors ’cause they have no guilt feelings) when it comes to bitcoin (cryptos) and ICOs. No matter how many times clients ask how they can participate in assets that go up dramatically, the answer is……NO, it’s not for you. Too risky. Better to be in “safe” investments like the Blue Apron IPO (disaster) or household names like GE (really?) or maybe the “FAANGs” (no speculation there). And when the most innovative exchange in the world (CME Group) announces ways to mitigate the risk (bitcoin futures), stay away. You MIGHT lose money (like ETFs are soooo safe???) Just thinking, maybe time for a younger new informed advisor?
(Bill Taylor/CEO)


“It’s been a wild ride for bitcoin investors in the last week.

The news that the CME Group would launch a futures contract on the first and most highly valued cryptocurrency in the market sent the price of each bitcoin flying to a record high of $7,879 last week — more than 10 times its price of just a year ago..

…”Bitcoin [and other cryptocurrencies] are not for the faint of heart,” said Ian Weinberg, CEO of Family Wealth & Pension Management. “I expect a lot more upside and downside volatility.

“It’s getting on the radar screen of Wall Street now, but this is speculation. I don’t consider it an investable asset class yet,” he added.

Neither does Amy Hubble, a certified financial planner and founder of Radix Financial. Like Weinberg, she is fascinated with the potential of bitcoin and the blockchain technology underlying it. The run-up in price hasn’t escaped her notice, either.

“Advisors should not stick their head in the sand about an asset class that returns over 800 percent in a year,” said Hubble. “As a fiduciary, I have a responsibility to research and be conversant on emerging investment opportunities.”

Hubble, however, has gone deep enough into the weeds on bitcoin to know that she’s not yet ready to invest in it. “Bitcoin and other protocol tokens don’t have any cash flows, they don’t pay dividends, there is no way to systematically determine demand growth for them, and I don’t have the technical expertise to determine the value of one cryptocurrency over another,” she said…”

Full Story at CNBC