As a financial advisor you can hate bitcoin, but you need to be using it for your clients, according to Ric Edelman, a crypto assets expert and best-selling author.
Cryptocurrency and other digital assets are the first new asset class to hit the market in 150 years –the last being oil – and for any portfolio to be diversified it must include some, Edelman said during a presentation at the second day of the Invest In Women conference sponsored by Financial Advisor Magazine in Atlanta today.
Edelman is the founder of the RIA Edelman Financial Engines and of the Digital Assets Council of Financial Professionals, which offers a certificate in blockchain and digital assets. His latest in a long list of books is The Truth About Crypto. Earning the certificate is a way to differentiate yourself from your competitors in an industry where everyone looks pretty much alike, Edelman said, during the presentation, Digital Assets: How to Use This New Asset Class to Gain More Clients and AUM – Even if You Hate Bitcoin.
“Earning the certificate shows your clients you are keeping up with the latest developments,” he said, because, “believe me, your clients own crypto, you, as their advisor, just don’t know it.”
Edelman took a poll of the conference session audience and found that about half of the advisors personally own digital assets, but very few recommend them to clients, and few felt confident explaining what bitcoin or blockchain is. “That is pretty typical of the industry,” he said.
Other financial gurus who have badmouthed crypto – Warren Buffett, Jamie Dimon, Bill Gates – are wrong or hypocritical, Edelman said.
The more someone knows about crypto assets, the more wrong they can be, “because crypto violates all the financial rules they were ever taught. The more information you have about traditional investing, the harder it is to wrap your head around crypto,” he said.
“Bitcoin is software – that’s all it is. We had the Internet of people and the Internet of things. This is the latest iteration, the Internet of money,” he added. “The inventors wanted it to replace all money and put governments out of the business of printing money, because they do a really bad job of it. But crypto assets are volatile, and you want your money to be stable” so it did not work for that.
But people who are focusing on the volatility are missing the point. “Any new asset class is going to be volatile at first and cryptocurrency is only 13 years old. It has experienced 70% declines seven times of its original value in the last 12 years, including now.” But even with those declines, it has gone up millions of times since it was created and gone up 150% year-over-year. Other big tech companies also have experienced volatility recently, he explained.
“You are piling risk on risk first with a new asset class,” but if you want to wait till it is a safe investment, you miss the growth, he said.