Although about 39% of clients have asked their advisors about cryptocurrency investments, investor interest is now declining following the crypto crash in the spring, according to an online survey by the Money Management Institute (MMI) and Aon.
Only 14% of surveyed investors said they would be very likely to add crypto to their portfolio if their advisor offered it, and only 21% said they would be somewhat likely to do so, leaving the researchers to state “wealth management firms should be in no hurry to add crypto investments to their product portfolios while legal and regulatory frameworks are still uncertain.”
And that’s a good thing, said Peter Keuls, global head of wealth management at Aon, as 42% of advisors surveyed said they believed they were experts in cryptocurrencies and crypto wallets.
“I’m not too confident that they really are,” he said. “I think they feel they’re experts because they’ve done it. They may not feel so expert anymore now that the market has crashed.”
Meanwhile, 31% of surveyed advisors said crypto was an inappropriate investment for retail investors.
The survey was conducted in March and consisted of data from 1,500 mass-affluent and high-net-worth investors with investable assets of at least $250,000.
Regardless of where an advisor falls on the spectrum of embracing this asset class, a whole host of advisors are going to be helping burned investors make a financial comeback, the survey said. With crypto portfolios declining more than 50% off their peak, investors who over-allocated in this arena will likely need assistance getting their financial goals back on track since that loss coincides with a time when equity and bond markets are facing their own turbulence.
The pool of clients potentially looking for less flashy advice is large—and their assets even larger, the survey found.
Not surprisingly, interest in crypto has been strongest among those under 35, with 80% of them holding some cryptocurrency, the survey said. Fifty-two percent of investors under 35 had at least 60% of their portfolios dedicated to crypto. Of those heavy crypto-adopters, 48% said the investment value of that part of their portfolio was between $1 million and $2 million, and 37% said it was more than $2 million, according to the survey.
“When you look at the average crypto holding of the under-45s, it was more than 50% of their portfolio,” Keuls said. “Which is frightening.”