Financial advisors are showing a reluctance to discuss cryptocurrency with their clients, primarily due to legal concerns and potential liabilities, according to a recent survey. The survey, conducted by CoreData, found that only 1% of financial advisors frequently engage in discussions about crypto with their clients. The majority, a staggering 89%, stated that they have never provided advice on cryptocurrency. The main reason cited for this hesitation is the lack of coverage by professional indemnity insurance. Other factors contributing to advisors’ reluctance include the prevalence of scams in the crypto space, limited information compared to traditional assets, and the absence of clear regulations. However, the survey also revealed that there is a demand for professional advice on crypto, with 67% of crypto holders expressing interest in receiving such advice. CoreData believes that this presents an opportunity for advisory firms to specialize in or enhance their understanding of this emerging asset class. As younger generations, who are digitally savvy, become a larger part of the market, the demand for digital assets, including cryptocurrencies, is expected to rise. Therefore, building expertise in blockchain-based assets becomes crucial for future-proofing advisory practices in Australia. In related news, Morgan Stanley is considering expanding its sales of Bitcoin ETFs by allowing its brokers to actively recommend these products to customers. Currently, customers must approach their advisors independently to express interest in investing in Bitcoin ETFs. By enabling advisors to actively recommend these products, Morgan Stanley could potentially broaden its customer base, but it would also expose itself to additional liability. Some financial institutions, such as Raymond James Financial and Vanguard, have chosen not to offer cryptocurrency products due to concerns about their suitability for long-term portfolios. LPL Financial, on the other hand, announced plans to evaluate which Bitcoin funds it could offer to customers.
