As Bitcoin surged to a record $108,000 following the November U.S. election and enthusiasm for President-elect Donald Trump’s pro-crypto policies grows, many financial advisors are hesitant to recommend crypto investments to their clients.
“As traditional long-term planners, we do not currently include crypto in our portfolio allocations,” said Marianela Collado, CEO of Tobias Financial Advisors and a certified financial planner (CFP). Collado cautioned that she advises her clients to only invest in crypto as much as they can afford to lose.
Skepticism stems primarily from regulatory uncertainty and the volatility inherent in cryptocurrencies. A Cerulli Associates survey conducted in April, when crypto prices were lower, found that 59% of financial advisors did not use crypto or planned to use it. Another 26% said they expected to use crypto in the future, while only 12% said they used crypto at the request of their clients. Less than 3% of advisors actively recommend crypto.
For investors determined to add digital assets to their portfolios, financial advisors often point to ETFs as a safer, more accessible option.
“It really depends on what the client is looking to achieve and how comfortable they feel navigating this market,” said Ashton Lawrence, CFP at Mariner Wealth Advisors. “If they’re looking for an easy solution, ETFs may be the best way to go.”
“Bitcoin ETFs have become the vehicle of choice for Bitcoin holders,” Brian Hartigan, global head of ETFs at Invesco, told CNBC’s Halftime Report.
Advisors are warning their clients to limit crypto investments to 1% to 5% of their overall portfolio, depending on individual risk tolerance, financial goals, and time horizon.
“Crypto can play a role, but it’s important to view it as a high-risk asset,” Lawrence said, adding: “For most investors, it should remain a small allocation within a diversified portfolio.”
*This is not investment advice.