Majority of advisers speak to clients about crypto

Majority of advisers speak to clients about crypto

Seven in ten (72 per cent) UK advisers have spoken to their clients about investing in cryptocurrencies, according to a survey by Wisdom Tree.

The survey was conducted by CoreData Research and polled 600 advisers across Europe, ranging from wholesale financial advisory firms to wealth managers and family offices. Of the 600, 100 were advisers based in the UK. 

The research found nearly half (48 per cent) of UK advisers said they believed cryptocurrencies can be used for diversification as an uncorrelated asset in portfolios. In addition this, 17 per cent of UK advisers said they could be used similarly to portfolio allocations into gold. 

At the same time 35 percent of UK advisers said the “lack of intrinsic value” was the reason they had not made allocations to cryptocurrencies in a professional capacity. 

The next most common barriers was the lack of regulations and lack of trust, both of which 34 per cent pinpointed as big barriers for allocating capital to cryptocurrencies.

The research found almost half of clients (45 per cent) intended to step outside of their adviser relationship to allocate funds to the asset class.

However, many advisers told FTAdviser they disagree.

Jason Barefoot, chartered financial planner at Ascot Lloyd, said: “I have only had a small number of clients ask me about cryptocurrency. No client has 'sacked' me to invest in crypto, and to my knowledge none of my clients have a notable exposure to it.

“I agree with the findings as to why crypto should not be in a portfolio – namely that it’s an intangible asset, it’s unregulated, and there’s no history on which to base financial projections. The latter may come in time, but until the former two are addressed, it wouldn’t even be looked at.”

The Financial Conduct Authority has repeatedly warned investors about being prepared to lose all their money if they choose to invest in crypto.

The price of major crypto currencies crashed on Wednesday but Bitcoin rallied on Thursday morning to climb back to above $61,000 (£44,000). Others like Shiba Inu and Tether have kept climbing throughout the week. 

Philip Milton, of Philip J Milton and Company, said his firm has monitored the news but will not be changing its stance.

“These things do not exist. They are ethereal. They are not assets, they are not a currency and do not display the characteristics of a currency. They rely purely on the collective faith of the participants, like fiat currencies.  

“They are the items of casinos based on pure chance and gamble and whilst yes, people may make lots of money on them, they can lose lots of money too (all their investment too) and by nature of the beast, the bank always wins.”

Meanwhile, Alistair Cunningham, financial planning director at Wingate Financial Planning, said he wouldn’t “touch cryptocurrencies with a barge pole”. 

“There are no current legitimate purposes and they seem only to be for speculation and money laundering, neither of which any reasonable investor should consider,” he said.