'Advisers need to talk to clients about crypto'

Matteo Dante Perruccio, a partner at Wave Financial, a US-based digital asset investment manager, told FTAdviser that he is seeing a number of investors, including advised clients and family offices, starting to look into crypto investing.

“They want to get involved…and they’re looking for a trusted adviser," he said.

This presents an enormous opportunity for the advice and wealth management sectorMatteo Dante Perrucio

“I think it's no longer acceptable for the advice [industry] to say, I don't touch this stuff, or I don't know about it.

“What the investor is saying is, well if you're not going to help me with it, I'm going to go to somebody who can.”

This presents an enormous opportunity for the advice and wealth management sector, he said.

Career

Dante Perrucio has spent over 35 years in the asset and wealth management industry, spending time as the chief executive officer at Pioneer Investments and on the board of Jupiter Asset Management. He also founded Hermes BPK, a hedge fund group.

When he joined Wave Financial in late 2019, he said his peers were surprised when he moved into crypto.

There is a lot of uncertainty in the investment communityMatteo Dante Perruccio

He said his 'lightbulb moment' came when he was advising a group that wanted to build an account platform for hedge funds in the crypto space.

He admits he was "very skeptical" of crypto, but soon realised how uncharacteristic this was for him.

“I realised that was a sign of age…when you start saying, 'well if I don’t understand it it must be dumb.'

“And that was the rabbit hole from which I have never emerged.”

Since then, he said he’s spent a lot of time talking to more traditional investors about bitcoin, cryptoassets and blockchain technology.

“I've been talking about this now for three years, to more traditional investors, I didn’t get a lot of ‘oh yeah I believe in it too’, I got a lot of curiosity and a lot of questions,” he said.

There is [still] a lot of uncertainty in the investment community, he added because there's two things that investors want to see when they adopt something.

The first is clarity on regulation, he said, and the second is clarity on tax.

“If you're an institution, you're not going to invest in something [when] you don’t know how it's going to be treated in tax or if you're going to go to jail for having invested in it.”

Regulation

The cryptoasset ecosystem has grown from nothing to almost £2.23tn in value within a decade, but despite this the investment and wealth management industry has been slow to both adopt this technology and advise on investing in this asset class.

A recent survey from WisdomTree, conducted by CoreData, polled 600 professional investors responsible for £3.41bn, and 83 per cent said they had spoken to their clients about investing in cryptocurrencies or digital assets.

Yet almost a third of clients surveyed (32 per cent) intend to step outside of their adviser relationship to allocate to the asset class.

Indeed, commentators told FTAdviser's podcast last year that advisers who do not talk crypto currencies with their clients risk clients going elsewhere without advice or even losing their business in the future.

While acknowledging that crypto currencies are not a regulated asset class, experts said it was only a matter of time before the financial services regulator started allowing retail investors to access crypto through regulated products such as investment trusts or exchange-traded funds.

The Bank of England has also pushed for new regulations around cryptocurrencies as a "matter of urgency", due to the risks posed to retail investors.

The FCA considers cryptoassets as very high risk, speculative investments, and investors are unlikely to have access to the support of the Fos or FSCS if anything goes wrong.

Currently, what the regulator calls 'exchange tokens' (cryptocurrencies) are only regulated for money-laundering purposes.

sally.hickey@ft.com