With institutional investment being something of a major theme in the blockchain space these days, financial advisors better start studying up on cryptocurrencies and their underlying technology – and fast – lest they risk losing their clients.
‘It’s Really Here to Stay’
JP Morgan chairman Jamie Dimon once called Bitcoin a “fraud,” and Vanguard CEO Tim Buckley once told CNBC, “You will never see a fund from Vanguard on bitcoin.”
Their loss.
Despite a slew of negativity from high-profile individuals in the world of investment banking, Bitcoin and other cryptocurrencies are an increasingly more viable alternative to traditional investments that should be a part of any serious investor’s portfolio — as evidenced by the number of traditional bankers jumping ship for cryptocurrency-related investment vehicles.
With this in mind, traditional investment bankers who are stubbornly rooted in their old ways would be wise to study up on both cryptocurrency and blockchain technology before their clients move elsewhere. Lex Sokolin, global director of fintech strategy at Autonomous Research, explained to CNBC:
Cryptocurrency is very controversial, but it’s really here to stay. And the underlying [blockchain] technology is really fundamental to the types of companies that people are building right now.
As such, investment bankers are doing their clients a serious disservice by failing to properly advise them on cryptocurrency and blockchain-related investments. Explained Sokolin:
So [advisors] can choose to say that this whole thing will fall apart and not get educated about it and not help [investors], but that’s really irresponsible […] Advisors really need to start to understand the basics of how blockchain works. Start to understand why there are different cryptocurrencies.
For example:
What’s the difference between a payments coin, like bitcoin or ethereum? All of these things are different, so advisors have to spend the time so they can actually help their clients make sense of this.
Still, Sokolin doesn’t recommend going all-in on cryptocurrency. Rather, he thinks Bitcoin and brethren ma
It’s volatile right now, so you should not just go and fill your entire portfolio with cryptocurrencies. But it is a good way to add alternatives to your general allocation, something like 3 [percent] to 5 percent of your portfolio.
Do you think traditional financial advisers are failing their clients by not knowing enough about Bitcoin and other cryptocurrencies? Be sure to let us know in the comments below!
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