Majority of Clients Still Hesitant to Embrace Cryptocurrency, Advisors Report

Approximately half of financial advisors have personal investments in cryptocurrency, but they generally advise clients to avoid these assets.

Around 50% of advisors report that 5% or less of their clients hold cryptocurrency. Among those advisors whose clients do invest in crypto, about half indicate that some clients have faced notable losses, while 70% report that at least some clients have seen significant gains.

Among advisors personally owning crypto, their investments generally range from $1,000 to $50,000, according to findings from Financial Planning’s September Financial Advisor Confidence Outlook (FACO), a survey that assesses advisors’ confidence in various economic factors.

Client Involvement in Cryptocurrency

Most advisors agree that cryptocurrency constitutes a small portion of client portfolios, though some have noted higher allocations among certain clients. For example, Chris Diodato, founder of WELLth Financial Planning, shared that up to 40% of his clients have invested in crypto, likely due to his younger, Financial Independence, Retire Early (FIRE)-oriented clientele.

In a similar vein, Ramiro Marmolejo, founder of Financial Rubrics, indicated that about 30% of his clients hold cryptocurrency, which he views as a distinct asset class. He advises clients to consider crypto as an aggressive growth asset and to avoid excessive weighting in this area of investment.

Volatility of Crypto Returns

Advisors in the FACO survey reported varied results from crypto investments—some had significant gains, while others incurred losses. For many clients, outcomes tended to be modest. Marmolejo has seen mixed results, with some clients facing substantial losses due to panic-selling in 2022, although most of his clients who remained invested are now profitable.

Conversely, Diodato’s clients, especially early adopters, have faced substantial losses, particularly for those who invested in NFTs and meme coins during the 2020-2021 boom. As a result, many have shifted towards more stable cryptocurrencies like Bitcoin and Ethereum. Newbert noted that aggressive investments in alternative coins led to significant losses for some clients, emphasizing the importance of integrating these challenges into overall financial planning.

Advisors with Personal Crypto Investments

More than half of survey respondents indicated they personally invest in cryptocurrencies, with investments varying significantly—14% hold less than $1,000, while 4% exceed $100,000. Most began investing recently, though a minority have been involved for a decade or longer. Diodato has invested roughly $10,000 in Bitcoin ETFs, citing a compelling narrative behind Bitcoin against a backdrop of governmental budget deficits.

In contrast, D’Eletto, an advisor at Investment Insight Wealth Management, reported a personal investment of around $60,000, made since late 2017, which has experienced significant volatility, consistent with crypto’s risk profile.