Advisors, particularly those that have been in the industry for decades, are apt to question clients’ motivations for being interested in and wanting to direct some of their capital to cryptocurrencies.
Advisors are right to have those questions and they wouldn’t be performing their duties as fiduciaries if they didn’t strike up related conversations with crypto enthused clients. Of course, there are different crypto answers for various clients. High and ultra-high net worth clients can likely afford indulgences on digital assets while those nearing or in retirement probably shouldn’t take such wagers.
What’s important for advisors to realize is that many clients, including those in the coveted younger demographics, want crypto exposure and putting the kibosh on that desire can be counterproductive. It might even chase those clients away.
Long story short, the survey that will be highlighted below is worth a read by advisors because it provides valuable insight into clients’ crypto feelings and motivations.
Heed Wisdom in Coinbase Survey
Coinbase (NASDAQ: COIN) is one of the biggest names among crypto brokerage firms, so while its new survey done in conjunction with Morning Consult may sound like talking its book to naysayers, it is nonetheless pertinent to advisors.
The firms queried more than 2,000 investors in the U.S., finding that 20% are holding crypto assets in some form today. While that percentage is comparable to what was seen a year ago, it’s notable because crypto prices plunged in 2022. One takeaway from that data point could well be that investors -- at least some of them – are viewing bitcoin and the like as long-term assets and are not succumbing to short-term market gyrations.
Advisors should acknowledge another set of data that confirm clients that are bullish on bitcoin are in fact treating the largest digital currency as a long-term asset. A recent report from blockchain data provider Glassnode confirms roughly 15 million bitcoin haven’t changed hands in six months.
As for why some clients are enthusiastic about crypto, that’s easily understood. Eighty percent of those polled by Coinbase say the traditional financial system “unfairly favors powerful interests” while two-thirds believe that system needs substantial overhaul.
Important Demographic Insight
For advisors looking to cultivate more business among millennial and Gen Z, the Coinbase survey is also worth a read and the following nuggets confirm why that’s the case.
“Seventy six percent of those who own crypto agree that cryptocurrency and blockchain are the future. These numbers are even higher amongst people of color and younger Americans. Regardless of crypto ownership, the majority of Gen Z adults (54%) and Millennials (55%) agree that cryptocurrency and blockchain are the future,” notes Coinbase.
Fortunately, politics isn’t an issue when it comes to crypto investing because a comparable amount of Democrat, independent and Republican voters are currently crypto investors. Additionally, those polled by Coinbase hold the belief that crypto can play an important role in financial services equality and as such, is being embraced by minorities.
“Previous studies have found that communities underserved by the banking system are more likely to have used a cryptocurrency, and this study confirms that communities of color are more likely to be engaged with and optimistic about crypto’s future,” concludes the brokerage firm.