Financial Advisors Reluctant to Discuss Crypto with Clients Due to Legal Concerns, Survey Finds
A mere 1% of financial advisors frequently engage in discussions about crypto with their clients due to concerns about potential legal liabilities and associated expenses if the investment goes awry.
According to CoreData’s “Australia’s Crypto Investors” report, a staggering 89% of financial advisers stated that they have never provided advice on cryptocurrency.
“One of the most prominent reasons why advisers are not talking about cryptocurrency is due to concerns around not being covered by professional indemnity insurance (PI),” the report says.
“Without PI cover, advisers risk heavy legal expenses if clients claim their advice led to financial loss or harm.”
Several other factors contribute to advisers’ hesitance, including the prevalence of scams within the cryptocurrency space, the limited information compared to traditional assets, the absence of historical performance data, and the lack of clear regulations.
“Unlike traditional assets, cryptocurrency currently lacks research house ratings and clear advice from governing bodies. While historical data exists on the blockchain, cryptocurrency’s history is relatively short, and its future uncertain.”
However, CoreData believes that the majority of advisers’ reluctance to explore the cryptocurrency market presents an opportunity for advisory firms to specialize in or enhance their understanding of this emerging asset class.
Financial advisers are beginning to allocate to $BTC, around 3.5% of a client’s portfolio. If this practice becomes widely adopted, the inflows into crypto will be staggering, in the $trillions.
Beyond that, managed funds are also now able to expose themselves to crypto by…
— Sam (@SamCKx) March 19, 2024
Interestingly, the survey revealed that 67% of crypto
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