As Advisors Hesitate, Crypto Curiosity Crosses Demographic Lines

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With all the talk about younger investors being the ones driving the surge in cryptocurrency investments, interest in this relatively new asset class is actually growing across the board, according to Andrew Guillette, vice president of Americas Insights at Broadridge Financial Solutions, a global financial services and technology firm with more than $5 billion in revenues.

A larger proportion of younger people, millennials and Gen-Xers, have jumped into cryptocurrency investments, but advisors report clients of all ages are asking about digital currency. Advisors who do not respond to these inquiries are missing an opportunity that is almost certain to grow in future months, Guillette said in an interview.

“Every generation is looking for information, and interest has grown just in the last six months,” Guillette said. “That speaks to the popularity of cryptocurrency.”

Two-thirds of advisors told Broadridge some of their clients have asked about being exposed to cryptocurrency, although most have not taken the next step of actually investing. “Maybe it is just curiosity now,” but that will probably change. The interest is being driven, in part, by investors search for creative ways to boost returns in a low-interest environment, Broadridge said. Broadridge is conducting ongoing advisor surveys and will update the numbers in January.

Only 6% of advisors said they are using cryptocurrency now, but 21% said they would do so within the next two years. “Right now, there is a knowledge gap for digital coin investments,” Guillette said, and each wirehouse and firm is determining how to handle these investments as the regulators figure out what kind of safeguards and restrictions are needed.

“Advisors should understand what their organizations’ positions are on cryptocurrency investments and relay that to clients who are asking,” he added. “Right now, investors and advisors are sort of on their own for gathering information. There are a lot more variables for cryptocurrency investing than for more traditional investments.”

Many investors are using self-directed accounts for their cryptocurrency investments, and advisors should at least be aware of these accounts if they want to provide holistic planning, Guillette added. Half of all investors and two-thirds of millennials now use self-directed brokerage accounts, according to Broadridge, with self-directed brokerage account usage being the highest among high-net-worth investors. Broadridge noted that one third of investors, out of 1,000 surveyed, plan to increase trade frequency in self-directed accounts over the next year.

More than a quarter of investors use both a financial advisor and a self-directed brokerage account, showcasing investor demand for longer-term financial planning advice coupled with the ability to invest on demand, Broadridge said. Of these investors, 57% report that they use a self-directed brokerage account because they enjoy investing, while 33% said they do it to increase diversification.

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