Advisers buck cryptocurrency trend

A poll of 3,931 ifa readers has found an overwhelming majority are very unlikely to recommend their clients invest in cryptocurrencies like bitcoin and ethereum.

The data found 68.1 per cent of readers were “very unlikely” to recommend cryptocurrencies, with a further 2.6 per cent responding that they were “unlikely” to suggest them to their clients.

These figures compared with 15.3 per cent saying they were “very likely” to do so, while an additional 12.8 per cent said they were “likely” to do so, with only 1.2 per cent saying they were neutral on the issue.

The results come despite rapid increase in crypto investment and demand from clients and investors more generally.

Warrick Pleash, partner manager with crypto brokerage firm Bitcoin Trader, told ifa that many advisers are hesitant to recommend them due their omission from most APLs.

“The problem with cryptocurrency from an adviser point of view is that generally the firm won’t have cryptocurrencies of any sort on their approved product list,” he said.

“You find a lot of advisers will say either that it’s a bad idea without proper underlying research or investigation because they haven’t got the motivation to do that because it’s not on their APL, or secondly they’ll have clients who’ll say ‘look, I want to buy some of this cryptocurrency’ and the adviser will say ‘I don’t think it’s a good idea but it’s your decision to do so’, and then may give a referral to a firm like ours or to someone to look after the client properly.”

Mr Pleash said a lack of education around crypto investments was another challenge for advisers.

“I would say that’s a lack of adviser awareness. I’d say [these figures are] a reaction to wanting to err on the side of conservatism,” he said.

“I totally understand that – if I went and stood in front of a hundred quality advisers and asked them to describe bitcoin and how it works, and what is the real intrinsic value and background to it, there’d be a pretty small percentage of people that could do it, probably that 4 per cent that’s in your figures.

“You’ve got 96 per cent of people saying they wouldn’t recommend it, so you’ve got 96 people in a hundred saying they don’t really know anything about it, so I would say those people are uninformed.”

Mr Pleash said education on the issue will likely change advisers’ attitudes towards crypto.