Crypto Asset Education: An Advantage for FA Recruiting?

RIA Firms Offering More Expertise and Education on Crypto Asset Management Could Gain an Edge in Recruiting Financial Advisors

The high-growth, $2 trillion-plus crypto market presents a unique opportunity for registered investment adviser (RIA) firms to differentiate themselves in competing for financial advisor recruits.

With the rapidly escalating demand among many clients for more exposure to digital assets in their portfolios, financial advisors are under pressure to align with firms that can support them in this area.  Firms that put time and resources into educating their team about cryptoassets will separate themselves from the pack and recruit higher-caliber talent as a result.

Education is Key

Just like every other asset class, firms need to arm advisors with the necessary resources to form their own educated opinion on cryptoassets and determine whether or not they are suitable for their clients. 

For firms that have not already taught their advisors about cryptoassets but have clients invested in this asset class, their advisors should be well supported from an educational perspective to maintain their fiduciary duty of providing sound ongoing advice and monitoring their clients’ investments.  

A financial advisor wants to sit across from their client feeling prepared for the questions they will be approached with and scenarios they might be asked to walk through. Firms that aren’t preparing their advisors appropriately for this increasingly popular asset class — now complete with various investment vehicles available for retail investors and more on the way — are doing advisors and clients a disservice. 

Rest assured that advisors are looking around at their peers and taking note. This isn’t about anyone’s personal opinion on an investment; this is about preparedness.

Focus on Next Gen Priorities

Financial advisors with the most potential to drive impact for businesses and clients alike in the future will be the ones who take notice of what younger generations care about. Younger generations who will take on a large chunk of wealth in the coming years are technologically savvy, forward thinking, and primed to disrupt traditional ways of thinking. 

These convictions carry over into their investment preferences – This includes bringing cryptoassets into the conversation. Recognizing the magnitude of this opportunity, advisors should jump at the chance to work within an entity willing to adapt to the times. 

Why?  Because clients will jump at the chance to work with open-minded advisors at a forward-thinking firm. From a business continuity standpoint at the firm level, RIAs should recognize these paradigm shifts and subsequently position themselves for long-term success. 

Embracing change need not be done hastily.  Simply taking the time to help advisors become conversant on crypto with their clients is a massive step in the right direction. Determining how to prepare their business and how the asset class can be implemented within a broader practice is the next step. (Yes, crypto touches every aspect of the financial planning process just as other assets do). Within large organizations, these things never happen overnight – and that is okay, but firms must work on a roadmap to help move them in the right direction.

Achieve a Baseline Knowledge of Blockchain and Crypto

For firms that are just waking up to crypto education and want to know where to start, a baseline knowledge on blockchain and crypto as an asset class is a must. Taking the time to learn the basics will have powerful ripple effects on overall comprehension of the asset class. Then, let’s take it a step further. 

Think about the unique needs of advisors and their clientele throughout the financial planning process:  How does a potential crypto allocation apply to a client’s: estate plan, financial plan, investor policy statement, and risk tolerance? How do you determine the value of a cryptoasset? Where does a cryptoasset allocation fit within a diversified portfolio? What are the tax implications? How can you purchase them? How do you store them? How can you as a firm remain compliant while supporting advisors and clients in this endeavor?

In my opinion, we are approaching a critical “eat-or-be-eaten” point where wealth management firms that refuse to embrace the waves of change will be widely drowned out by those that do. 

Caitlin Cook is Vice President of Operations at Onramp Academy, a cryptoasset education platform for financial advisors