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.
Bitcoin at $7,102 this afternoon 09/04/2018
Bitcoing now at $6,039 today 27/06/2018
Bitcoin at $3,424 this morning 07/12/2018. Oh dear!
[quote=Justin]I wish you would post as Anon. My son’s name is Marek and I’m nervous that others might think it is him spouting this drivel. [/quote]
Why would you be nervous? Is your son not allowed to make up his own mind and post about an idea? All I can say is that if this is your general attitude, I’m glad you’re not my father!
I’ve read and learned enough about cryptocurrency so far to know that not only is it not drivel, it is an exciting new technology which will have world-changing effects. It may not happen today or tomorrow, but within the next 5 – 10 years we’ll see significant improvements and some true winners in this space. I’m not ashamed to post with my name as I believe in what is happening here.
What have you done to educate yourself about cryptocurrencies?
Anon, Even you get confused dribbling your garbage.
You need to learn that there is a difference between technology and a fake currency.
Please learn not to confuse the 2 and then maybe you will understand why any Real Financial Adviser in this country will not recommend what you refer to as crypocurrencies!
When referring to Bitcoin specifically, Japan has officially recognised it as a currency (under the virtual currency act passed in March 2017 and which took effect in April 2017). If even one country recognises it, that means it is now a real currency. Would you like to explain the difference?
Furthermore, people in the first world seem to live in bubbles, not realising that there are billions in the world who are unbanked or underbanked. Cryptocurrency technology may not be that useful for any of us here who enjoy a life here in the first world among the world’s top few percent, but for people who have limited means and live in areas where they cannot access banking, this technology is and has already been life-changing.
It’s OK to be confused or scared about a new technology, but to simply dismiss it as garbage is to your own detriment.
As I’ve mentioned before, it’s not my role to convince people to use this technology, but if I can pique the interest of even one person to dig a little bit deeper then I’m happy with that.
I own some crypto and it is recognised by the ATO as a currency when you use it to buy something (GST only payable)… Would I ever recommend it to a client as an investment, absolutely not.
We all know who got the blame when all those dodgy tax minimization forestry schemes fell apart. And it will also be the poor adviser that gets in the sh*t WHEN these dodgy so called investments collapse. You can also bet it won’t be these cowboys that are peddling it to advisers though. The product pushers and everyone else gets through unscathed when things go wrong.
Anyone like to provide a sensible valuation method for any crypto currency … I like tulips as well!
It’s very difficult to do at the moment as they don’t behave like traditional assets. Look up the likes of Ari Paul or Naval Ravikant. These are two people with strong financial backgrounds and also very knowledgeable with regards to crypto assets and are a voice of reason in this area.
“Cryptocurrency confuses and scares me, therefore it should be [b]banned[/b]! The same goes for nuclear physics, quantum mechanics, and maybe even vaccinations! Come to think of it, I’ve never been able to solve a Rubik’s Cube either – [b]ban them too![/b]”
Not understanding/agreeing with something isn’t a valid reason for it to be outlawed. Highly speculative decisions are made every day (be it investing in penny stocks, shorting companies, placing options etc) – and it’s a trend that isn’t likely to end any time soon. People will always be chasing the quick buck – and as it has always been, a good adviser will need to be the voice of reason when it comes to cryptocurrency, not the voice of derision.
No, continue with the voice of derision as often and as frequently as you can please as you would address other social ills such as gambling, which this basically is, except that the Casino will still be there when this crypto game is over.
What do you know about the crypto ‘game’ CEJ? When will it be over? Why is financial inclusion a social ill? Be interested to know your researched responses!
Note – there are a lot of ‘garbage’ crypto tokens, but it doesn’t mean that the entire space is garbage nor worthy of further investigation.
See the address of the Governor of the Reserve Bank to the 2017 Australian Payment Summit (just google “RBA” and “eAUD”) in particular the section that commences with the following…
“In terms of the issuing authority, our working hypothesis is that this would best be done by the central bank.”
I had a look at the article. No prizes given to those who guessed that the RBA would be the ones wanting to issue the currency. That is exactly why Bitcoin is popular, as it is NOT issued by a central bank! That’s not to say the Australian Government won’t issue an e-currency at some point in the future; in fact it’s highly likely. The point here is that many countries who run their own separate fiat currency may change to an e-currency of some sort over time. Even if they do, that doesn’t stop Bitcoin being a viable alternative (for example people still own Gold and other precious metals now; these are not issued by a central bank). Over time Bitcoin has shown low correlation to the stockmarket and can be used as a hedge in times of market turmoil the same way that precious metals are used.
Apart from reading content by financial industry incumbents, I think you’ll find it is worth learning more about this technology and the fundamental difference it can and will make to the future from those who really know what they are talking about (I don’t profess to be one of those people; I have only scratched the surface). If you enjoy reading, get “The Internet of Money” volumes 1 and 2 by Andreas Antonopoulos. If you would prefer to see him talk (I strongly recommend it), just look him up on YouTube and you can watch some fascinating speeches he has made in various locations around the world.
Some great points raised here and exactly what I’ve been trying to illustrate. Just because it’s different, doesn’t mean it’s wrong or doesn’t warrant further investigation. Some of the world’s largest companies have already been on this for some time.
Care to explain to me how you get it past being in the best interest of the client???????
Certainly. If the client fully comprehends the risks involved and has some spare money that they are willing to set aside for this (knowing that it may be lost completely as the technology is still in the very early stages), then it is definitely in the best interests of these clients. This is where advisers can add value by educating people, pointing them in the right direction for learning materials and instructing them about ways to safely store their crypto assets (which they would have bought anyway, but perhaps with less understanding of what they were doing).
That would not satisfy Corporations Act 961B Provider must act in the best interest of client. Clearly that post was not written by a licensed Adviser and is probably this evangelist Marek person again.
It was written by Marek again (as mentioned before, I have entered my name each time but it sometimes coming up as anonymous regardless).
It would appear that my answer wasn’t properly worded. What I was getting at is that while you wouldn’t be recommending it as an adviser at this stage, by educating yourself on it (as an adviser), you can then provide clients with information so that they can make an informed decision on what to do. No recommendations need to be made to buy it, but if a client is going to do it anyway, why not point them in the right direction for credible and accurate sources of information? It’s a minefield out there at the moment and there are definitely a huge amount of scammers taking advantage of novices in this space.
As the article states, a significant amount of advisers do not understand the space so they are rightly not recommending something that they don’t understand. The more interesting thing to me is the attitudes of some advisers. Rather than trying to understand, they just wave it away as a fad (especially some of the commenters on this site!)
Anonymous (and others with the same ideas), there is nothing else to which this technology can be compared. Can you store a racehorse in your head using only your memory? If you can remember a wallet seed code you can literally have nothing on you and restore this wallet seed to a new wallet at a new destination and extract the value of your cryptocurrency in this new wallet. That’s right, value. Even this early in the piece, cryptocurrencies are being used for purchases and can be sold for local currencies in many countries. Their usage will only increase over time as the technology grows and becomes easier to use (right now it is quite clunky). This is not about making a ‘quick buck’, it’s about people being genuinely interested to invest in a revolutionary new technology that is going to continue improving as time goes on.
Remember when the Internet first started (the world wide web that is)? It progressed in stages. First with dialup and only text being transmitted, then images, then email, then video etc. Each stage of the process had its own challenges and many people said it couldn’t be fixed. Now we have 4K streaming video readily available and Netflix has essentially driven 99% of local video stores out of business (note: 4K technology didn’t even exist when the Internet first came out and now you can buy a handheld 4K camera for a few hundred dollars. Nobody could have predicted the demise of the local video store!)
It’s OK not to recommend crypto assets to clients, but keep an open mind as this will constantly evolve and become something much bigger over the next few years.
Thanks for your further and ongoing contribution here Marek
No probs Jape. Happy to be an outlier in a sea of people determined to ignore something as fundamentally life-changing as this technology. If I can get just one person to do a bit of research and gain some actual understanding of these technologies, I’ll consider it a job well done.
Using the word “space” just gives you away – even when posting as Anonymous.
Not trying to be anonymous Jape . I put my name here every time, but for some reason it sometimes still comes up as anonymous (it’s Marek here, in case the anonymous moniker rears its head again). I take ownership of the comment you referred to. Also not sure why people here (not just you) have an issue with the term ‘space’ to succinctly describe an entire technological ecosystem. Experts in this field will often refer to crypto as a whole in this way. In any case, you’re missing the point by quibbling over semantics. Again, not trying to convince anyone, just trying to show a different way of thinking which everyone will have to adopt over time anyway!
I wish you would post as Anon. My son’s name is Marek and I’m nervous that others might think it is him spouting this drivel.
Fundamental value is??? Asset backing is??? How it fits and what’s the function in a portfolio???
My only disappointment was why the negative sentiments from investment professionals was not higher.
There is a future for crypto but it looks too much like s Ponzi scheme right now.
How many of these positive advisers take a position in USD, GBP, Yen or Euro as a part of a portfolio??
If not these currencies then why crypto??
On top of the reasons you have stated, because it is not actually a “currency”. Currencies are backed by governments. Bitcoin is a highly speculative virtual asset used for barter.
“Cryptocurrency” is just a misleading label in the same way “industry funds” are actually union funds, “Securitor” is actually Westpac, and “Balanced funds” can be whatever a fund manager feels like.
You’re right anonymous. Cryptocurrency is a misleading label as many of the ‘cryptocurrencies’ are actually tokens for use in an emerging system. For example Ether tokens are used to power the Ethereum network, which is essentially a worldwide computer spread out across a vast array of computers – i.e. no downtime and no centralised source for hackers to attack – on which applications can be run. Some of the biggest tech companies in the world are already on board so this technology is definitely not going away. Some cryptocurrencies are pure garbage with the intention of fleecing people of their money, but many of these systems are and will be extremely useful in the future.
4% Cowboys – How can they even consider this as an option for clients and sleep at night. It is not an investment it is gambling and any planner worth their salt would avoid it. Did these same 4% of advisers invest in Dotcoms, emus, Forests or other fads?
What I want to know is why don’t licensees have racehorses on their APL? Lot’s of Australians are very interested in racehorses and plenty of them will tell you they have made good money from them. For those advisers who don’t have sufficient “awareness” in such matters to adequately service your clients, I’m sure the Waterhouses would be happy for you to “refer” your clients to them.
A perfect response to this ludicrous article.