There has always been confusion and a steep learning curve with cryptocurrency investing. As the FTX and BlockFi bankruptcies rock the crypto world and volatile pricing remains a feature, not a bug, of the asset class, putting dollars into digital investments seems even more daunting these days.
Financial advisors, then, have a choice. They can rubberneck as they pass by the wreckage of this week’s news and go on with business as usual. Or they can seek out more information to better understand an asset class that many investors, especially younger ones, are interested in.
Dec. 12 -13, Financial Planning will give advisors the opportunity to do the latter, hosting its Cryptocurrency for Advisors conference. The free, online event will feature conversations around the basics of blockchain and how cryptocurrencies function to more in-depth strategies on how financial professionals can work with investors to strategize the role that crypto can play in portfolios.
Data shows that younger investors from millennials to Generation Z, who are expected to inherit trillions of dollars in coming years, are still interested in crypto as a part of their retirement savings plans. Even if advisors aren’t ready to put much, or any, money into digital currencies today, it behooves them to educate themselves on the burgeoning asset class.
With that in mind, FP spoke with Caitlin Cook, the head of marketing and communications at Hxro Labs, which provides crypto analysis and education, about the latest crypto fallout and what it should mean for advisors. Cook, a #FinTwit fixture who tweets to more than 23,000 followers at @DeadCaitBounce, is on the steering committee for Cryptocurrency for Advisors and will present at the event.
Click here to see the agenda and register free for Cryptocurrency for advisors.
This discussion has been lightly edited for length and clarity.
FP: Some people think this is the beginning of the end for crypto. Is crypto dead?
Caitlin Cook: Crypto is not dead. The FTX situation was not a crypto problem. It was a problem that stemmed from lack of transparency and lack of internal controls that we’ve seen in traditional financial services for decades. And although it is a company that people perceive as “crypto,” it operated as a centralized entity that didn’t offer the same level of transparency that so many projects in de-fi (decentralized finance) do.
Crypto is such a robust industry. People are building so many different projects that are very outside the scope of something that FTX does, and that hasn’t changed. FTX is not representative of the broader industry and all of the innovation that’s taking place.
Unfortunately, FTX plays a really important role because it’s really what bridges a lot of people into the space, but that’s not where most people stop, and that’s not where a majority of the innovation and a majority of the assets flowing in and out are going. So crypto is not dead.
This was more of an event akin to what you’d see in the traditional finance space. And people are still building crypto. The blockchains are still operating.
FP: Can you talk a little about what happened over the last month in the crypto world and the role education plays in moving forward?
CC: I think that when there is a lot of news and a lot of headlines, it’s very easy for misinformation to spread. It’s very easy for people to read headlines and not go any further. In reality, these are big opportunities for people to actually do their research today so they can understand what’s causing the situations that are unfolding, as well as what’s not causing the situations that are unfolding.
I also think that when there’s a market pullback, a lot of people think that that’s something that will deter people from getting educated. And my argument is really the opposite. You’re never going to regret taking the time to learn about something when things are quiet because when things pick up again, you’re going to be behind. This is the time to sort of pull back, think about what you need to learn, what’s really important to understanding all these headlines that are coming out, and where can you get started.
This really brings up the case for education, because as much as people like to opine on all of the things that are happening, there’s a lot of research that needs to be done to even understand how these things happen to begin with.
FP: What do you think the biggest knowledge gaps are when it comes to financial advisors and crypto?
CC: A lot of advisors start with Bitcoin and stablecoins because those are a lot of the very common assets that people are onboarding into the space.
Something that is probably way down the line in terms of what they’re going to start learning about first and where they’re going to go is around de-fi and a lot more of the kind of exotic innovations that are being worked on there that are a lot more technical and have a lot of layers that are harder to understand. It’s really difficult to make the jump from what blockchain, Bitcoin, self custody is to de-fi as a whole. There’s just a lot to take in.
I was actually just having a conversation with someone about how it’s hard to keep up. The innovation is going on at such a high rate, and a lot of it seems very complex versus what we’re used to today. The rate at which new information and new projects are coming to life is really, really hard when crypto isn’t all of your business — it’s just a small part. It’s hard to allocate the time to fully understand it.
FP: What do you think advisors can get out of this conference?
CC: Hopefully we strip away a lot of the perceived complexities of the space and put people a little a little bit more at ease. You are capable of learning about this.
I think the biggest goal, at least for me thinking about the agenda for this conference, is not just giving content that’s already out there. We want to give information that’s targeted to the audience and give them takeaways for their business. And that should be happening no matter what the market conditions. Advisors should always be ready to serve their clients in the ways that they need, even if it’s not a part of their core business.
So I think there’s a lot to be learned from that perspective, and I’m excited to get into everything from regulation and compliance to estate planning and all the important things that advisors should care about for their clients.
