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Opting out of crypto offerings can come at a cost for wealth managers

Published

3 years ago

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2021 has seen crypto adoption skyrocket like never before. But, many might still not engage in the asset class due to several reasons including volatility and environmental concerns. The rest are still learning about the evolving technology.

To be or not to be

Some reports point out that just like investors, wealth managers are also in two minds about crypto. However, not choosing crypto might come at a cost for these financial advisors. According to research

cited by Barron’s, financial advisors who offer crypto-related money management, can receive up to $4.6 billion in incremental fee revenue.

Further, the upward potential is immense considering the global crypto asset management market size might surge from $0.4 billion in 2021 to $1.2 billion by 2026. It is a massive compound annual growth rate (CAGR) of 21.5%, according to research by MarketsAndMarkets.

And, that’s not it. As of this year, there are an estimated

300 million crypto users globally. And a decision to not offer crypto products is set to impact that huge investor base.

Institutions dive deep

A while back, Jamie Dimon, JP Morgan Chase & Co chief executive, had opined that Bitcoin is “worthless.” Despite that, the bank has been diving into the sector through crypto funds and other offerings. And recently, JP Morgan has also revised its price prediction

for Bitcoin at $146,000. Which is clearly not “worthless.”

As per other recent reports, many pension funds are also eyeing the asset class despite volatility concerns.

Changpeng Zhao, Binance chief executive officer, stated in a recent interview with Bloomberg,

“Most institutions or organizations should be looking at crypto at this stage.”

With that, it is noteworthy that digital asset investment products saw inflows of a record US$9 billion YTD. The interest is evident in the upcoming Metaverse space as well. Where Crunchbase’s list of companies has already raised $96 million this year.

Cody Harmon, director of Hard Line Wealth, told a media house that,

“Retail investors – and particularly younger ones – know much more [about cryptocurrencies] than the advisers themselves and regulators.”

But, he also added that even conservative investors can successfully navigate the space with the help of advisors.

“There is a massive basis for advising in the space.”

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