Advisers face crypto clamour from clients

Laith Khalaf
10 August 2021

AJ Bell’s latest survey of over 300 financial advisers found that: 

•    Three quarters of advisers say their clients have asked them about investing in cryptocurrency
•    36% of advisers said their clients held cryptoassets
•    Only 4% said they would consider advising clients to invest in cryptocurrency directly
•    But 26% would consider recommending investment in a multi-asset fund that had some crypto exposure
•    That compares with 43% who hold gold as part of a balanced asset allocation

Laith Khalaf, financial analyst at AJ Bell, comments:

“Advisory clients aren’t immune to the lures of cryptocurrency, and many have been asking their adviser about investing, according to our latest survey. All but a few advisers said they wouldn’t consider recommending a direct investment in cryptocurrency, though just over a quarter said a multi-asset fund with crypto exposure was a different matter. 

“Cryptocurrency is here to stay for the foreseeable, and so advisers are going to find themselves continuing to field questions on the subject from clients. However the asset class hasn’t really made it into mainstream investment solutions, with the notable exception of funds from Ruffer, who bought Bitcoin earlier this year, but realised profits pretty swiftly thereafter. Nonetheless just over a quarter of advisers said they would consider investing in a multi-asset fund that had some crypto exposure. 

“That seems the most likely path for crypto to make it into the portfolios of advised investors in future, though that would require more asset allocators to build exposure to cryptocurrencies, something we haven’t seen as yet, because the prevailing mood towards crypto in the investment community is still one of deep scepticism. That seems legitimate given its volatility, a lack of functionality in the real economy, a heavy carbon footprint, and bucketloads of regulatory risk. So while investors may choose to dabble with a few pounds here and there, crypto in its current state isn’t highly investable for advisers or money managers.”

*AJ Bell Investcentre study of 311 adviser on 27 July 2021

Laith Khalaf
Head of Investment Analysis

Laith Khalaf started his career in 2001, after studying philosophy at Cambridge University. He’s worked in a variety of roles across pensions and investments, covering both the DIY and the advised sides of the business. In 2007, he began to focus on research and analysis, and has since become a leading industry commentator, as well as a regular contributor to the financial pages of the national press. He’s a frequent guest on TV and radio, and for several years provided daily business bulletins on LBC.

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