Fiduciary advisors won’t say no to a client who wants to add crypto to their assets, but it’s such a fast-growing world that there is no way for them to keep up, says Standing Oak Financial Founder Scott Eichler.
Christopher Robbins
This kind of optimism can be contagious. Indeed, over the past two years the mainstream financial press has adopted a mostly benign, if not enthusiastic, stance towards crypto. “A lot of my clients privately own crypto, and we end up advising on it as well because it is part of their portfolio and asset allocation,” he said. “I don’t mind if a client wants it. I don’t mind building it in as part of their asset allocation, but I do mind accepting the fiduciary role of managing crypto. I don’t think we’re in a good position to act as fiduciaries in terms of trading and rebalancing crypto. We can give advice, but we can’t really act.
“I would have to keep track of every trade basically on paper,” Eichler said. “To my knowledge there is no system right now that will do all the trade-tracking and journaling and everything required as a fiduciary.”For many firms with these problems, the solution is found in a cryptocurrency exchange-traded fund or private placement product, which Eichler views as poor fits for individual investors and therefore inappropriate recommendations for fiduciary advisors.
“I don’t act as a fiduciary here, I’m acting as an informed participant,” he said. “I’m not trading it, I’m not buying it, we’re just giving it an asset allocation and making sure it stays within those parameters. The asset allocation is already a fiduciary responsibility.”As a fiduciary, Eichler also tries to ensure that a client’s crypto holdings reflect their capacity for risk and volatility.
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