What You Need to Know
- The recent launch of the Onramp Invest platform could help attract more RIAs to crypto.
- But challenges, including the SEC delaying approval of cryptocurrency ETFs, continue to persist.
- Crypto is also still too risky to recommend to clients, says, Andrew Graham, a managing partner at Jackson Square Capital.
The launch in late May of Onramp Invest — with Ritholtz Wealth Management as an initial investor — and Dynasty Financial Partners rolling out its first crypto options for its advisors could help persuade more RIAs and other advisors to start offering cryptocurrency to their clients.
But ongoing challenges, including the Securities and Exchange Commission postponing a decision on approval of the first Bitcoin exchange-traded fund — continue to cause hesitation among advisors, RIA firm executives and industry experts told ThinkAdvisor.
Onramp is a crypto-asset integration platform for financial advisors led by investment advisor Tyrone Ross. It is championed by a number of prominent figures in the advisory industry; it lists Danielle Fava of Envestnet, Jamie Hopkins of Carson Group, Jason Wenk of Altruist, Douglas Boneparth of Bone Fide Wealth and Anthony Stich of Advicent among its advisors and investors.
Dynasty, for its part, has teamed with Eaglebrook Advisors to offer Bitcoin and other digital asset investment strategies to its network of independent advisory firms.
Movement, but Slowly
“I think the Onramp platform will make it easier for those advisors who want to get their clients allocated to crypto to do so,” according to Joel Bruckenstein, head of Technology Tools for Today (T3).
“Based upon our experience last year when we had Ric Edelman,” founder of Edelman Financial Engines, “organize a half-day seminar on crypto, it seems to me like there is movement in that direction, but it has been slow to date,” Bruckenstein told ThinkAdvisor by email Tuesday.
“Most advisors are a conservative bunch, and it takes time for newer ideas to get fully vetted and accepted in the marketplace,” he pointed out.
In addition, “more education is needed” in the advisor sector, he said. “I think when the SEC starts approving crypto ETFs it will lend further legitimacy to crypto as an asset class.”
Meanwhile, Timothy Welsh, president, CEO and founder of consulting firm Nexus Strategy, said he believes “when industry leaders like Dynasty and Ritholtz embrace something new, then that portends well for the future.”
But, echoing Bruckenstein, he said: “The RIA industry has always been a conservative, ‘fast follower’ marketplace. RIAs want to wait and see if a new trend or approach has staying power, and doesn’t blow anyone up.”
His prediction: “Once there are some credible firms that have passed the guinea pig stage, then look for broader adoption. In this case, crypto has so many unknowns still that it does take time, but inevitably, RIAs and the ecosystem that supports them will customize solutions and then it is off to the races.”
Waiting on the SEC
More optimistic was Tommy Marshall, executive director at Georgia Fintech Academy, who also pointed to the significance of SEC approval of crypto ETFs.
“I think that we will continue to see more and more RIAs offer cryptocurrency investing capabilities for clients,” he predicted. “One simple reason is that sophisticated clients are asking that this type of investment be available in the portfolio.”
He added: “The marketplace will also likely soon offer cryptocurrency ETFs as soon as regulatory approvals allow. … As these ETFs become available a much wider group of RIAs will have a relatively easier way to provide cryptocurrency exposure in client portfolios.”
San Francisco-based RIA Jackson Square Capital doesn’t yet offer crypto investment options to clients, for whom the firm manages about $375 million in assets, according to Andrew Graham, its founder, managing partner and portfolio manager.