Approximately 72% of advisors would be more likely to invest client assets in crypto if a spot ETF product were offered in the United States, according to a Nasdaq survey of 500 financial advisors.
Over the next 12 months, 86% of advisors who are already investing in crypto plan to increase allocations, while 0% plan to decrease. In the same group, 50% already use Bitcoin
futures ETFs, and 28% will do so in the next 12 months.
Approximately 6% of a client’s total portfolio is optimal for advisors currently investing in crypto or considering doing so. In addition, the survey found that 69% of advisors would consider using index funds as a broad asset class, followed by sector-specific index funds (57%), actively managed funds (52%), digital assets (40%) and high-yield funds (31%).
“Over the last decade, financial advisors have been focused on shifting assets into index funds. As they incorporate digital assets into their investment strategies, they are expressing strong interest in a similar vehicle that can offer broad asset class exposure for their clients. The vast majority of advisors we surveyed either plan to begin allocating to crypto or increase their existing allocation to crypto. As demand continues to surge, advisors will be looking for an institutional solution to the crypto question that now dominates client conversations,” Jake Rapaport, the Head of Digital Asset Index Research at Nasdaq, commented.
The surveyed advisors were not confident that a crypto spot ETF would be approved in 2022, despite strong interest in passive crypto and passive crypto ETFs: a mere 38% of respondents think it is likely, 31% do not, 24% are neither sure nor certain and 7% are unsure.
RIAs and Cryptos
In the survey, registered investment advisors (RIAs) adopt cryptocurrency at a rate of 34%, while independent broker-dealers (IBDs) adopt crypto at a rate of 19%, and wirehouse advisors at a rate of 17%. In addition, about half of financial advisors (49%) say that compliance rules and restrictions keep them from recommending crypto investments, compared with 78% of advisors from all other sources.
Among advisors, 10% report being very knowledgeable about crypto, and 9% have great confidence in their ability to advise clients on it. Moreover, nearly all advisors (98%) are interested in learning more about crypto and digital assets.
According to respondents, about 7% consider ESG when determining a client’s digital asset strategy very important.