According to a new Nasdaq survey of 500 financial advisers who are currently or considering allocating to crypto, 72 per cent of advisers would be more likely to invest client assets in crypto if a spot ETF product were offered in the United States.
Among advisers already investing in crypto, 86 per cent expect to increase their allocations over the next 12 months, while 0 per cent report plans to decrease. Of the same group, 50 per cent are already using Bitcoin futures ETFs and 28 per cent plan to start using them in the next 12 months.
On average, advisers currently or considering investing in crypto state that their ideal crypto allocation is 6 per cent of a client’s total portfolio. Notably, some 69 per cent of these advisers would consider using an index fund for broad exposure, followed by sector-specific index funds (57 per cent), actively managed funds (52 per cent), individual digital assets (40 per cent) and high-yield funds (31 per cent).
Despite strong interest in a passive approach to crypto and a spot crypto ETF, the surveyed advisers are not confident that such a product will be approved in 2022. Only some 38 per cent find it likely, 31 per cent find it unlikely, 24 per cent find it neither likely nor unlikely, and 7 per cent are not sure.
“Over the last decade, financial advisers 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,” says Jake Rapaport, Head of Digital Asset Index Research, Nasdaq. “The vast majority of advisers we surveyed either plan to begin allocating to crypto or increase their existing allocation to crypto. As demand continues to surge, advisers will be looking for an institutional solution to the crypto question that now dominates client conversations.”
The survey finds that crypto adoption is highest among registered investment advisers (RIAs), with 34 per cent of RIAs using crypto compared to 19 per cent of independent broker-dealers (IBDs) and 17 per cent of wirehouse advisers. About half of RIAs (49 per cent) report that compliance rules and restrictions are a barrier to crypto investing, compared to 78 per cent of advisers in all other channels.
Some 10 per cent of advisers report being very knowledgeable about crypto, and 9 per cent feel very confident in their ability to advise clients on crypto. Virtually all advisers surveyed (98 per cent) express interest in learning more about crypto and digital assets.
Among respondents, some 7 per cent say that ESG is a very important consideration when determining a client’s strategy toward digital assets.
“Crypto inflows through advisor channels show no signs of stopping, even as advisers grapple with compliance considerations and look for guidance from educational materials from other industry participants, including asset managers and index providers,” says Rapaport. “We expect ESG and crypto considerations to converge as investors continue to direct assets into both.”
In March 2022, Nasdaq and Hashdex announced the launch of the Nasdaq Advisor Academy: Digital Assets curriculum to provide all financial professionals with informative and educational resources on the digital asset ecosystem.