Clients and potential clients of Financial Advisors, it’s time to get your crypto out of the closet.
When you meet with a Financial Advisor for the first time, one of their first tasks will most likely be to create your personal net-worth statement. The process can feel like an intrusive visit to the doctor’s office in your late 50s, as areas of your life you rarely shared with others are poked, prodded, and evaluated for various risk factors.
The advisor may begin to ask you, “own any homes? How much do you have saved in qualified retirement accounts? How much do you have saved in non-qualified investment accounts? How much cash do you keep in the bank? Do you have any debt? At what interest rates?”
Your palms begin to sweat as the final question approaches, “should I tell him/her about my crypto? I don’t want to be spoken to in condescension as my last advisor did when I brought it up.”
“Are there any other assets of value that we should add to your net-worth statement?” the advisor asks.
“YES!” you reply in confidence, “I have invested and would like to continue investing in cryptoassets. With that being said, I have ten questions for you Mr./Ms. Advisor.” (This instrumental randomly starts playing)
ONE
Are you a fiduciary, and if so does this include advising me on my crypto as well?
TWO
How do you get paid? When is the last time you reviewed your fee schedule? Will you bill on my crypto?
THREE
Are there any embedded costs in the crypto products you’d use to get me exposure? How do you evaluate the fees associated with a crypto product?
FOUR
Does your firm require a designation for giving crypto advice? If not, what are your qualifications?
FIVE
How will our relationship work if I just want your advice and I self custody? How will it work if you do it for me?
SIX
What’s your investment thesis for cryptoassets? Where is it documented? How often do you plan on reviewing and updating it? Can I review it?
SEVEN
What cryptoasset allocation will you use? How is that different than the allocation you use for your personal assets?
EIGHT
What investment benchmarks do you use for cryptoassets and how does it differ from my traditional assets? Will you create an investment policy statement for me that includes these cryptoasset benchmarks?
NINE
Who is your crypto custodian? Are my assets insured there? Have they passed a SOC 1 & 2 audit?
TEN
What are the similar and different tax implications of buying and selling crypto vs. traditional assets?
Congratulations, if your financial advisor can answer these questions, you can move on to the next step of reviewing the information they provide and determining if they are a good fit for you. Bonus points if you place this instrumental while asking your questions.
Would you like to get paired with an advisor that can answer these questions? Fill out the form below and we’ll be in touch with some vetted candidates.