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Why Financial Planners Have a Fiduciary Duty to Be Well Educated in Cryptocurrency

Cryptocurrencies are here to stay. It's well past time advisors started learning about them.

If a client came to you about a traditional investment opportunity, you'd be sure to research the topic and give your best advice.

Why, then, are so many financial advisors skittish when it comes to learning about cryptocurrency? After all, it's your fiduciary duty to give your clients your best advice on a wide range of investments. Even if your best advice remains to run away—far, far away—from the volatile market of crypto, you owe your clients to understand the market and be able to explain why you reach a certain recommendation.

Financial planner and blogger Michael Kitces, no fan of cryptocurrency investing, made that point clear with Tyrone Ross, CEO of Onramp Invest, during a recent discussion at the 2021 Bitcoin for Advisors online conference sponsored by CoinDesk. Kitces pointed out many of the roadblocks for financial planners in steering their clients toward crypto but did agree with Ross that the industry needs to provide better education for advisors about cryptocurrency.

Right on the heels of that conference, the SEC announced approval for the development of bitcoin futures ETFs, a move that opens the door to a broader range of crypto investors without touching on the full volatility of investing directly in cryptocurrencies.

After all, the idea behind the development of cryptocurrency was to provide equal access and equal opportunity for financial resources for everyone. In the financial planning world, advisors might be limited by industry regulations, firm rules and their own individual knowledge. The one piece of the pie you can control there is your knowledge level.

Cryptocurrency Is Here to Stay

If you are one of those financial planners who thought cryptocurrency was like investment fads of the past, you can't just bury your head in the sand and hope it's gone when you come up for air. Cryptocurrency investing has been going on for more than a decade and has exploded in recent years. According to CoinMarketCap, the cryptocurrency market cap is hovering right around $2.5 trillion.

The SEC's recent action adds to the evidence that not only will crypto not go away, it's also on the verge of becoming a major part of the work planners perform and how financial services are delivered.

Your investors don't want to miss out on a great opportunity. If they aren't already inundating you with questions about cryptocurrency, they will be soon as news continues to blossom about the huge financial gains investors are pocketing in crypto. (Of course, if you follow social media, you're aware that people like to brag when they score big but fade from view when they get caught with the big losses.)

If you have clients determined to invest in cryptocurrency, they will find many opportunities if you cannot or are unwilling to serve their desires. Even PayPal and Venmo allow customers to buy and sell cryptocurrency. Your investors will turn to the internet or other financial advisors if they aren't satisfied with the advice they receive from you about this hot topic.

Fiduciaries Have a Duty to Stay Educated

For a financial planner to give any asset class a thumbs-up or a thumbs-down, the advisor must know what they are talking about. Even if you hate crypto, you owe it to your clients to accurately and intelligently articulate why you're against it, why it's not in their best interest.

An article this spring in Investopedia noted that while major brokerages, such as Wells Fargo, JPMorgan Chase, Merrill Lynch and Morgan Stanley have asked their advisors not to offer recommendations on cryptocurrency, Wells Fargo does issue primers on digital currency that advisors can share with their clients.

With the limits on industry conferences and seminars during the pandemic, which also coincided with the crypto explosion, financial planners cannot learn from others how they are handling their crypto education.

Lack of regulations and issues about compliance are two more concerns planners have about directing clients toward crypto investments. Planners need to monitor this as well. Peter Harrell, senior director for international economics and competitiveness with the National Security Council, this month told the Wall Street Journal's Risk & Compliance Forum that the Biden administration will move aggressively to address the risk surrounding crypto investing. While some fear too much regulation could drive the markets offshore, the various agencies that oversee market regulations are in some cases teaming up to determine the best route forward on digital currencies.

Matthew Kolesky, CCO for Arbor Capital Management and director of Arbor Digital, wrote recently on Blockchange that planners must remain aware of these changes in regulations and compliance and amend their policy statements accordingly as they begin to dip into the crypto market. Arbor Digital lists cryptocurrency investing as "speculative" and notes the high degree of risk.

Investopedia suggested planners start by investing a tiny percentage of their clients' assets in cryptocurrency, so if they experience a total loss, it would have minimal effect on their portfolio.

If advisors don’t believe it is worth an allocation of their clients’ funds, they should at least consider giving it an allocation of their own continuing education. After all, that is what being a fiduciary is all about.


Steve Larsen, CPA, CFP is co-founder of PlannerDAO, a cryptocurrency education community for financial planners. He is also co-founder of the Certified Digital Asset Advisor (CDAA) designation, as well as an adjunct professor of finance at Gonzaga University where he teaches classes in cryptocurrency and financial planning. To learn more about PlannerDAO, please visit

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