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How Crypto Fits Into Goals-Based Financial Planning 

Start having conversations with clients now to retain and reel in both the crypto-haves and the crypto-ready-to-haves. 

Cryptocurrencies are minting new millionaires by the day, and even staid institutional money is beginning to allocate to this new asset class. While crypto’s rising tide has lifted many boats across the harbor, existing wealth clients have largely been left watching from shore. Understandably, more clients are asking advisors about crypto’s merit as an investment. For advisors keen on incorporating crypto offerings into their repertoire, re-examining the situation through the lens of goals-based financial planning sheds clarity on the situation and may allow those wealth managers to better retain and reel in both the crypto-haves and the crypto-ready-to-haves. 

It is well known that goals-based planning’s success is rooted in behavioral finance – clients are more engaged with a plan they feel is fit to them. To wealth managers, though, the thought of integrating non-traditional financial assets into this plan can be perplexing at best and deterring at worst. Clients won’t accept that, and neither should the firms that service them. Although some wealth managers may view crypto as too risky for any client to consider, advisors can be prepared to have conversations with clients ready to adopt crypto through the lens of goals-based financial planning by considering a few key steps. 

Discovery and Behavior 

Thoughtful discovery is the bedrock to successful goals-based financial planning, and the success of those plans, spurred by truly probing questions, can drive client satisfaction and, ultimately, greater asset retention and acquisition. Discovering a client’s true feeling on crypto will help an advisor to respond with thoughtful commentary and recommendations. 

Initially, during the fact-finding stage, it is important to understand what holding crypto means to the client. Are they a zealot, convinced of the upcoming blockchain revolution? A techno-skeptic convinced by his nieces? Something in between? Asking probing, open-ended questions to distinguish and understand this dynamic will help define inputs, such as a client’s desire to grow, divest or diversify their crypto and crypto-adjacent holdings. Similar talking points can springboard a conversation between a wealth manager and a neophyte client looking to build a position.  

In attempting to determine to which (if any) goals to peg crypto holdings, a wealth manager must first determine how much value can be budgeted for the future. According to intotheblock, the average holding time for Bitcoin is over two years, while Ether is roughly half that. No client is an average, and those numbers are meaningless without a comparison to the client’s holding periods for traditional assets, and how they treat taxable gains. This conversation is, however, a valuable exercise in attempting to understand how a client plans to use this newfound wealth and whether it can be confidently understood as a funding source. A client who views their crypto gains as a winning lottery ticket is much more likely to fund an ephemeral fancy than a well-considered goal. 


While there is no industry standard yet to determine who is a fit for a crypto investment, there are approaches to integrate speculative, risky assets into client portfolios. To establish a client’s crypto position within a portfolio, a wealth manager must assign some return expectations to the asset. Understanding how a client would react to this growth (or contraction) of value — both in their own portfolios and generally — can directionally help a wealth manger assign a portfolio weighting. For clients still teetering on comfortability with direct crypto ownership, there are myriad crypto-adjacent assets, such as equity in blockchain companies or exchanges, BTC futures or crypto funds that can help stabilize a positioning. Each exhibits unique risks and correlations and, as such, should be evaluated both individually and holistically within the portfolio. 

While crypto’s potentially dramatic downside risk and client’s reaction to it must be considered in any goals-based financial plan and corresponding portfolio construction, crypto assets unarguably sport a mosaic of other risks above and beyond simple downside. For example, on the regulation front, while crypto doesn’t quite live in the Wild West, regulatory opacity may bristle risk-averse investors and firms.  

Wealth managers should consult with firm compliance regarding selling away considerations, but the ability to recommend either existing or to-be-obtained crypto assets’ inclusion in goals-based financial planning can be a powerful value proposition. Like other alternative assets held away, a high-quality review of vendors, exchanges, platforms and custody controls is another way to add value to the process. 

Integration Into a Goals-Based Financial Plan 

Obviously, it would be foolish to assign a client’s entire crypto holding to a single (even aspirational) goal; no wealth manager would assign only Apple stock to buying a vacation home or suggest leaving only Ford to future generations (unless, maybe, if your last name is Ford). Building blended portfolios, diversified with crypto, and in line with client expectations is the only way to present an effective, exciting, and actionable goals-based plan to a crypto-conscious client.  

Finally, it’s important to remember that in goals-based financial planning, the risk focus shifts. Risk tolerance (“What’s the variance?”) is replaced with risk capacity (“What is the risk that I will not achieve X?”) It is important for wealth managers to keep this in mind when budgeting and assigning certain assets to specific goals or pockets. This allocation — in contrast to simple asset allocation — and the application of the aforementioned discovery is where wealth managers can truly set themselves apart from the competition. 

Or, simply ignore it, and just wait for the business to walk out the door. After all, Bitcoin is a fake money going to $0 anyways. 

Simon Zais is a consultant with Capco specializing in wealth management. He holds a degree with honors from Baruch College, and is a CAIA charterholder. He lives in Connecticut with his wife, son and two dogs.

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