Cryptocurrency-focused investment firm Eaglebrook Advisors, which serves RIAs by providing separately managed accounts for clients holding bitcoin and ether, is partnering with Alto Solutions to extend its SMA capabilities into tax-advantaged accounts, according to an announcement. The move follows Eaglebrook’s launch of taxable SMAs alongside Dynasty Financial Partners last month, as the two-year-old Washington, D.C.–based firm works on developing means for advisors to advise and bill on crypto assets.
The cryptocoins handled in the SMAs, currently limited to bitcoin and ether, are custodied at Gemini Trust Company in an offline account (Gemini was also recently announced as part of a separate Onramp Invest integration). Eaglebrook plans to expand its options for cryptocoins, adding 12 in the next six months, said CEO and founder Christopher King. Crypto investments in Eaglebrook SMAs provide investors with direct ownership of digital assets.
The typical Eaglebrook investor has over $100,000 in investable assets, said King. The firm currently has about $50 million in crypto assets on its platform and advisors using its services tend to have clients with allocations of 3.5% in cryptocurrencies, he said. Typical end-investors range in age from their early 30s to late 50s, according to King.
“It’s not just millennials,” he said, noting that the firm is seeing more investors “in the 45+ [age range] who are investing in these qualified accounts.”
Eaglebrook’s push into the retirement account space is a sign of just how quickly attitudes around cryptocurrencies are changing, said Wally Okby, senior analyst for Aite Group's wealth management division. Advisors need to be familiar with digital assets or risk potentially damaging their brand and business, he said.
“It's not just some stuff that weirdos do,” he said. “The way that wealth management is designed now, which is to be holistic and to basically serve as an advisor—not a stockbroker, but a full-fledged advisor—with a fiduciary orientation means advisors need to be familiar with digital assets.”
He called Eaglebrook’s push a “good move,” because as soon as federal regulations incorporate financial advice and crypto, it will be a race between firms to provide advice to clients holding digital assets.” Comparing crypto to other financial inventions like structured products, he pointed out that some home offices will limit the scope of the advice or products that advisors can work with, but that doesn’t mean they’re completely off limits. He anticipated something similar happening with crypto.
“The digital asset space woke up from its slumber about a year ago,” he said. “The advisor really needs to have full knowledge and full accessibility to the client portfolio in order for him or her to do their job properly.” The Eaglebrook and Alto partnership is one more example of the industry innovating to provide that information and capability for advisors.
