NEW YORK, NY, September 14, 2022 – Investor interest is limited and declining in cryptocurrency investments, according to new research from the Money Management Institute (MMI) and Aon plc. The report, “Risks and Opportunities for Wealth Managers in Cryptocurrencies and Cybersecurity,” evaluates the cryptocurrency movement and cybersecurity experience through the lens of the investor and the advisor.
Although there continues to be interest in cryptocurrencies, wealth management firms should be in no hurry to add crypto investments to their product portfolios while legal and regulatory frameworks are still uncertain, according to the report. Findings show only 39 percent of investor clients have asked their advisors about cryptocurrency investments and just 14 percent indicated being very likely to add crypto to their portfolio if their wealth management firm offered it, while 21 percent said they’d be somewhat likely to do so.
“This research underscores the complex issues and challenges that crypto investing presents to our industry,” commented Craig Pfeiffer, President and CEO of MMI. “While some investors are excited by what they see as an important new investment avenue, it is clear that additional rules and structure for both crypto products and platforms are critical to protect investors from the inherent risks.”
“Moving forward, a clear regulatory framework for cryptocurrencies will be a prerequisite for improving the appeal of this asset class to investors,” said Peter Keuls, Global Head of Wealth Management at Aon. “Investors who are interested in cryptocurrencies should also make sure their portfolios are diversified to manage short- and long-term financial risks and volatility.”
The study also found that:
- The strongest interest in cryptocurrencies continues to come from investors below age 35. Eighty percent of investors under 35 hold some form of digital asset, with 52 percent of them holding at least 60 percent of their portfolio in cryptocurrency, with men being twice as likely as women to invest. Ten percent of all clients who hold crypto investments have 80 percent to 100 percent of their portfolios dedicated to crypto.
- Forty-two percent of advisors claim to have expert knowledge of cryptocurrency, with an equal proportion believing that their firm should offer it to their clients.
- High growth and return potential were the most cited benefit of crypto investing, while market volatility was identified as the greatest risk, followed by cybersecurity and lack of inherent value.
- Cyber-risk has grown as a very significant concern for both clients and advisors (78 percent and 87 percent, respectively) as digital delivery becomes a more embedded element of the wealth management experience.
- Investors who have confidence in their wealth management firm’s cybersecurity are almost three times more likely to be very satisfied with their overall wealth management experience. However, only 52 percent of investors indicate being highly confident in their wealth management firm’s cybersecurity.
“Nothing is more fundamental to the wealth management offering than keeping assets safe and, in today’s world, that means cybersecurity,” Keuls added. “Wealth managers can do more to build client confidence in their cybersecurity practices. By deploying their trusted brands and offering cyber-risk management products, firms can turn this core capability into a growth opportunity as they help investors navigate volatility and make better investing decisions.”
For more information, the report is available here.
About Advisory Solutions: Expectations and Experiences:
Now in its third year, the Expectations and Experiences research is a three-part series based on a proprietary research program sponsored by the Money Management Institute (MMI) in association with Aon, that explores the gaps that have emerged between client expectations for investment advice and the solutions delivered by wealth managers. The research also explores how these gaps are undermining client satisfaction and wealth management firm performance.
About the Money Management Institute (MMI):
Established in 1997, the Money Management Institute (MMI) is the industry association representing financial services firms that provide financial advice and investment advisory solutions to investors. Through conferences, educational resources, and thought leadership, MMI facilitates peer-to-peer connections, fosters industry knowledge and professionalism, and supports the development of the next generation of industry leadership. MMI member firms are dedicated to helping individual and institutional investors, at every level of assets, plan for and fulfill their financial goals. For more information, visit www.MMInst.org.
You can learn more about Aon here.