Yahoo Finance

• A survey found that most financial advisors aren't directing their clients to crypto investments.

• Crypto recommendations could lead to reputational damage among advisors, experts told Business Insider.

• But things like bitcoin ETFs have helped get advisors comfortable, paving the way for greater adoption.

As cryptocurrencies boom in recent months and push further into the mainstream, a corner of the financial industry remains on guard.

A recent CoinShares survey of 250 financial advisors found that 62% do not think that recommending bitcoin aligns with the fiduciary responsibility to act in a client's best interest.

The study, which fielded responses between November and December of last year, also reported that many are worried that clients underestimate the risks of a crypto investment. Over half— 53%—of respondents rank volatility as a top challenge when it comes to digital assets, leading some to discourage clients from putting money in the space.

"Clients trust us to secure their financial future. We can't be rolling the dice. If that's all we're going to do, then they don't need us. They can go to a casino," Kashif A. Ahmed, a certified financial planner and the president of American Private Wealth, said.

For him, there's no way to justify adding crypto to a client's portfolio if its leading use is "pure speculation," he told Business Insider.

Others agreed.

"There are different roles that investments in a portfolio can play: It can be high risk-high return potential. It can be risk-mitigating. It can be protecting against inflation," said Noah Damsky, a certified financial advisor and the founder of Marina Wealth Advisors. "Crypto doesn't really have any set purpose. I guess it could return a lot, but that's just speculation."

Reputational risk

Bulls may be quick to point out that crypto speculation has been massively profitable lately. Bitcoin soared by about 114% in 2024, outpaced by even steeper gains among some meme coins.

But whereas the gains have stirred enthusiasm among advisors' clients, cryptocurrencies also have a history of extreme volatility. For financial advisors, ignoring that risk can come with a big cost: an injured career.

55% of CoinShares respondents cited fear of reputational damage when recommending digital assets. For a career that hinges on a reputation and the ability to build trust with clients, this isn't a casual concern.

"In our case, we have to be a little bit more sober about it, because we are truly responsible," Ahmed explained, adding: "If we screw up your financial future, then there may be no recovery time for you, right?"