As cryptocurrency grows in popularity, financial advisors are likely to face more questions from clients about whether Bitcoin, Ethereum and other blockchain investments should have a place in their portfolios.
One financial expert who is embracing crypto as part of his consulting practice is Tyrone Ross, a financial consultant and startup advisor who is passionate about working with people at all stages of their financial lives and empowering them to be knowledgeable investors.
After starting his career in advisor relations at a Wall Street firm and then working as an advisor at Merrill, Ross launched his own practice in 2017 to bring together his interests in serving a wide range of clients, as well as cryptocurrency investing and startup ventures. Below, he shares insights on how he built his practice and why he believes crypto could have a significant place in asset management.
Is There a Place for Crypto in Your Practice?
The growth of cryptocurrency has been one of the big trends of the past few years, but it tends to get a bad rap in the advisory space. Yet Ross believes that ignoring its potential could be a mistake. "From a financial advisor standpoint, it's hard to ignore the characteristics of Bitcoin and what it may mean for a portfolio," he says. "If you look at a 1-2% portfolio allocation and what that means for returns, I definitely think it's something that financial advisors should realize has an attractive return profile."
Further emphasizing why he believes cryptocurrency to be a viable asset class, Ross explains that it's important for advisors to read the latest research on cryptocurrency through resources like Delphi Digital and Coin Metrics, and to learn more about its potential. "There are a few things that still need to be addressed from a regulation standpoint and custody standpoint," he says. "But overall, the infrastructure now is a lot better than it was in 2017—the derivatives market has been built out and there's a lot more liquidity in the system."
Why Crypto Could Be the Key to Financial Literacy
Another reason Ross is passionate about cryptocurrency is that he believes it can offer financial opportunities to those who currently don't have them. "My fascination with crypto, and one of the things that I think is underrated and not talked about enough, is how it’s an outlet and a help to those who are unbanked," he says, highlighting the importance of creating a more accessible financial landscape and serving a truly diverse set of clients.
This interest goes hand-in-hand with Ross' desire to help clients develop financial literacy and come up with strategies to address their individual circumstances, whatever they may be. "Crypto is the answer to getting the unbanked banked, to getting them exposed to investing and saving." Beyond that, it's about making a client's priorities the core piece of the advisor-client relationship and educating them on the things that can help them meet their long-term goals. Cryptocurrency is only one piece of that puzzle, but it can be a significant one.
The Bottom Line
Working with clients to address their needs is a large part of any practice, and taking a more diversified approach to getting there could be the key to future success. For Ross, cryptocurrency is one such avenue and he believes that it could impact everything from financial literacy to estate planning. "When it comes to tax and estate planning, there's a lot that financial advisors need to understand," he says, explaining that these types of considerations are different for those who invest in cryptocurrency and it's something advisors should be well-versed in.
Above all, Ross believes that a future-focused practice should consider how things like cryptocurrency, financial literacy and a more diverse range of clients could shape the advisory services landscape, and how advisors can best position themselves to serve their clients' changing needs.