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Practice Management > Marketing and Communications > Client Outreach

Advisors Face Client Confusion About Crypto, Meme Stocks

By Michael S. Fischer

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What You Need to Know

  • Eighty-nine percent of advisors said clients don't understand the volatility of cryptocurrencies, hot ETFs and meme stocks.
  • The popularity of such investments reveals a generational divide.
  • Fifty-four percent of advisors “refuse” to let their clients invest in these speculative sectors.

Two-thirds of financial advisors in a recent survey from Incapital said clients were confused by their adult children’s encouragement to invest in cryptocurrencies, meme stocks and hot ETFs. And 89% of advisors said clients do not understand the volatility of those sectors.

Although 58% of advisors said their clients were curious about such investments, and 35% said their clients want to invest in these opportunities, 54% of advisors said that they “refuse” to let their clients do so. 

Just 43% of advisors said their firms provide them with enough information to educate investors about these types of investments. Nearly half of advisors also reported that their clients have opened electronic trading accounts at other firms. 

“The popularity of investments like cryptocurrencies has taken everyone by storm and reveals a generational divide,” said Chris Mee, Incapital’s head of wealth management solutions distribution, in a statement. 

“Younger investors have time on their side and can afford to take the potential risks that accompany these types of investments.” 

That’s not so for older investors approaching or in retirement, Mee said, as they may not have time to recover from substantial losses from an investment such as cryptocurrencies, or even from overexposure to equity market risk.

“Retirement-minded investors may benefit from risk-managed strategies that help them stay invested for growth, but with protection from too much downside risk exposure,” he said. 

Qualtrics by Red Zone Marketing conducted an online survey in late April among 346 financial professionals from some 50 broker-dealers and RIAs residing in 41 states.

Risks and Opportunities

Thirty-four percent of financial advisors surveyed saw the greatest risks over the next six months in cryptocurrencies, 29% in bonds and 19% in meme stocks. 

Forty-one percent saw the greatest opportunities over the next six months in equities, 25% in large-cap value and 20% in emerging markets. 

At the time of the survey, more than three-quarters of advisors were fully or partially vaccinated, 10% planned to be vaccinated and 12% said they would not be vaccinated. 

Survey participants were almost equally divided on whether they would or would not require their staff to be vaccinated, or were unsure. Another 31% said they would fully reopen their office once their team was vaccinated. 

Six in 10 advisors said they would inform clients about their firm’s vaccination status. Forty percent said they would encourage clients and prospects to meet in person once they are fully vaccinated, and 37% said they would consider being fully vaccinated a competitive advantage. 

Fifty-three percent of surveyed advisors said they were back to a normal, in-office schedule, up from 42% in December. Just 13% said they would not have their team fully back in the office in 2021. 

In terms of client meetings, 26% reported that they were currently having in-person meetings with clients, up from just 12% in December, while 46% planned to wait until the second half and 21% said they would likely start in-person meetings in 2022. 

Two-thirds said prospecting and selling can be done effectively via virtual meetings. So far, 27% of advisors had held more than 10 virtual prospecting meetings this year, 49% had hosted between one and 10 and 24% said they had not hosted a virtual meeting. 

“Working virtually, we learned invaluable lessons about client communications; about being flexible, accessible, and responsive,” Mee said. “The industry will take these lessons into the future and transform how it creates the client experience, and investors everywhere will benefit.”

Michael S. Fischer

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