Cryptocurrencies like Bitcoin and Ethereum are growing in popularity and capturing the imagination of investors nationwide. Some clients may have a fear of missing out—after hearing about big gains and steep runups in the value of some cryptocurrencies. Given all the publicity, there’s a good chance some of your clients have asked you about these new digital assets. How should you respond when clients ask you about investing in cryptocurrencies?
Don’t just dismiss questions about crypto investing
Your first reaction might be to dismiss cryptocurrency investing as a passing fad and discourage clients from getting into it as too risky and not appropriate for their portfolios. But dismissing it out of hand may not suffice— this isn’t going to make their interest go away. Some clients will still want to invest in crypto or fear they are missing out and should be investing in it.
In fact, up to 43% of investors already own at least some cryptocurrency and there are currently almost 100 million Coinbase accounts. It’s prudent to know how to field clients’ questions about cryptocurrency investing and offer a thoughtful response. If nothing else, you don’t want to be left out of the conversation.
The first step is to educate yourself so you understand the basics of what cryptocurrency investing is, how it works, and how to invest. Second, when clients inquire about crypto investing, ask them open-ended questions about it. You want to find out what’s behind their interest; for example, are they simply curious or do they have a serious interest in investing? What is their knowledge of crypto investing and do they understand the risks involve?
Here are a few suggestions for how you can talk to your clients when they ask you about cryptocurrency investing:
1. Explain the risks of investing in cryptocurrency.
Cryptocurrency poses many unique risks that aren’t present with traditional types of…
