Bitcoin ETFs Are Here, but Most Financial Advisors Are Still on the Sidelines

Most of the advisors said they're neither initiating conversations nor fielding client inquiries about the ETFs – and most don't have more than one client who has made an allocation to the funds.

Financial advisors are largely steering clear of bitcoin exchange-traded funds despite their arrival on the U.S. market earlier this year.

Most of the advisors said they’re neither initiating conversations nor fielding client inquiries about the ETFs – and most don't have more than one client who has made an allocation to the funds.

Of those advisors, some are proactively educating themselves about bitcoin investing, while others — often those with an older, more traditional and conservative client base — are more dismissive.

Some of these advisors work with younger clients who have a greater appetite for risk and a longer investment time horizon. They say that their clients were already interested and educated in crypto exposure before this year, and that the arrival of ETFs hasn't motivated them to jump in.

At 15 years old, bitcoin is in a maturity phase comparable to that of a teenager — it has big potential but still comes with a lot of volatility. Bitcoin is up more than 59% this year, and about 230% from its 2022 low that deepened during the collapse of FTX. In the past three, five and 10 years the cryptocurrency has gained 85%, 704% and 10,854%, respectively. It's also suffered several 70% drawdowns over the years, which not all investors could stomach.

Many hope consistent flows into bitcoin ETFs over the years can lower that volatility, but for now, it's still a deterrent for some.

"Financial advisors now have a way to give clients access [to bitcoin] that's safe, reliable and regulated," said Bradley Klontz, managing principal of YMW Advisors in Boulder, Colorado. "I love it … that it's a tool in our toolbox for clients who want it. I just don't see, right now, most firms recommending it because they're not recommending any asset class, or any particular asset, that has that much volatility."

Rianka Dorsainvil, co-founder and co-CEO of 2050 Wealth Partners, said that most of her clients prioritize stability and long-term growth over high-risk opportunities, and that the "relatively early stage of bitcoin ETFs in the financial landscape and the ongoing volatility associated with bitcoin" are primary factors keeping bitcoin ETFs out of her investment strategies.

Cathy Curtis, founder of Curtis Financial Planning in Oakland, California, said that she doesn't know if bitcoin will ever be a stable asset class but that she would consider adding it to client portfolios if it showed stable returns over at least 15 years.

"If it proved itself to be a true diversifier along equities, for example, maybe," she said. "The history of that asset has not shown me that."

Apex Financial's Baker pointed out that investors have decades of software and tools to show them how a certain percentage of a given bond, ETF or other asset in a portfolio might enhance returns or increase volatility and more.