[ad_1]
Throughout 2022, cryptocurrencies and ESG were consistently in the headlines of financial news. Still, neither product plays a significant role in their business, according to most financial advisors, and few expect them to grow in 2023.
A new study by financial planning parent company Arizento shows just how wide the gap between media stories and reality is. Research, “Predictions for 2023: What to expect in the year ahead” We asked 362 advisors what they think 2023 will look like in the wealth management industry, including the assets their clients are likely to invest in. Cryptocurrencies and his ESG (short for “Environmental, Social and Governance”) investments barely made an appearance.
In particular, cryptocurrencies were invisible to newbies. Nearly half (49%) of advisors say they don’t consider digital currencies to be a good investment. His three-quarters of advisors had less than 5% of his clients invested in cryptocurrencies in 2022. So, will the cryptocurrency revolution come next year? Only 30% of advisors expect more clients to buy cryptocurrencies in 2023, down from 60% who thought so in 2021.
For ESG, the outlook also looked bleak. The majority of respondents (69%) said he is unlikely to recommend ESG products in 2023.
Given all the crypto and ESG press coverage in the last year, this may seem surprising. From Bitcoin’s peak last winter to its plunge in the spring, the news media have followed the digital currency’s rise and fall in value with avidity.Meanwhile, the investment giant black rock Dive headfirst into the ESG movement. From the headlines, cryptocurrencies and his ESG seemed poised to play a major role in the future of finance.
or maybe not. Since June, the price of Bitcoin has been sluggish. In May, sister coins TerraUSD and Luna crashed.And in November, the crypto exchange FTX implosion As a result, CEO Sam Bankman-Fried resigned and was arrested on fraud charges. (Bankman-Fried pleads not guilty.)
At the same time, Republican politicians loudly turned its back on ESGRepublican leaders, from Florida Governor Ron DeSantis to former Vice President Mike Pence, have voiced their opposition to what they call “awakened capitalism,” and they’ve moved to Kansas, Texas, Oklahoma, and other states. state legislators are pushing for a new bill to crack it down.
But bad news aside, both cryptocurrencies and ESG face a simple hurdle. Many advisors avoid them.
“I don’t recommend or actually discuss cryptocurrencies with my clients because I have a responsibility to do so,” said Ron Straubel, a certified financial planner and founder of the RIA. rice field. retire wisely in Meridian, Idaho. “From a professional standpoint, I don’t know how to do any form of due diligence on something that’s very suspicious in the first place.”
Others are put off by the opacity of technology.
“Most of my clients want to understand it before putting their money in it, but cryptography is not an easy thing to understand. Valkyrie Financial in Appleton, Wisconsin. “I get a lot of questions about investing in cryptocurrencies, but no one asks for it in their portfolio.”
Even among advisors who endorse cryptocurrencies, many believe they will be less popular in the coming year. Jan Pevzner, CFP and Founder gotham block The New York City-based man said he was generally “bull” about the technology but did not advise clients who own cryptocurrencies to buy more.
“A lot of investors already own cryptocurrencies and they have fallen this year, so interest naturally goes down,” Pevsner said. “Many people have become disillusioned with cryptocurrencies due to the recent bad news.”
ESG issues are different, but can be repugnant to advisors. ESG products typically invest in companies that they believe have a positive impact on environmental, social and governance issues, or at least exclude companies that they believe are harmful to those causes. But when the fund doesn’t exactly match the client’s idea of who is toxic and who isn’t, the advisor customizes the index to the investor’s ideals, picking the ‘good’ companies and choosing the ‘bad’ companies. should be excluded. .
Ratings of companies based on ESG metrics also vary greatly depending on who is doing the assessment and the factors involved.how it is Companies that manufacture cluster bombs You can sneak into funds that are considered ESG friendly.
Strobel says this can quickly become a headache.
“A ‘one size fits all’ ESG approach doesn’t fit most clients,” he said. “It opens the floodgates for me to build very complex and time-consuming investment strategies and distracts me from other more important responsibilities.”
It’s not that I’m completely uninterested in these products. After all, nearly a third of advisors surveyed by Aligent said they were at least “somewhat” likely to recommend an ESG fund.and even after the year there was a ciphersome advisers believe it will be a good investment in the long run.
“There is nothing wrong with cryptocurrencies per se,” Pevsner said. “Most of the scandals are related to regulation, compliance, and bad actors. I think we have to go through this period. It will be too late to do so.”
But according to Arigent research, the majority of advisors don’t expect to do much business with either of these headline-grabbing assets in 2023. In fact, they expect less than last year. For many, it seems easier to stay away from them.
“I have found that the best option for my sanity and investors to reach their goals is to recommend them to experts when they want to invest in cryptocurrencies or ESG.
[ad_2]
Source link
