Why financial advisors are still wary of cryptocurrency, even as prices rise

SAGINAW, Mich. (WNEM) – Bitcoin is booming again, and interest in cryptocurrency is climbing, but many financial advisors are still steering clear of the digital asset conversation.

Zachery Smith, a financial advisor with Premier Financial Group, said the hesitation isn’t rooted in skepticism, but in regulation.

“For me personally, it’s just the regulatory framework around it, and the lack thereof,” Smith said.

Advisors are bound by fiduciary standards, meaning they’re legally required to act in their clients’ best interests. With cryptocurrency’s high volatility and limited federal oversight, recommending it can open the door to legal and compliance risks.

“If I’m not taking good notes and following all of the compliance guidelines, I could be on a silver platter for a lot of lawyers,” Smith said.

That cautious approach, however, isn’t stopping some financial institutions from jumping in. Credit unions like Frankenmuth Credit Union have started offering customers access to cryptocurrency through third-party platforms.

So what’s the difference?

“They don’t have the fiduciary obligation to their clients,” Smith said. “They’re making it available for people to purchase. They’re not necessarily recommending the purchase or advising on the purchase.”

This distinction matters. Credit unions can provide access to digital currencies without taking on the legal liability of offering financial advice. Advisors, on the other hand, risk penalties or loss of licensure if crypto investments don’t align with a client’s best interests.

When asked about the future of cryptocurrency in financial planning, Smith said he believes it could eventually play a larger role, just not yet.

“I have a feeling that it will play a larger role in financial planning in future years,” Smith said. “I do not think we are there yet.”

For now, investors interested in crypto may have to take matters into their own hands, doing independent research or using platforms provided by credit unions. But Smith advises proceeding with caution. Never investing more than you’re willing to lose.

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