While broker-dealers can now allow their financial advisors to sell a new spot-bitcoin exchange-traded fund, firms still have plenty of work to perform regarding the product, according to senior brokerage executives who spoke Tuesday morning at an industry conference.
On January 11, the Securities and Exchange Commission gave its approval to 11 bitcoin ETFs, and they’re up and trading on public exchanges.
Some firms were early adopters. For example, Wells Fargo Advisors, with close to 12,000 financial advisors across various business channels, said this month that it was selling new spot bitcoin exchange-traded funds, but only when a customer asked for the security in a nonsolicited trade, or without any prompting from a salesperson.
But other firms are much more tentative, according to executives who spoke Monday at the Financial Services Institute's annual meeting, OneVoice, in Orlando, Florida.
"When new structures come out, it presents new challenges," said Matt Fries, head of investment products and partner solutions at Cetera Financial Group. "It’s daunting because there is so much innovation occurring with investment products."
"We’re scrambling to figure out spot-bitcoin ETFs right now," said Fries, who was speaking on a panel titled, "Including Alternative Investments in Mainstream Portfolio Allocations." "That wasn’t something that was on my mind a month ago, but now I’m writing a policy on how we’re going to handle these."
Cetera Financial Group is developing training for its financial advisors regarding the product, he added.
Broker-dealers typically have tight restrictions on trading volatile products such as futures and options contracts, which require special training at many firms. Volatile alternative asset classes, including currencies and metals, also face strict limitations in client portfolios. Spot-bitcoin ETFs are facing that same kind of scrutiny.
"It is very difficult to stay ahead of this kind of stuff even when you are trying to stay ahead of it," said Seth Miller, general counsel at Cambridge Investment Research Inc. He said that while he had anticipated the SEC's decision to approve spot-bitcoin ETFs, it still took a week to introduce training for financial advisors who were interested in the product.
Meanwhile, one Cambridge financial advisor was admonishing Miller over email to hurry and immediately approve trading of the new ETFs, Miller said. "When I look at other executives in this position, I ask, were you unprepared or were you just cautious?"
A new platform turns disputed facts into tradable markets, flipping the prediction market model on its head.
The financial advice industry has been facing inquiries into its cash sweep programs for years now.
Investor money allegedly went to strip clubs, exotic cars, and landscaping
Procyon adds $415 million in assets under management in New Jersey while Savant picks up a $213 million Southern California planning firm
With a growing number of real estate-rich Baby Boomers aging into retirement, some advisors may be failing to consider all the options available for those clients' assets.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
