Speculation or New Asset Class?

I can hardly believe it's been nearly 4 years since the masses first became infatuated with Bitcoin or more specifically the price of Bitcoin. The ride was fun to watch, with many caught up in the frenzy. Fortunes were made, lives were ruined. The bubble predictably popped and it went away for a while. It hit a new all-time high in March 2021, took a 50% hit (yes a minus 50% hit) and then has continued its advance. It's now is sitting at close to all-time highs around $68k ‘a coin’.

It was a bit annoying for many of us. After years of educating clients and helping them behave their way to wealth, here was the next get rich quick scheme. Something that was ‘working now’ that we tell our clients who are working on long term financial plans to avoid.

The latest bull market which started late last year has caught the attention of mainstream media and many of our clients. Trust me, they are talking about ‘crypto’ and many will be feeling f.o.m.o (fear of missing out). This cycle has also seen some of the sharpest minds in tech and finance add their weight behind the space. Is there more to this than we sceptically thought?

The recent correction was severe and fast but we've since returned to record highs in most of the major cryptocurrency "coins". Thought equities were volatile?!? They make equities look pedestrian, holders of crypto assets get a master class in volatility.

In our role as behavioural financial advisers, what are we to make of this new technology? I think we need to face it head on, educate ourselves, and be willing to have the difficult conversations with clients.

I've started to allocate some fun money to random ‘projects’ and ‘coins’, skin in the game, learning the ropes. I’m pretty sure my younger self would have been all-in on crypto, certainly if I wasn’t a money professional. We need to embrace new terms such as Web3, layers, gas, NFTs - it's a strange world, but it always is. If it's not going away soon, it's the right thing to do.

I just see most of this as new technology, at first it’s not clear what it’s real life application will be. But some bright spark or many bright sparks find real uses for the tech we create. None of any of this is possible without the current tech that we have. Tech compounds and is exponential.

I have no idea where this goes next, but if one of the most valuable companies in the world (Facebook, or now Meta) pivots to position themselves for this space, it's worth taking note. If you ever wanted a cue, this is it.

I recently had a chat with Barney Whiter (The Escape Artist fame) about how he views this space. Watch it here. Alternatively, follow a trustworthy source and learn over time. A new podcast focusing on the web3 space is staring soon. You can subscribe to it here: https://podcasts.apple.com/gb/podcast/web3-breakdowns/id1594407589

📰 Articles & Blogs

How to Invest Your Money When Inflation is High [7 minutes]. Own things that provide value to humans.

How to exceed client expectations [2 minutes]. Client wants and needs are moving targets.

Addressing a Surge in Client Behavioral Biases [10 minutes]. Recent research by Cerulli to better understand advisors’ views on, and use of, behavioral finance when working with clients.

Moving Upstream in Your Client Work [5 minutes]. Lessons from the marketing world about moving from implementation to strategy work.

The Sign Around Every Person's Neck [4 minutes]. Help me feel important.

Three Easy Ways to Show a Prospect You're Listening [5 minutes]. The power of repetition.

Your financial plan is probably too long [3 minutes]. Clients need more than your technical expertise. They need you to make it understandable.

🎧 Podcasts

The Power of Practice Management for Financial Advisors [43 minutes]. A conversation with a rising star of managing advice businesses.

The Guide is Not the Hero: Financial Advisors and the Power of Storytelling [51 minutes]. The relationship between storytelling and good selling.

📚 Book Recommendations

Wanting: The Power of Mimetic Desire, and How to Want What You Need by Luke Burgis. A groundbreaking exploration of why we want what we want and a toolkit for freeing ourselves from chasing unfulfilling desires.