Eaglebrook CEO: advises ‘lowest fruit’ for crypto market

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95% of financial advisers are not yet engaged in crypto, according to Eaglebrook CEO Christopher King Advisors.

Volatility issues and a lack of education prevent a large majority of financial advisers from investing in crypto, said Christopher King, CEO of Eaglebrook Advisors.

Eaglebrook, one of the largest crypto-focused separately managed account platforms, is launching a crypto educational platform for advisors to educate them on the emerging $ 2,000 billion asset class, the company.

The company has been offering informal research and education activities since its launch in November 2020, King noted. But Eaglebrook has spent the past six months or so creating what he calls Eaglebrook IQ, an offer, he said, that advisers and C-suites at multi-billion-dollar wealth management firms have been asking for.

About 95% of the advisor market has yet to invest in bitcoin or other crypto assets, King told Blockworks, presenting a great opportunity for increased allocation to the emerging asset class in the coming years.

“The biggest elephant in the room and the lowest fruit for the crypto market is the $ 30 trillion wealth management market, which I think a lot of the market is ignoring,” a- he declared. “[People] see it as a sort of retail or institutional establishment, but everyone ignores the middle market, which is arguably bigger than those two. “

The new offer

Eaglebrook IQ is available free to more than 2,000 financial advisors across the United States, the company noted.

“Advisors trained in digital assets are more likely to engage confidently with clients in this emerging asset class,” said Nick Gerace, senior vice president of investments at Dynasty Financial Partners, in a statement. “Interest in investing in crypto has grown and the training required for our advisors has been incredibly helpful. “

The offering includes a two-hour training program detailing the merits and risks of bitcoin, ether, and other digital assets, as well as weekly market commentary and research reports on topics such as decentralized finance, credit markets and layers 1 and 2 protocols.

The company also offers documents that advisers can send to clients who may decide to allocate a portion of their wallet to Eaglebrook SMA crypto.

“You can kind of go to the top level and crypto 101 with our training program and as deep as DeFi market, lending protocols, total value locked and everything in between,” King said. “It’s really important for advisors to have these training tools… readily available on a single platform where they can train and market in a secure, compliant and fundamentally transparent way. ”

Advisor switches to crypto

Eaglebrook communicates with advisers in two ways, King noted.

As the company works with some advisers who end up onboarding some of their clients, Eaglebrook has also started connecting with the investment and operations teams of multi-billion-dollar Registered Investment Advisors (RIAs) to add its SMA crypto to their model portfolios.

This could include adding a 4% position in a personalized multi-asset diversified SMA crypto on 1,500 client accounts, King gave as an example.

Customers requesting access to crypto through their advisers are forcing executives of some companies to at least consider relocating to the space, King explained. A majority of advisers allocating to the asset class for the first time are looking to access both bitcoin and Ethereum, he added.

“Making sure they are educated and have a way to bring customers to market securely will be really important if they are essentially going to protect their practices and businesses over the next five to ten years. years ”.

Crypto SMA vs. ETF

More than 500 financial advisers are actively allocating to Eaglebrook SMA crypto, the company reported, as King said some are looking for the harvest of tax losses and wallet customization provided by the envelope.

But investment options for investors seeking exposure to crypto assets are increasing. More recently, the United States Securities and Exchange Commission allowed ETFs investing in bitcoin futures to enter the market.

The first and largest ETF ProShares Bitcoin Strategy (BITO) has reached $ 1.4 billion in assets under management since its launch a month ago. Three similar offerings from fund managers Valkyrie Investments, VanEck and Global X are also now available.

King said the money going into these funds came from independent investors rather than financial advisers and RIA. Advisors stay away from proceeds due to rollover and deferral costs – a situation in which the futures price of a commodity is higher than the spot price, he explained.

“It doesn’t matter what the price of the futures ETF is; it could be free from a management fee perspective, but you are paying 15% to 20% per year because of turnover and contango, ”he said. “This is a significant cost compared to what we provide, which is direct ownership, which means there is minimal tracking error. “

Dave Nadig, Director of Research and CIO of ETF Trends and ETF Database, argued that the breakdown of the types of investors who invest money in bitcoin futures ETFs is not yet known. He added that the BITO-related webinars were very popular with the advisers.

“The fact remains that BITO will primarily be a trading tool for individuals and institutions looking for quick and easy exposure on a regulated exchange, or for people using options strategies,” Nadig told Blockworks. “The VanEck offer is potentially more attractive to advisors, due to the tax treatment and lower expense ratio. “

The SEC has yet to approve an ETF in the United States that would invest directly in bitcoin or other crypto assets, more recently rejecting a proposal from VanEck.

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Ben strack

Ben Strack is a Denver-based reporter who covers macroeconomics, financial services, and digital asset management. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a journalism degree.

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