Financial Experts Respond to Rise in Crypto Retirement Plans

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Cryptos are finding their way into traditional investments, and the next frontier is pension plans. While advisers remain cautious about digital assets, it looks like they may be embracing them due to client demand, according to a new survey.

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The Financial Planning Association’s Trends in Investing survey found that 14% of advisors currently use or recommend cryptocurrencies with their clients, up from less than 1% in 2020. Meanwhile, 26% said they plan to increase their use or recommendation of cryptocurrencies in the next year, up from a fraction of a percentage of those surveyed in the 2020. Additionally, the survey notes that 49% of those surveyed said their customers had asked about cryptocurrencies over the past six months.

Financial advisers are taking note of the interest, as retirement plans are a huge target: Investors currently have $ 22.5 trillion locked in IRAs and 401 (k), according to the Wall Street Journal.

Bitcoin IRAs or crypto IRAs are popping up everywhere, but Motley Fool warns investors to make sure they consider the high fees of investing in a Bitcoin IRA compared to the tax benefits. Many charge installation fees, maintenance fees, and transaction fees, and they often have significant account minimums, according to the report.

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Ric Edelman, founder of consulting firm Edelman Financial Engines, LLC and financial advisor training group RIA Digital Assets Council, told GOBankingRates that a consideration to consider when considering crypto IRAs is ” ensure that you select a qualified custodian. Some IRA custodians in digital asset business are unqualified, which means they haven’t been licensed by federal or state regulators, Edelman said. Only qualified custodians are required to meet regulatory standards and are subject to inspection and verification by regulatory bodies.

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Earlier this month, retirement investment platform ForUsAll partnered with Coinbase to provide employees with crypto exposure, which the company said was a first of its kind. For too long, too many Americans have not had the same access to alternative investments as wealthy and professional investors, said Jeff Schulte, CEO of ForUsAll, in a statement. Our mission is to provide every American with the tools to build a better financial future, and making these alternatives more readily available is a key step towards that.

Full Story: Coinbase Partners With 401 (k) ForUsAll Platform To Offer Crypto Options

Due to their inherent volatility, not everyone is in favor of adding crypto to pension plans. Bitcoin, for example, which now stands at $ 36,000, is down almost 50% from its peak of $ 65,000 in April.

Howard Dvorkin, CPA and president of Debt.com, told GOBankingRates that he couldn’t think of anything more ridiculous than adding cryptocurrency to a retirement wallet.

The point of investing for retirement is to ensure that it grows over the next several decades. Cryptocurrency is still in its infancy. Maybe he’s growing up to be tall and strong or maybe he’s not growing up at all. Remember the adage of never investing money you can’t afford to lose? Retirement savings is the very definition of money you can’t afford to lose.

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Dvorkin adds that investing in cryptocurrency is akin to investing in a start-up business. I have done this several times, he says. Most startups fail, but the rare one that succeeds pays for all the flops and then some, but I would never do that with my retirement accounts. There is no track record by which to measure risk, and there is no guarantee that cryptocurrency will not completely turn into something else long before you retire.

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Last updated: June 29, 2021

This article originally appeared on GOBankingRates.com: Financial Experts Respond to Rise in Crypto Retirement Plans

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