Jefferies, Fidelity and Goldman Sachs: Financial Advisors to Ready Themselves for a Shift to Digital Asset Investing

crypto investment banks financial advisors

crypto investment banks

This week has welcomed yet another suite of exciting news for the crypto industry as a number of Wall Street firms made major headway with onboarding digital assets into their service suite. The investment bank Jeffries announced that it is expanding banking services for crypto clients, Fidelity opened up Bitcoin inclusion in its 401(k) accounts, and Goldman Sachs is ramping up crypto trading, never mind mentioning digital assets on the front page of their website. As finance institutions ready themselves for a shift in demand to digital asset investments, we believe financial advisors must ready themselves to advise on the incoming wave of demand from their clients, boomers to millennials alike.

Among the wave of demand experienced by Wall Street institutions for crypto products, Financial Advisors also find themselves approaching one of the greatest wealth transfers of all time. Coined “The Great Wealth Transfer,” millennials are gearing up to inherit $68 trillion from boomers over the next three decades, implying not only a shift in wealth, but also a shift in investing goals and strategies. This wealth transfer will likely spur the universal adoption of digital assets as millennials drive the exponentially increasing capital inflow towards Bitcoin and other cryptocurrencies.

The impending wealth shift towards decentralized finance and digital assets offers an equally lucrative opportunity for financial advisors to align themselves with the future of their clients’ interests. According to Grayscale’s October 2020 Bitcoin Investor Study, Bitcoin’s largest investor group is between the ages of 25 and 34, while more than half of millennials surveyed indicated that they would invest in digital assets if their financial advisors recommended they do so. Thus, advisors must ready themselves for the upcoming shift in wealth and investor interests by building the resources and knowledge base about the crypto ecosystem to support the future needs of their clients. If advisors fail to act, they will miss out on the next frontier of investing.

Additionally, the shift towards personalized digital investing via platforms such as Robinhood and Coinbase gives everyday folks the opportunity to invest without the need for a financial advisor. As Coindesk reports, 80% of Robinhood’s investors are millennials, indicating that the once niche practice of investing is less viewed as something only professionals and wealthy individuals can engage in. Rather, personal investing platforms are normalizing investing for smaller-scale investors as they are steered towards cheaper fees and more transparent portfolios.

While most traditional investors remain invested in the stock and fixed income markets, the upcoming wealth transfer and alternative interests of millennials will likely make way for a significant reallocation of this capital into digital assets, according to Grayscale’s report. As such large sums of money change hands, Financial Advisors remain best suited to field this emerging demand for digital asset advisory and should prepare themselves to provide proper advisory and insights to digital asset investors when they are needed. For a crash course on everything financial advisors should know about crypto to effectively educate and advise their clients, check out the Sarson Funds Financial Advisor Education Program, here.

While digital asset investing intersects with the new era of personally managed investments, advisors should not shy away from incorporating digital asset investment opportunities into their offerings. Digital asset custodian platforms give advisors the ability to uphold their traditional fee structures when managing their clients’ investments, allowing for easy integration when advisors are ready.

By Liam McDonald

Digital Assets React to Elon

Elon Musk

Twitter (NYSE: TWTR) announced on Monday that it has accepted Elon Musk’s $44 billion offer to take the company private. That means that Tesla’s CEO and world’s richest person will soon hold the keys to a platform used by more than 200 million people daily and is arguably at the center of the conversation over cryptocurrency.

How might Musk’s Twitter ownership affect the digital asset landscape?

We asked the Sarson Funds cryptocurrency analyst team for their take on which digital assets might benefit from Twitter’s ownership change. Here’s what they said:

 

Zachary Profeta, Portfolio Manager

 

 

 

 

 

 

 

Arweave (AR)

“When asked why he made an offer to purchase Twitter and take the company private, Elon Musk states, ‘It’s very important to have an inclusive arena for free speech. Twitter has become the default town square. It’s really important for people to have the reality and perception they can speak freely in the boundaries of the law. They should open source the algorithm and when any changes to people’s tweets are made, that action should be made apparent to keep those actions public.’ Elon’s description of the changes Twitter needs to take are quite similar to the utility of a blockchain. Arweave (AR) has the unique opportunity in leveraging a platform’s need for increased censor-proof mechanics and assurance of longevity for the information stored. Arweave allows users to make a one-time payment in the form of AR tokens to host whatever data they have on the Arweave Permaweb. Arweave offers permanent storage of both public and private data that can be accessed at any time all while being validated by miners supporting the network. We have seen a major increase in the number of accounts being “shadow banned” and deleted from Twitter. Everyone has seen how detrimental censorship and loss of data and history can be for all communities involved. Throughout the entirety of human existence, there’s history that is lost and no way to go back in time and see what really happened at a given moment besides reading what people of those times recorded. Arweave is the solution to permanent storage and censor proofed platforms the world needs to be able to tell our story in years or centuries to come. At the end of the day, don’t you want your contributions to the Town Hall protected forever?”

 

Jonathan Cagle, Portfolio Manager

 

 

 

 

 

 

 

Dogecoin (DOGE)

“Love him or hate him.  Elon, DOGE, and Twitter go together like peanut butter and jelly.  In the past few years, DOGE (and Elon) have proven how impactful the community backing a crypto project can be for its price potential.  TSLA and DOGE have two of the most polarizing, but incredibly loyal fanbases in both the TradFi and Crypto markets.  And both have made waves on Twitter over the years with their price movements in the wake of Elon’s tweets.  Now Elon owns the platform.

As of this writing, DOGE is already up 14% and the daily trading volume is up ~429% in the last 12 hours.”

 

Jenny Mongan, Research Analyst

 

 

 

 

 

 

 

Ethereum Name Service (ENS)

“Under Elon I believe Twitter will start to leverage the technology offered by the Ethereum Name Service (ENS). ENS is an Ethereum-based naming system for web page routing and digital identity/NFTs that specifically focuses on making the decentralized web – web3 – easier for users. Simply put, ENS gives the opportunity of having a single Ethereum-based username for all wallets/addresses of a holder, providing scaling solutions for the Ethereum network that enable security and censorship protection better than any traditional source. In the near future, ENS identities stored in your Ethereum wallet will connect you to Twitter and all other decentralized applications. Sign-in functionality with ENS will help the Ethereum network achieve its vision for a decentralized internet through ENS’ parallel internet that will connect blockchain technology to the open world.”

 

David Gamble, Portfolio Manager

 

 

 

 

 

 

 

Decentralized Social (DESO)

“Putting more power back into users and the creator, DESO is the first and only Layer 1 blockchain purposely built from the ground up to scale decentralized social apps to billions of users worldwide. DESO provides great mechanics for decentralized social media because of the strength of its blockchain solutions compared to traditional social media frameworks, especially with its hypersync scaling solution.

With news breaking that Elon Musk will be acquiring Twitter for $44 billion, the possibilities are endless for where he could lead Twitter. One likely change is that twitter may be moving towards web3 consensus mechanisms. Elon recently tweeted “I hope that even my worst critics remain on Twitter, because that is what free speech means,” potentially implying Twitter’s new direction to be a more decentralized ecosystem that does not incentivize gate keepers to “mistakenly” ban certain targeted users or coincidentally remove tweets.

Storing content on-chain is the key performance metric indicator that will allow Elon Musk and Twitter to do exactly what they are potentially seeking to do with becoming more decentralized. DESO blockchain provides this solution with its ability to store users’ on-chain data and it is already equipped to handle billions of users.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: As of publication date, Sarson Funds’ products have allocations to Arweave, Dogecoin, Ethereum Name Service, and Decentralized Social.