How a Longtime Financial Advisor Invests in Crypto, Advises Clients
The use of digital assets, the first new asset class in 150 years, has many intriguing implications. These include “the ability to create money out of thin air,” as Jeffrey Janson, senior adviser at Summit Wealth Partners, which invests in crypto, as do some of its clients, frames it in an interview. with ThinkAdvisor.
As an example, he cites the potential for the US government to use a digital dollar to “immediately surface [economic stimulus] funds in [a] digital wallet. They could even schedule them to evaporate if not spent within 45 days,” the certified financial planner presumes.
Janson cites the potential for the US government to use a digital dollar to distribute immediate stimulus payments. The government “could even schedule them to evaporate if they are not spent within 45 days”, presumes the certified financial planner.
In 2021, Janson became the first financial advisor to take the Certificate in Blockchain and Digital Assets course offered by Ric Edelman’s Digital Assets Council of Financial Professionals.
This prompted him to start investing in the asset class.
As a financial advisor, Janson has over 30 years of experience serving high net worth individuals and institutions. His target client is in his early 60s with $1 million in investable assets.
About 10% of his clients have asked him about crypto. Some have even invested in it using various approaches, as Janson describes in the interview.
It also captures their reactions to investing in these highly volatile assets.
As the first new asset class in 150 years, crypto sparked Janson’s interest as a way to diversify portfolios.
He also argues that crypto is “probably the most effective inflation hedge, although it is a timing issue and dependent on what a person is buying,” he says.
In our conversation, he points out the pitfalls of crypto and recommends not letting digital assets “become a crazy part of your portfolio.”
As an accredited fiduciary investment analyst, Janson argues that Fidelity’s decision to include digital assets as an investment choice in its 401(k) plans is premature.
In the interview, Janson also discusses bitcoin ETFs – both pros and cons – and why he thinks Warren Buffett is right to avoid bitcoin.
ThinkAdvisor interviewed Janson, author of “Stacking the Odds to Win the Loser’s Game,” on July 8. He was on the phone from his base in Naples, Florida.
Here are the highlights of our interview:
THINKADVISOR: What does the future hold for digital assets?
JEFFREY JANSON: They are here to stay. Most central banks around the world are working on some form of digital currency. I jokingly call it “Fedcoin”.
In the United States, we are working on a digital dollar. There are all sorts of implications to this, including the ability to create money out of thin air.
We say the Fed “prints money”, when all it does is create new dollars in a computer program. Well, now they will be able to do so via a digital dollar. I believe they will also have the ability to program that money.
If the government wants to have an immediate impact on the economy – like its stimulus payments during COVID, let them [mainly] sent as a check — imagine if we had a digital dollar and you had a digital wallet: They could immediately deposit these funds into your account, and they could even schedule them to evaporate if not spent within 45 days.
It’s a bit scary, actually.
And very futuristic.
It’s very futuristic. And the future is damn near here!
Is Crypto a Hedge Against Inflation?
Yes. However, I think it’s a long term hedge against inflation. Of course, over the past six months, it’s not [accomplished that].
But if you extend your time horizon over several years, I think [crypto] is probably the most effective inflation hedge, although this is a duration issue and dependent on what a person is buying.
Have your clients asked you to invest in digital assets? If so, what do you tell them?
About 10% of my clientele asked about it. I say it’s an exceptionally volatile asset class. I believe it is a speculative asset.
In other words, you shouldn’t consider investing in it unless you’re doing it with money you can afford to lose.
That said, if they want to scoop out a small amount to dip their toe in the water, I’m willing to help them do that.
What approaches have your clients used to invest in digital assets?
Various approaches. Over the past two years, some have done so through Grayscale Bitcoin Trust. Some have invested through the Bitwise 10 Crypto Index Fund.
You can also invest using dynamic strategies.
What was the reaction from customers?
So far, most of them have been pretty stoic about it. I told them from the start that it was a very, very aggressive asset class and that they shouldn’t do it unless they were [investing] the money they can afford to lose.
But of course, investors see the bright side of the equation.
Some customers are shocked to see the volatility. Others hang on for a few more years waiting for the crypto to recover.
You started investing in crypto after completing the Certificate in Blockchain and Digital Assets course offered by the Digital Assets Council of Financial Professionals. How have you invested and what do you think of digital assets now?
Oh, man! They are many and varied. I invested in different ways: some private placements, some direct investments through Coinbase, some through Grayscale Bitcoin Trust.
It’s an extremely volatile asset class, the likes of which I’ve never seen. So depending on when you ask me, I can love it or hate it.
Probably right now you hate it!
It’s not my favorite right now!
You need a strong stomach to invest in crypto. Right?