Why Bitcoin Millionaires Aren’t Going to Traditional FAs
Financial advisors hoping to gain new business from early investors in cryptocurrencies are in for a rude awakening. People who’ve become wealthy through bitcoin and other digital currencies aren’t interested in traditional wealth management — and may even revolutionize the industry from the outside, TechCrunch writes.
Rather than go to traditional financial advisors, the “crypto-wealthy” reinvest in blockchain or other startups, Ben Jorgensen, the chief operating officer of “blockchain microservice” provider Constellation, tells the web publication.
“Individuals are forming strong syndicates that share deal flow much like the venture world,” he tells TechCrunch.
Nonetheless, some early investors in cryptocurrency are looking to cash in at least some of their profits, particularly given the volatile nature of digital currencies in recent months, the web publication writes. Lorraine Fox, a principal with the San Francisco-based wealth management firm Aspiriant, tells TechCrunch her firm is getting more and more inquiries from people wanting to lock in some gains in their cryptocurrency investments. But most of these people aren’t new clients, she says; rather, they’re existing clients who “recognize the speculative and unregulated nature” of cryptocurrencies, according to the web publication.
Bitcoin rose from $830 to $19,300 in 2017, plunged below $6,000 last week and climbed back up to $8,000, TechCrunch writes.
However, some people tell Fox they’re not ready to cash out because they think bitcoin’s price will reach $100,000, according to the web publication.
“I tell them, ‘Go knock yourself out,’” she tells TechCrunch.
Stephen Goldbart, a Bay Area psychologist, tells TechCrunch that these “cryptomillionaires” are “trying to shift the way that we think about money and the way that it’s managed.” And rather than the new crypto-wealthy coming to traditional money management, what could happen is that everyone else comes around to their way of thinking, the web publication writes.
“The goal beside from making money is to change the culture of finance,” Goldbart tells TechCrunch. “They may well make banking obsolete as [we] know it.”
Then again, some early bitcoin investors are “diversifying” in other ways: Peter Saddington, a coder who describes himself as a “serial entrepreneur,” recently sold 45 of his bitcoins — which he had bought in 2011 for $115 — to buy a $200,000 Lamborghini, he recently told CNBC.