A bitcoin author and angel investor said advisors are doing clients a disservice by brushing off the returns available in the cryptoassets space.
Jack Tatar, speaking after taking the stage at the 2018 Private Capital Markets Conference on Bay Street, Toronto, yesterday believes the space will become a widely accepted sleeve of a portfolio within two to three years as more ETFs and mutual funds enter the market.
He said it should be viewed as an alternative asset class and said firms are wrong to be giving this space the cold shoulder, and risk being left behind by what he called the “new Silicon Valley”.
“Most of the firms in the States and here are telling advisors you can’t even discuss this with your clients,” he said, “and I think this does a disservice to the clients because the reality is they should recognise that the returns are pretty good.”
He added: “The reality is, there are going to be products that are going to start coming down the track like ETFs and mutual funds that are going to make it much easier for the individual investor and so, therefore, the investor and the investment firms are going to make money out of this from commissions.”
Tatar, co-author of the 2013 book What’s the deal with Bitcoins?, believes there are innovative projects set to come out in this space and said advisors risk being behind the curve when it kicks into gear.
He said: “It’s the new Silicon Valley – all the innovation going on in technology is happening in this space and I can speak to that as an investor, there are some phenomenal business cases that are coming through this and that’s a big reason this should not be ignored.”
He added that two things have to happen: firms have to become knowledgeable about it and some educational programmes need to be put in place to educate advisors. He also says investors must understand the differences in products; for example, bitcoin is a cryptocurrency, while ethereum is a cryptocommodity and cryptotokens are applications, such as Factom.
Tatar, a former vice president at Merrill Lynch, said a good portfolio will contain a mix of these cryptoassets. “Down the road, if you’re looking to invest in cryptoassets and diversify, maybe you do something in cryptocurrencies, cryptocommodities, crypotokens and you do allocations there – just like you allocate between retail, oil stocks and things like that.”
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