New year, new you. Your personal to-do-list says it’s time to get your finances sorted. So, you book a coffee with your financial advisor, and she spends an hour going over your finances, the different types of assets, the funds you can invest in, and your goals and risk appetite. Crypto was only briefly glossed over as part of a long list of possible investments. Once you have both finished coffee, you ask her if she owns any crypto. "Plenty!" is the reply! So why isn't she talking to you about it?

Do as I say, not as I do…

A recent Bitwise study confirmed the worst–financial advisors are happily investing their own funds in crypto, but not their clients’ funds. Although around half of financial advisors own crypto as part of their own portfolio, only 22 pe cent of them were making any client allocation to crypto. And of the other 78 per cent of financial advisors who hadn’t allocated client funds to crypto, only 18 per cent of them lean towards doing so (at some point).

So what’s stopping your financial advisor from, well, advising?

The answer is two little words with big implications: volatility and regulation.

Let's start with volatility. Financial advisors don’t like it because when portfolio values go down, they have to have tough conversations.

Time horizons are often forgotten and essentially, they get the blame for “giving bad advice”. Investors will also often take drastic action in response to volatility. We saw this in New Zealand over Covid when people experienced a fall in their KiwiSaver portfolios and responded by taking all the volatile assets out – moving from aggressive funds to conservative – for instance).

The downside of this approach is that without those types of allocations, your returns are hobbled. And if you aren’t beating inflation, you are going backwards in real terms. If, conversely, we think about some level of volatility and risk as a positive, then this opens up a whole new way to get ahead. Sometimes it's just about zooming out, as short-and-term-charts will often demonstrate.

Fig 1. The Bitcoin daily chart (TradingView) since mid-December 2024 is choppy.

Fig 1. The Bitcoin daily chart (TradingView) since mid-December 2024 is choppy.

Fig 2. The Bitcoin monthly chart (TradingView) since 2022 paints a different picture.

Fig 3. The Bitcoin monthly chart (TradingView) since 2016 shows a consistent picture of an asset that is trending upwards over time.

Investment time horizons are important. The research is clear – holding assets over a long period of time tends to outperform short-term trading. Bitcoin and crypto are volatile, but over a decent (five year) time horizon, the trend has been consistently up and to the right.

Volatility also presents opportunities as investors can purchase assets at lower prices during market dips. This benefits investors when they dollar-cost average and it enables investors to lower the average cost per coin over time.

Regulation has also held a lot of advisors back. Rupert Carlyon from Kōura Wealth, who is a pioneer in integrating crypto into KiwiSaver funds, explains that “it’s a huge concern for advisors because any advice they give needs to be well researched, typically relying on research from large investment houses either in New Zealand or offshore. If you can’t use that research to clearly show that it was in the client’s best interests to recommend investing in a product, you open yourself up to regulatory pressure if you get a complaint.

“Lots of advisors understand and believe in crypto, but regulation and reticence from the large global investment firms prevents them from feeling they can openly and confidently advise on it.”

Finally, it would do everyone a disservice not to mention compensation. Because investors can buy crypto products directly, this challenges the commission-based revenue model of some financial advisors. Financial advisors are going to have to adapt.

It is no surprise, then, that investors are taking things into their own hands. Now, it’s becoming a case of “doing what they do, not what they say”.

Before you hit “buy”

But, if you are going to get into crypto alone (sans advisor), you should “do your own research”.

We’ve summarised some basics for you below.

Bitcoin has been the standout performer of the past decade, outpacing all other asset classes. The S&P Cryptocurrency Broad Digital Market Index, launched in 2021, has soared 826 per cent since inception (88 per cent annualised), with Bitcoin leading the charge. But while the long-term gains are undeniable, Bitcoin’s journey isn’t a straight line: it often moves independently of traditional markets, making it a unique diversifier in an investment portfolio.

Even conservative analysts recognize its low correlation with stocks and bonds, which can help smooth out market volatility.

Beyond diversification, Bitcoin also enhances portfolio performance through its strong Sharpe Ratio (0.96), a measure of risk-adjusted returns. In simple terms, it offers high returns relative to the risk taken. Adding even a small allocation of Bitcoin to a KiwiSaver or investment portfolio can improve overall returns without amplifying volatility – a counterintuitive but powerful advantage for long-term investors.

Ways to access crypto

• Use a local platform: Kiwi crypto exchange Easy Crypto offers a secure, fast onboarding experience for Kiwis, plus tools, education and simplicity.

• Other platforms: Be mindful of credit card and withdrawal fees when using offshore platforms - do your research and check reviews.

• ETFs: Nervous about diving in? ETFs can be a starting point, but remember, you’re paying someone else to manage your crypto.

• KiwiSaver: You could also consider KiwiSaver providers like Kōura Wealth that include crypto options in their portfolios.