• The Certified Financial Planner (CFP) Board issued a 14-page report outlining the risks associated with investing in cryptocurrency.
• The report outlines standards for financial advisors to abide by when giving advice on cryptocurrency investment, including adhering to Fiduciary Duty and possessing competency in the topic.
• The report does not require advisors to give advice on crypto, but it does provide guidance on how to do so if they choose to.
The Certified Financial Planner (CFP) Board recently released a 14-page report outlining the risks associated with investing in cryptocurrency and providing guidance for financial advisors on how to handle such investments. The report, titled “Notice to CFP Professionals Regarding Financial Advice About Cryptocurrency-related Assets,” explains the CFP Board’s Code and Standards, which do not prohibit advisors from giving advice on crypto but also do not require them to do so.
The report outlines a series of risks associated with cryptocurrency investment, such as volatile market prices and the potential for fraud. It also emphasizes that financial advisors must abide by Fiduciary Duty when giving advice on crypto by taking into account the goals, risk tolerances and personal/financial circumstances of the client. It also underscores the standards of competency necessary for giving crypto-related advice.
The CFP Board’s report is designed to help advisors understand the risks associated with cryptocurrency, as well as provide guidance on how to properly provide advice on crypto-related investments. It stresses the importance of transparency and disclosure, as well as the importance of understanding the risks associated with the investment. The report also provides guidance on the types of questions advisors should ask themselves before giving crypto-related advice, such as whether the client is able to bear the potential losses of the investment and whether the client has the necessary technical knowledge to understand the risks.
Ultimately, the CFP Board’s report provides a comprehensive overview of the risks associated with cryptocurrency investments, as well as guidance for advisors on how to properly handle such investments. While it does not require advisors to give advice on crypto, it does provide guidance on how to do so if they choose to. By adhering to the principles outlined in the report, financial advisors can ensure they are providing their clients with the best advice possible when it comes to cryptocurrency investments.