Fiduciary responsibility to clients is of the utmost importance to RIAs. Clients rely on advisors to strengthen and secure their financial wellbeing and, through methods such as portfolio allocation and rebalancing, RIAs help them feel safer in their futures.
Advisors have traditionally diversified clients’ portfolios from equity exposure with bonds and recently alternative investments, such as commodities, hedge funds, and gold. Digital Assets, like bitcoin, are now being used to add diversity to balanced portfolios. While some claim Bitcoin is a must in portfolios, other RIAs are still hesitant to invest. Many RIAs question where Bitcoin’s value comes from or the compliance implications and nuisances needed to invest through their traditional frameworks.
As an analogy, think of bitcoin’s role in a portfolio in terms of golf: it exists as “Big Bertha” does in your golf bag. Both are highly advanced and radically different from the other assets in your portfolio (or clubs in your bag) but serve a very specific purpose. As part of a balanced approach (or game of golf), it has the potential to be the perfect product for the ideal time.
As with a Big Bertha, Bitcoin has to be appropriately utilized as an investment to be effective. When implemented correctly, it has the potential to be a tremendous asset in a portfolio. Investors and RIAs alike are recognizing that correct allocation size, which for Bitcoin is usually a small percentage of a portfolio, can protect against risky impact. As an early alternative asset class, some market analysts believe there is a possibility that it can increase in value by 5 times or more, resulting in reasonable returns that significantly outweigh the risk of a small allocation.
The potential benefits extend beyond the possibility of just growth opportunities. Bitcoin and other digital assets may act as uncorrelated investments and possibly behave as stable safety nets in the event of stock market crashes and globally uncertain environments.
As more RIAs grow interested in diversifying with bitcoin, TB Sunridge Advisors helps them understand the asset class by explaining what drives value, how to invest for clients within the US regulatory and compliance framework, and how to look at bitcoin in a fundamental manner. The goal is to help RIAs optimize inclusion to produce better, more diversified returns for their clients.
“Having an asset like bitcoin in your portfolio may be incredibly valuable at times when your other assets are not performing. Since it is not tied to any particular government treasury policy, it has certain benefits in times of global change and strife, and it often acts differently to other assets in a traditional portfolio,” CEO Matt Tunney explains. “With the help of TB Sunridge Advisors, RIAs can gain a better understanding of how Bitcoin works, what amount to appropriately allocate, and how to talk with their clients about it. You have a fiduciary responsibility to your clients. We have a responsibility to you.”