Advisers Increasingly Considering Crypto in Financial Plans

Among advisers who recommend investing in cryptocurrencies, the most common allocation remains 2% of assets, according to a Digital Assets Council of Financial Professionals survey.

As of 2024’s fourth quarter, an average of one in five advisers reports that they recommend crypto to clients, with more than one-third (35%) recommending it to at least half of their clients, according to a recent survey. This is nearly double the percentage reported in Q3 2024.

However, advisers surveyed by the Digital Assets Council of Financial Professionals still recommend it as a very minor allocation in the overall portfolio. Half of advisers who recommend crypto keep the allocation recommendation to 5% or less. The most common allocation recommendation remains 2% of assets, recommended by 30% of advisers, while another 20% recommend a 5% allocation.

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The Advisor Pulse Survey, conducted by DACFP and sponsored by Franklin Templeton Digital Assets, showed a “significant acceleration in crypto adoption among both advisers and their clients,” said DACFP Founder Ric Edelman.

One-quarter of the 266 advisers surveyed also reported that more than half of their clients now own digital assets. Most respondents (63%) to the survey primarily serve clients with assets ranging from $500,000 to $3.5 million, and 34% manage more than $100 million in assets.

Nearly half (46%) of advisers surveyed who do not yet recommend crypto reported they intend to do so in the future; of those, 90% intend to recommend allocations of 1% to 5%.

Cryptocurrency still has not made significant inroads in retirement plans, though Aliya Robinson, managing legal counsel of the legislative and regulatory affairs division at T. Rowe Price, noted there is significant excitement and buzz for the use of private investments and cryptocurrency in retirement plans, as both the administration of President Donald Trump and Republicans in Congress have expressed support for expanding these investments (see “2025 Retirement Outlook: Tax Changes, Cryptocurrency Trends and Litigation Reforms”). However, she said there is still much education to be done, both in Congress and in federal agencies, so she expects small changes rather than large, immediate shifts of the asset classes into retirement plan investment offerings. 

In 2022, a DOL official reported “grave concerns” about an investment offering from Fidelity that included bitcoin as an investment for inclusion in 401(k) plans.  

Study Finds Most Corporate Retirement Plans Have Regulatory or Fiduciary Violations

According to Abernathy Daley 401k Consultants, more than 600,000 American companies could be at risk of fines, legal penalties and fiduciary failure.

More than eight in 10 (84%) retirement plans have at least one likely Employee Retirement Income Security Act “red flag” violation that puts them at regulatory risk or indicates their failure as a fiduciary, according to Abernathy Daley 401k Consultants.

To come to this conclusion, Abernathy Daley analyzed the most recent Form 5500 filings for 764,729 plans. The company looked for what it considered “red flag violations,” defined as “infractions, fineable offenses, fiduciary failure, or plan malpractice” in two categories: regulatory infraction red flags and egregious plan mismanagement red flags.  

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Regulatory infraction red flags were found at 43% of companies across the U.S., and egregious plan mismanagement red flags at 76% of American-based companies, per Abernathy Daley’s study. Therefore, the company says, in its opinion, more than 600,000 American companies could be at potential risk of fines, legal penalties and fiduciary failure.

According to Abernathy Daley, regulatory infraction red flags are “the most severe violations, which represent issues within the retirement plan that can result in civil legal penalties, discovery leading to trial, or both.” The categories of plan failures Abernathy Daley considered were:

  1. Loss from fraud or dishonesty;
  2. Not offering qualified default investment alternatives;
  3. An insufficient fidelity bond; and
  4. Not 404(c) compliant.

The egregious plan mismanagement red flags may not necessarily result in a fine, but they represent failure of the plan administrator in its fiduciary duty to the plan sponsors, and the plan sponsors in their fiduciary duty to employees. These infraction categories were:

  1. Not including automatic enrollment;
  2. No corrective distribution of excessive contributions;
  3. No 404(c) with participant-directed accounts; and
  4. Failure to transmit payments on time.

Abernathy Daley previously released a study showing that it believed nearly 80% of companies with at least 100 employees are overpaying on administrative fees for their 401(k) and 403(b) plans (see “Many Plan Sponsors Appear to Be Overpaying DC Plan Fees”).

“Retirement plans represent a fiduciary duty toward employees and provide an essential competitive advantage for talent acquisition and retention,” said Abernathy Daley President Matthew Daley in a statement. “Yet, these alarming findings clearly show that administrators are not keeping plan sponsors out of harm’s way and plan sponsors are not offering their employees a bulletproof retirement plan.”

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