Over the last few years, cryptocurrency has become an increasingly popular option for investing. The crypto market is known for its volatility but has captured the attention of a large number of investors looking for new ways to seek profit in their portfolios. But amid such a new and unregulated financial market, investors are left looking for guidance on crypto matters—such as how to choose a coin or how to account for taxes on crypto trading proceeds.
Find out what sources to avoid when seeking crypto advice and how to find an advisor who can help.
- Many individuals and organizations view crypto assets like Bitcoin as an investment vehicle and seek advice on investing in this market.
- It’s not advisable to follow financial advice concerning crypto investments from family, friends, or people unknown to you on the internet.
- If there’s hype around a particular crypto coin, don’t invest in it just because you fear you might miss out.
- To build and manage a solid crypto investment portfolio, use the services of a professional crypto financial advisor.
- You can educate yourself on blockchain topics by learning from reliable educational platforms and staying updated on news in the crypto industry.
Which Are the Worst Places to Seek Crypto Advice?
Family and Friends
Unless your family member or friend is a crypto advisor, or longtime crypto expert, taking advice from close friends and relatives can be costly. Banking on the experience of your close pals when handling financial matters might not be the best choice. Instead, you want to ensure that your financial decisions are wisely made out of careful consideration with an expert on the subject matter.
Different forums like Quora and Reddit can be good for getting perspectives from people about a topic. When it comes to asking for financial advice, however, it’s not the best place to get counsel on smart money moves.
You can learn from the experiences of others, but trying to replicate someone’s success by making the same moves they made can prove to be your biggest mistake. Circumstances and conditions do change, and this affects outcomes. So, it’s best to consult a certified crypto advisor who can guide you in making the right decisions on your crypto journey.
People Unknown to You
If you’re a non-fungible token (NFT) collector, creator, or crypto enthusiast, you should be familiar with the platforms used to host crypto communities. You’ve probably had messages sent to you by users you don’t know, expressing the lucrative opportunities you have with XYZ coin. These are commonly experienced across all social media platforms, even if you’re not an enthusiast.
Such people can present a seemingly promising investment opportunity worth buying into. But beware of such propositions, as they’re mostly scams. If possible, your platform might allow you to adjust your settings to not allow random people to send you messages.
Where to Get Crypto Advice
A financial advisor is a professional who assesses someone’s financial circumstances and goals and provides guidance for achieving them. Some might be well informed about crypto or even be certified.
Certified Crypto Advisors
The profession includes a wide range of specialties, including those involved in cryptocurrencies. Crypto financial advisors can help you create and manage an investment portfolio that includes cryptocurrency, providing financial advice to crypto investors and crypto-based startups.
Advisors might have a Certificate in Blockchain and Digital Assets (CBDA) or a Certified Digital Asset Advisor (CDAA) credential. It’s important to note that these certificates are issued by businesses and decentralized autonomous organizations (DAOs) that are not necessarily recognized by educational or financial institutions.
So, if an advisor has one of them, it is an indication that they have passed an organized educational and certification process, but these certificates should not be held in lieu of Chartered Financial Analyst (CFA) or Chartered Financial Consultant (ChFC) certificates—they should be held in addition to them.
Crypto Experts and Influencers
Many crypto experts have a wealth of knowledge in the blockchain industry, including blockchain developers, crypto influencers, thought leaders, and crypto investors.
Here are a few people to follow to get sharp insights on cryptocurrency. They share information on innovations in different blockchains and highlight cryptocurrencies in which they’re heavily invested. Remember that they do not provide financial advice and that you must conduct your own research before making any investment decisions.
Vitalik Buterin is a Canadian programmer who co-founded the Ethereum blockchain and Bitcoin Magazine. Buterin is an active voice on social media, especially on X (formerly Twitter), where he has gathered 5 million followers as of Dec. 17, 2023. He shares updates about Ethereum, relevant blockchain information, and personal insights on crypto topics. He also has a blog on which he writes on a wide range of topics, from crypto to productivity and lifestyle.
Andreas M. Antonopoulos is a Bitcoin advocate, tech entrepreneur, author, and popular podcaster. He hosts the “Speaking of Bitcoin” podcast, on which he discusses how Bitcoin and cryptocurrency, in general, are being adopted globally. He has a blockchain education platform and posts on topics relating to crypto to more than 750,000 followers as of Dec. 17, 2023.
Dr. Gavin Wood was one of the Ethereum founders. He has written several books about blockchain and cryptocurrency and has been involved in multiple projects. He is a programmer and data scientist and founded Polkadot and Parity Technologies. He has an active X profile with nearly 400,000 followers and is actively sought out by media outlets for his perspectives.
If you’re new to cryptocurrency, you’ll benefit from the learning resources that many educational platforms offer. You can explore different topics to help you understand how crypto works and how to get started investing in it. Here are three reliable educational platforms to learn crypto.
Binance is a cryptocurrency exchange offering a platform for users to buy and sell crypto coins. The platform also offers educational content on blockchain, cryptocurrencies, security, and NFTs through its academy. You’ll find how-to guides, trading tutorials, a comprehensive glossary, and various articles.
Coinbase Learn comes from one of the most-used crypto exchanges globally. In addition to providing financial services for crypto transactions, Coinbase offers educational content to help educate crypto users on how to navigate the crypto space. You’ll find beginner’s guides, tutorials, and market updates on this site.
Investopedia (this financial content producer) has extensive cryptocurrency coverage, including expert reviews of popular crypto coins and exchanges. You’ll find content such as beginner guides, a comprehensive collection of terms used in crypto, and news on the latest in the crypto market, among other financial news, definitions, and articles.
CFP Board Issues Crypto Guidelines
On Dec. 5, 2022, the Certified Financial Planner Board of Standards, Inc. (CFP Board) released a new guide about cryptocurrency-related assets to help CFP professionals. The guide, named the Notice to CFP Professionals Regarding Financial Advice About Cryptocurrency-Related Assets, was developed in response to questions about financial advice on cryptocurrencies and other crypto-related assets.
In its notice, the Board recommended CFP professionals follow regulatory guidance when providing financial advice about crypto-related assets since both the Department of Labor (DOL) and the Financial Industrial Regulatory Authority (FINRA) have expressed concerns about potential risks when investing in crypto-related assets. In March 2022, the DOL’s Employee Benefits Security Administration (EBSA) published compliance assistance warning 401k plan fiduciaries against cryptocurrency investments.
According to the Board, CFPs are not prohibited or encouraged to provide crypto-related advice but should be familiar with the asset and its risks when discussing crypto with clients. In addition, the board highlighted the specific risks associated with crypto-related assets, including speculative and volatile nature, difficulties in analyzing, custodial issues, valuation issues, potential unregistered status, and the potential for additional regulation.
More compliance resources, including FAQs, videos, fact sheets, case studies, and other guidance resources to help CFP professionals understand and comply with the Code and Standards, can be found at the CFP’s compliance website.
Why Crypto Advice Is Beneficial
It’s not hard to find a crypto-centric community on major social media platforms, with many people sharing advice on various topics. You can learn from the experiences of others, but blindly following advice from a public space like social media can cost you a fortune. Here are some reasons to seek crypto advice from the right sources.
As quickly as crypto innovations are created, scammers find new methods to defraud unsuspecting individuals. There are thousands of cryptocurrencies created, each with a different profit potential. Some tokens will do extremely well in the long run, while others will be average performers. But it’s even worse than buying a crypto coin that performs poorly if you invest in a scam coin.
There are many cryptocurrencies created by fraudsters in hopes of stealing funds from unsuspecting investors or users. Buying into such a project can lead to the loss of your entire investment. Consulting a cryptocurrency advisor before investing in a cryptocurrency can help you make investment decisions that carry a lower risk of being scammed.
Benefiting From a Professional Outlook
People dive into crypto for many reasons, from seeking an alternative income stream to looking for suitable retirement investment opportunities. A crypto financial advisor will bring a professional outlook on the crypto industry and can help you build a lower-risk crypto portfolio.
A crypto advisor will help you keep track of your crypto trading activities and prepare your taxes effectively. They’re informed about crypto laws and regulations that could affect how you calculate your taxes.
How to Find a Crypto Advisor
You can begin your search with referrals from friends, family, or colleagues who have crypto investments and are managing their finances successfully. Another way to find a crypto financial advisor is by getting recommendations from professional advisors.
You can also browse the internet and explore credible websites like The National Association of Personal Financial Advisors (NAPFA).
How to Verify a Crypto Financial Advisor
You can verify an advisor’s credentials by checking their records with the Financial Industry Regulatory Authority (FINRA), the Certified Financial Planner (CFP) Board of Standards, and other membership organizations with which the advisor is associated.
Before you choose a crypto financial advisor, determine what help you need concerning crypto. Are you looking to manage your crypto tax liability effectively? Are you unsure about which crypto coins to invest in? Knowing what you want help with will determine which professional is right for your needs.
Another important factor to consider is your budget. When considering which professional to choose, it’s important to know how much you can afford to pay for the services. There are different financial advisor fee structures, ranging from fixed fees, hourly charges, and commissions to others like the percentage of assets under management and performance-based fees.
Each fee has unique features, and your advisor might charge a combination of these fees. Therefore, it’s important to understand the fee structures that the advisor uses to charge clients.
Questions to Ask a Financial Advisor
Before you choose a financial advisor, ask specific questions to determine if that advisor is a good fit for you. Here are five questions to ask a financial advisor:
- What do you think of cryptocurrencies as a digital financial asset?
- Do you think cryptocurrencies are a good investment option to add to my portfolio? If so, what percentage of my portfolio should be crypto-based, and should I invest in crypto directly or through an investment vehicle like an exchange-traded fund (ETF)? If not, why shouldn’t I invest in cryptocurrency?
- Do you invest in crypto? If so, how do you decide which coin to invest in? Which crypto do you own?
- How long have you been following cryptocurrency, and how do you stay abreast of the developments in the industry?
- What advice do you have for an investor just getting started with crypto?
When you ask these questions, you’ll receive responses that indicate whether a particular financial advisor is right for you or if you should consider another.
What Are the Arguments for Cryptocurrency?
For many, cryptocurrencies hold the promise of financial freedom and riches beyond the control of governments, regulators, businesses, and greedy individuals who exploit current financial systems.
What Are the Risks Associated With Cryptocurrency?
The main risks associated with cryptocurrency trading are price volatility and project legitimacy. It is easy, when money is involved, to become emotionally involved and make decisions based on them before conducting your due diligence.
Where Should One Go for Crypto Advice?
Conduct your research for a credible crypto financial advisor and interview them before trusting their advice. You can browse the internet and explore websites like The National Association of Personal Financial Advisors (NAPFA) to find registered advisors in your area.
The Bottom Line
Hiring a good crypto financial advisor can help you manage many matters that arise from investing in this new asset. The advisor can guide you in choosing investments, managing your crypto taxes effectively, and provide financial planning advice. At the same time, following crypto experts and influencers with qualifications who offer insights into the ever-changing realm of crypto and blockchain technology will help you to be more informed about the market’s innovations and news.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency.