by Cindy Huynh
High Net Worth Individuals (HNWIs) have expressed significant interest in cryptocurrency investments. These individuals, however, would like more information on the emerging industry from their wealth managers as 25 percent receive most of their investment information from their wealth managers.
Research: HNIs Keen on Cryptocurrencies
According to Capgemini 2018 World Wealth Report, HNWIs were defined as people who had at least $1 million to invest in, excluding assets like their primary home, art collections, and cars. Reuters noted that for the second year in a row, these HNWIs in 2017, had seen a return in investment above 20 percent. The HNWIs collectively own more than $70 trillion and will amass $100 trillion by 2025.
Unfortunately, only 56 percent of HNWIs feel “very well” connected with their wealth managers. The number is considerably low since the French Business Consulting Group calls 70 percent a passing grade.
While HNWIs have significant wealth, the report also highlighted they were reasonably enthusiastic when it came to cryptocurrencies:
“HNWIs are cautiously interested in holding cryptocurrencies, with 29 percent globally having a high degree of interest, and 26.9 percent saying they were somewhat interested.”
The report also noted that “although regulatory uncertainty and firm caution have prevented cryptocurrencies from penetrating the wealth management industry, the strong demand for information on cryptocurrencies from younger HNWIs is likely to force wealth management firms to at least develop and offer a point of view during the months ahead.”<
Cryptocurrencies to Penetrate Wealth Management Industry
While the digital asset class experienced widespread popularity in 2017, the wealth management industry has remained fairly cautious on the emerging digital asset. However, this will change as HNWIs demand for cryptocurrencies grows. The change is already evident since, in 2018, more traditional finance companies have begun to look into cryptocurrencies. These companies include Rockefeller Foundation’s venture capital arm Venrock, BlackRock, Goldman Sachs, and even Soros Fund Management.
Overall, HNWIs are incredibly interested in the high investment returns and potential as a store of value from cryptocurrencies. Globally, 39.9 percent of HNWIs mentioned that the potential for investment return was the primary reason why they would hold or purchase cryptocurrencies. 19.3 percent would participate in the industry because of its enormous potential as an alternative store of value.
The 26.9 percent who are more “on the fence” about cryptocurrencies could be a source of new assets for the wealth management industry if they can provide clear, meaningful, and educational resources for these HNWIs.
Cryptocurrencies Provide Opportunities
While cryptocurrencies are a new emerging asset for HNWIs to invest in, the online cryptocurrency community sees the industry as an equalizer for everyone in society.
“This is one of the most interesting things about the crypto boom,” said Reddit user solar128. “With previous booms, private investors and institutions get access to early investing opportunities, and the average Joe can only pick up bags much later. Cryptocurrency is the exact opposite since individuals have more access to crypto than funds which have rules & restrictions on how they can invest.”