Crypto - the fear of missing out
A growing number of people are promoting a myriad of crypto investment services through social media, no doubt to the extreme annoyance of regulated financial advisers who are under tight constraints when it comes to promotion of investments. I was an IFA for 18 years and although that was over a decade ago I remember well the reasons I chose to terminate my FSA [now FCA] authorisation.
It was not to do with the increasing regulatory pressure and administration burden - both of which I understand still plague the industry. Nor was it the ever increasing sales targets or threats of losing one's job.
What finally made me decide to get out was the fact that the financial services "industry" believed - still believes - that off the shelf financial products, often complex, were the answer to everyone's financial objectives and aspirations, despite the fact that we are all different.
I am sure things have moved on in 11 years but in my day there were, effectively 3 definitions of investment risk; low, medium and high. It was extraordinary how many were deemed "medium".
When markets fell the excuse was that events [like 9/11, war in the middle east, financial crash - again, Brexit...] could not possibly have been prepared for. Yet when markets rose again there was that smug acknowledgment that of course they knew what they were doing all along.
The demise of commission was a major step forward but "client agreed remuneration" serves many advisers which in my book is commission under another name.
And yet all of this is largely irrelevant. The reliance on and obligation to sell regulated financial products means the advisers primary concern is the regulator [after PI insurer] The investor is firmly in second, possibly third place.
Unless detailed knowledge of our financial circumstances is known, including how we got to here and crucially, in which direction we are headed AND a determination of our NUMBER - the amount of money we need to see us through to life's end - NO product should be purchased.
The financial services regulator, the FCA, is entirely right to warn the public about potential investment scams; sadly their warnings are often unheeded. However their condemnation of alternative, or digital or [because of the coded security] cryptocurrencies is both flawed and inaccurate.
For those who have suffered through poor regulated advice, it must be tempting to try this new and exciting opportunity. For those who are genuinely interested in this new and revolutionary unit of value, the war of fear perpetrated by the banks and the FCA will be off putting.
As my regular readers know, I am big on perspective; so - think about who or what has most to lose from the mass adoption of this new money.
The Financial Services Industry.
Despite last years "crypto winter" [borrowed that!] demand continued to rise. Why? Because value is not the most important factor!
I established a new[ish] service late last year which takes the strain away from trying to determine which crypto "platform" is best or worth considering. It punches through all the powerful claims on social media and tells you who the individuals are, what their business actually is, whether it is a trading service or participatory, whether it focuses on foreign exchange or not. How you get your money out. What the payment options are. And so on.
If you are perfectly happy with the current "system", with your banks support and its charges, with your product selling financial adviser and the whole spectrum of investment risk which the industry has no real control over, then dismiss this note.
If, however you are becoming more and more curious, and would like to know just a little more, then you know what to do.