And about that 401k: Here’s what a financial adviser has to say about cryptocurrency
As a veteran of the financial services industry and a proud CFP professional, I’ve been around awhile. I have seen bubbles expand and burst, companies rise and fall, and account values ebb and flow with the markets.
What goes up, comes down. What goes down, comes up.
It’s the financial circle of life.
I shouldn’t be surprised by the crypto craze, but in a sense, I am. I’m amazed that people who have previously been so financially disinterested have suddenly lit up with a new passion for investing.
This is the same crowd I have pestered for years to put a few bucks into a Roth IRA each month and to make sure they’re contributing enough to get their 401k match at work.
Even seasoned, successful investors are being caught up in a wave of crypto-FOMO (fear of missing out).
Meanwhile, I beat steadily on my drum, the lone voice in the wilderness.
“What about paying off your high interest debt,” I cry, “or building a cash cushion?”
Yeah, I know. I’m weird.
My idea of “hot” is estimating the tax-free growth in a Roth between now and retirement. And “sexy” is investing in high-quality, diversified mutual funds that track broader financial markets.
No wonder no one asked me to the prom.
Yet every so often, a fresh wave of interest hits and I am peppered with questions about cryptocurrency.
It reminds me of the historical accounts of the Gold Rush. Everyone who was anyone was heading west with pickaxes and pails, tooled up to find the next big nugget.
Some did and their lives were changed.
Many more died penniless.
Please understand: I’m not anti-fun. And yes, it’s possible that cryptocurrency is the next big thing.
The problem is that the cryptocurrency space is so new, unregulated, volatile and speculative, I’m not allowed to provide advice or recommendations on it. And that’s fine with me.
Why? Because I don’t know where it’s going, who the winners and losers will be or which camp you’ll fall into if you catch “the fever.”
What I do know is that life brings a series of transitions and is ever changing. We set goals and direct our finances in the way we hope our lives will go. Then we adjust and adapt as things change, which they invariably do.
Real financial advisors will step away from a “product” conversation to engage in a “process” based on a fiduciary relationship with their clients.
CFP Professionals recognize financial planning as a seven-step process. Financial advice and recommendations aren’t even presented until step five. Before that, financial planners ask a lot of questions because that’s part of the process.
If you ask a financial planner about crypto, don’t be shocked or offended if they ask about your household income, cash cushion and long-term goals. They’ll want to know how much you have already saved, how those funds are invested, and how much you’re currently saving.
Number crunching aside, what really drives us and fills our bucket is you.
We care more than you realize. We laugh, cry and cheer with you, our clients.
Truth.
So what do I think about investing in cryptocurrency?
I think a few will make a lot of money and some will make a little. Some will lose a little and others will lose a lot.
More than ever, I believe in a journey and a process called financial planning.
Kelly Stiefel Arias, MBA-IM is a CERTIFIED FINANCIAL PLANNER professional and a member of Financial Planning Association of Greater Kansas City. She is president and financial advisor at Alegría Wealth at 10955 Lowell Ave., #200 in Overland Park; 913-712-0027.