FA-IQ reached out to advisors to ask: Do you believe that cryptocurrencies should be included as choices in 401(k) plans?

Jean Malo, private wealth advisor at Americana Partners. Houston-based Malo has been in the industry for more than 30 years and has around $83 million in client assets.

“In my mind, cryptocurrencies are still too volatile to be a store of value, a basic function of currency.

Furthermore, they are still not legal tender and, consequently, can only be used in barter transactions.

Jean Malo
Finally, their legal status is still in flux, and it remains to be seen how monetary authorities will regulate them.

Based on these factors, I would not recommend cryptocurrencies as an investment.”

Michael Leverty, founder of Leverty Financial Group. Hudson, Wisconsin-based Leverty has been in the industry for 20 years and has around $450 million in client assets.

Mike Leverty
"We believe crypto is a market that is here to stay. However, I am not an advocate for including this sector within a 401(k) currently due to the volatility.

We are not opposed to clients holding crypto but feel that this allocation should be part of their speculative allocation and not part of their core long-term allocations.

This view may certainly change in the future as the crypto market stabilizes and an appropriate level of regulation is implemented."

Jim Pratt-Heaney, founding partner of Coastal Bridge Advisors. Westport, Connecticut-based Pratt-Heaney has been in the industry for more than 30 years and has $2.85 billion in client assets.

Jim Pratt-Heaney
“401(k) investments should reflect a client’s overall investment plan.

For those who think crypto should be a part of their investments, investing in Bitcoin, for example, within a 401(k) should be OK.

However, it is vital to consider that in a 401(k) one cannot take advantage of sell-off and tax-loss selling. Perhaps the best advice based on this would be an allocation closer to 1%-2% of a client’s total portfolio.”

Gerald Goldberg, chief executive officer and co-founder of GYL Financial Synergies. West Hartford, Connecticut-based Goldberg has been in the industry for 26 years and has about $9 billion in client assets.

Gerald Goldberg
“For the past 25 years, GYL’s principals have advised plan sponsors on, among other things, the prudent selection and monitoring of investments offered to plan participants. This advice is subject to the highest fiduciary standards of care as codified under Erisa [Employee Retirement Income Security Act of 1974].

Although there are some respected names in the retirement industry that are wading into this realm and allowing plan sponsors to make these cryptocurrency investment options available, we recommend that plan sponsors proceed with extreme caution.

The high level of volatility and the lack of a consistent regulatory framework contribute to a highly speculative environment for these investments. Add on top of that the recent concerns expressed by the Department of Labor make this a ‘no-fly zone’ for us at this time."

Brett Bernstein, CEO and founder of XML Financial Group. Rockville, Maryland-based Bernstein has been in the industry for 23 years and has $3.7 billion in client assets.

Brett Bernstein
“I do but only if there are limitations on how much someone could own so they do not potentially blow up their 401(k) plan by overconcentrating in one asset. But I would say that for company stock as well.”

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