Originally published as a guest post in the Bankless newsletter

With billions of dollars flowing into crypto this year, it’s fair to wonder, “how much bigger can crypto get?”

Millennials and Zoomers are bypassing stocks to scoop up the coin of the week, while Wall Street firms are rolling out products exclusive to their aging, high net-worth clients.

This crypto-sandwich of young and old is driving crypto prices upwards, but neither demographic will spur the mass adoption necessary for crypto to become mainstream. The key to pressing the crypto turbo button is understanding who is late to the party.

Still dressed in their work clothes and straggling in fashionably late will be the middle-class—more specifically, middle-America. They will finally bring their trillions in wealth onto the blockchain, sending adoption into the stratosphere.

Crypto natives have been anxiously awaiting the arrival of their buttoned-down friends, politely waiting to spike the punch until they arrive. Your nervous but open-minded friends have heard about this party and are willing to check it out, but nobody has bothered to give them directions.

No Thanks, No Time

For those who have set up a desk and comfortable chair at the bottom of the crypto rabbit hole, the reluctance of friends and family to learn the basics of the future economy can be frustrating. “Just go to Coinbase and buy some Eth, mom.” Sounds exciting, she says, “who do I make the check out to?”

Despite our true belief that crypto is not only the future but the present, it doesn’t contain the power to change human nature. At least not in the short term. Mass adoption of crypto requires an understanding that not only will your mom never learn about crypto, but she also doesn’t want to.

She also doesn’t want to learn about investment, retirement, tax, insurance, and estate planning. She is plenty smart enough to do this but still hires a firm like mine to take care of her. Fitting crypto mastery into a busy schedule requires sacrificing something else, a tradeoff that doesn’t make sense for many.

The people we need for crypto to go mainstream don’t fix their own cars, administer their own medical exams, and they certainly don’t move significant sums of money into new investments they don’t understand without the advice of a financial professional.

You may not like your parents listening to their Boomer stockbroker, but the reality is they won’t make a move without his blessing. Changing their decision-making process is a fight you can’t win, so pivot to the one you can.

Not all financial advisors are created equal. Make sure your friends and family are working with a fiduciary. 

Financial Advisor ≠ Fiduciary

In the US, the term “financial advisor” is not defined by any regulatory authority. The title does not correspond to any specific exam, license, or governing body. It is an umbrella term that virtually anyone who has passed an investment licensing exam can put on their business cards.

Many in the crypto industry wonder when “financial advisors” will usher in the mass adoption of cryptocurrency for the middle class. To answer this tricky question, we need to understand the incentives different types of advisors have. Rather than think about job title or license, it’s easier to categorize advisors based on what form of crypto adoption they are motivated to recommend. 

Every financial advisor will be discussing crypto with their clients in some capacity. The agenda of the conversation will be driven by the incentive structure of the business model they operate under.

For example, if you work for a bank, Wall Street firm, or VC shop, your job is to onboard clients into a product owned by your employer. This is how your company generates revenue and also how you get paid. There is nothing wrong with this, but the incentive to steer individuals towards DeFi doesn’t exist.

A financial salesman is motivated to make a sale. It can be a product created by their company or a solution developed by a third party. Either way, compensation is typically built into the product itself. This could theoretically happen in DeFi, but the logistics of a protocol cutting a check to a regulated US financial entity is years away at the earliest.

The best hope for introducing permissionless finance on a massive scale resides with the fiduciaries. You may have seen several definitions of a fiduciary, but the simplest one is a financial professional who is compensated solely by their client.

Being a genuine fiduciary advisor means you don’t receive kickbacks, rebates, or duffle bags of cash from the manufacturers of financial products. A fiduciary sends a transparent invoice to their clients, and the client pays it because they see value in the service provided.

More advisors are choosing the fiduciary path every day. They are eliminating conflicts of interest and putting their clients first. This is good news for your mom and even better news for DeFi. 

Guided DeFi

Onboarding friends and family into Ethereum feels a lot like convincing someone to eat their vegetables. They keep hearing it’s good for them but can’t see how it helps them today.

Non-crypto natives will require a guide who can patiently educate them on the risks and rewards of moving their money away from traditional finance. They will need a consistent voice who can highlight the benefits of decentralization as they continue to stack up over time.

Enter the fiduciary financial planner. With no product to sell, and no Wall Street overlord to answer to, fiduciary planners can focus on doing what is best for the client. I’m willing to bet what is best for the client will be a non-custodial wallet with direct access to safe and secure Dapps.

The path to guide clients towards the promised land of decentralized vegetable eating will start with education. For my clients, it’s a process of 1) here is why crypto matters in the world, 2) here is why crypto is relevant to you personally, and 3) here are the areas where crypto can improve your financial plan today.

Immediately following client education will be the implementation. The typical client progression will look something like this: 

Wallet selection → Fiat onramp to USDC → Variable yield on USDC → Buy ETH → Borrow against ETH

For some clients this process will take weeks; for others, it may take years. One day I hope to help my clients yield farm or take out a magical loan on Alchemix, but there is no hurry. If the financial planning profession can get comfortable converting our clients’ money into USDC earning interest on AAVE, crypto will explode overnight. 

Fiduciary planners are going to make this happen because any other scenario is unacceptable. Waiting for the DeFi mullet to introduce our clients to the new frontier is a horrifying thought. I don’t know why anyone would want to do business or party with traditional finance. Our friends and family deserve better than that.

A truly permissionless experience is why we started PlannerDAO. We are a community of financial planners who see crypto as a path to freedom for billions across the globe. Our advisors are committed to giving clients as much control and access to their wealth as is legally and ethically possible. We also want to make it happen as quickly as possible. 

Cool Story, Now What? 

PlannerDAO is not waiting around for TradFi to deliver a glossy brochure telling us what is best for our clients, we are building the foundation our profession needs to empower our clients.

We have created the Certified Digital Asset Advisor (CDAA) designation, the most comprehensive cryptocurrency training program for financial advisors anywhere in the world. The designation is decentralized, meaning anyone (including BanklessDAO) can be an education partner of the DAO.

We recently received a grant from Nexus Mutual to build the Financial Advisor DeFi Toolkit, where we are spending six figures to answer the most pressing legal and technical questions concerning managing our clients’ assets directly on-chain. This toolkit of legal opinions, sample documents, and protocol audits will be free to all financial advisors and maintained by the DAO.

PlannerDAO is actively working with Nexus Mutual to create custom insurance solutions for planners to lower the risk of providing investment advice on digital assets. Many of us have spent our entire lives serving clients and building our businesses, and we need insurance to protect us from the unknown.

The DAO is steadily adding partners and supporters who see the value in what we are building. Our network shares our vision: a guided decentralized finance experience you are comfortable referring your mother to. 

The fiduciaries are coming. More importantly, we are coming in a sustainable and compliant manner.

We aren’t trying to squeeze crypto into our existing business model; we are re-thinking what it means to accumulate and manage wealth in the new economy.

Financial planners are in a prime position to build this new infrastructure because we don’t have conflicts of interest and legacy revenue sources to protect.

Crypto will not only eat traditional finance, it will eat traditional financial advisors.

How can we be so sure fiduciaries will win this war?

Because PlannerDAO is hosting the crypto party for your friends and family, and I don’t see TradFi at the table.

They don’t realize it yet, but it’s because they are on the menu.

Author Bio

Steve Larsen, CPA, CFP® is Co-Founder of PlannerDAO, a cryptocurrency education community for financial planners. He is also Co-Founder of the Certified Digital Asset Advisor (CDAA) designation, as well as an Adjunct Professor of Finance at Gonzaga University where he teaches classes in Cryptocurrency and Financial Planning. To learn more about PlannerDAO, please visit plannerdao.com.