Ric Edelman on Bitcoin: Breaking Down the Barriers to Entry

Published on
December 8th, 2020
Duration
47 minutes


Ric Edelman on Bitcoin: Breaking Down the Barriers to Entry

The Interview - Crypto ·
Featuring Ric Edelman

Published on: December 8th, 2020 • Duration: 47 minutes

Acclaimed financial advisor Ric Edelman, founder of the RIA Digital Assets Council (www.riadac.com) and Edelman Financial Engines, the #1 RIA firm in the nation according to Barron’s, talks with Real Vision CEO Raoul Pal about the barriers preventing financial managers and investors from buying bitcoin and how the crypto community can gain mass adoption. Edelman explains the benefits of adding Bitcoin to a diversified portfolio, shares his approach to investing in digital assets, and reveals his expectations for a Bitcoin ETF. All this and more, recorded Nov. 30, 2020. Key Learnings: Due to the slow progress of an official Bitcoin ETF, there are significant barriers to entry for financial managers to give their clients exposure to this asset class. Edelman explains how these barriers will eventually be removed. As Bitcoin provides valuable diversification for portfolios where traditional allocations may no longer generate satisfactory returns and hedge risk in the current market environment, there is an urgent need for investors to become educated about the crypto asset class as it approaches mainstream adoption.

Comments

Transcript

  • KG
    Kenneth G.
    19 December 2020 @ 17:38
    Where is the info on the crypto course & certification that Ric Edelman says he offers?
  • AD
    Alexander D.
    16 December 2020 @ 20:05
    "Those in the crypto space have to learn how to connect with the advisory space. The advisors have to understand what this is, how it works and why it is a value to clients, how to incorporate it into their practice. The advisory space has to connect with the crypto space. We need to bring the two together." As long as the answer is not "Charge a 3-6% front load fee and then charge a 1% 12B-1 fee, and then a 1-3% account fee, and then a 2% sales fee." because that is not an option any more.
  • MB
    Michael B.
    13 December 2020 @ 13:41
    Raoul, ever consider a briefing on the various ways to custody BTC and their limitations? Perhaps have an expert on. Trezor scares the shit out of me sometimes. Coin base has easy to use wallet for your phone. Is it secure? Winklevoss (good interview) or Gemini now offer cold storage on their site for a fee? If I died what is the chance my heirs will be successful with my Trezor. Many many issues to consider.
    • AD
      Alexander D.
      16 December 2020 @ 19:54
      Worse yet is "How many of those places allow you to email/fax a death certificate and transfer assets to an estate?" I've ask that on BlockFi and they have you fill out what looks like a nice online google sheets form and say that they will use the data when they have the capabilities / service live. For Trezor/Ledger it is all about education. I know my executor and have told him that in the same box which has the gold there is a sheet of paper with 24 words, don't lose that.
  • OM
    Oliver M.
    15 December 2020 @ 21:13
    Edelman...the person who charges you a fee to get index funds LOL. I guess he sees some profit potential in selling crypto with a fee wrapped around it. Sad.
  • bt
    brian t.
    11 December 2020 @ 17:54
    Good as usual, came across a fund on the TSX, closed end fund. QBTC.U Giving exposure to bitcoin. Benchmark Index: MVIBTC Still reading into how all this works.
    • GL
      Glen L.
      14 December 2020 @ 15:49
      same fund company just IPO'd and launched an ETH ETF last week (QETH) if you want to look it up...
  • RK
    Robert K.
    10 December 2020 @ 23:16
    This guy and this interview misses the point of bitcoin (self custody - no third parties to trust) because the entire RIA industry is not serving the best interests of individuals - they would lose a lot of business. Sovereign Individuality is the cornerstone of bitcoin. Sure, the masses will generate demand price increase and us early adopters and key holders will benefit. But I find it somewhat disappointing we don't educate people to be self sufficient and hold their own money as was the intention of a peer to peer cash. My 75 year old parents have bitcoin and so do my college age children. I would be a failed parent and son if I did not teach them how to self custody. It is so easy now. CashApp - buy bitcoin. Transfer to a cold card wallet. done.
    • GS
      Greg S.
      11 December 2020 @ 21:09
      To get widespread adoption, which will raise the price, it needs to be easier for non-digital natives to custody their coins. Many people who are interested or intrigued by crypto are reluctant to own crypto because they do not have the computer skills to self custody and therefore do not enter the crypto sphere. If we can make it easier to bring in new crypto holders, they may get into it and eventually learn the skills needed to self custody. Also, most people hold a lot of their investments in IRA's which need to have a custodian. On top of this, institutions can not self custody. The next level is if Bitcoin becomes a method of international settlement and the international reserve currency, which means central banks, regular banks and credit unions will all become custodians. So, for crypto to reach it's full potential and have widespread adoption, Bitcoin and crypto in general, custodianship is the next evolution.
    • MB
      Michael B.
      13 December 2020 @ 13:26
      Is a cold card wallet the same thing as a Trezor? It scares the shit out of me every time I use it. I have thought about Gemini or Winklevoss cold vault as I am getting to point of very real money now.
  • HT
    Hume T.
    13 December 2020 @ 07:29
    Why is every one trying to set up EFT for Bit Coin? The futures markets are what have destroyed returns on most products Grain, Gold . It ends up the tail waging the dog , they get so big. I understand that the 21 million limit on Bitcoin is the advantage. EFT and Futures will make it as common as paper money.
  • BH
    Brian H.
    9 December 2020 @ 00:22
    There is a BTC ETF on the Toronto Stock Exchange for Canadians. An Ethereum one starts this week by the same company. It allows me to have BTC in my wife's RSP which I self direct through the TD Bank.
    • bt
      brian t.
      11 December 2020 @ 19:03
      Was that QBTC?
    • BH
      Brian H.
      12 December 2020 @ 12:48
      brian t...QBTC.U...
  • GL
    Greg L.
    10 December 2020 @ 03:24
    Really interesting. Enjoyed the video. Did I get this right?" 1% in a 60/40 portfolio equaled a 25% return"
    • JO
      JOHN O.
      12 December 2020 @ 02:06
      Not quite - and I think he over estimated a little. But in the past year a portfolio of 60% ACWI and 40% AGG saw a total return of a little over 10%. If you had a portfolio of 59% ACWI, 40% AGG and 1% BTC you would have seen a total return of 11 1/2% +/-. 2% BTC would have gotten you to 12 1/2% total return and that is the 25% he speaks of, i.e. 125% of the 10% return.
  • JO
    JOHN O.
    12 December 2020 @ 01:44
    To your Excel and Lotus 123 comment - it was first Visicalc and its slash key commands.
  • RN
    Richard N.
    10 December 2020 @ 03:52
    Doesn't Greyscale or something like a MSTR act much like a BTC ETF right now?
    • JO
      JOHN O.
      11 December 2020 @ 23:52
      GBTC and ETHE are OK but as Ric observed, trade at significant premiums at times.
  • LH
    Luke H.
    10 December 2020 @ 04:06
    The ironic perspective I got from within this interview is Bitcoin doesn't need financial advisors, financial advisors need Bitcoin. Next step is educating financial advisors as to why and most importantly, given the acceleration of tech, what comes next. Cardano is leaps and bounds ahead of Ethereum. It'll be interesting to see how fast we'll all see the digital asset option within the milk toast 401K. Exciting times ahead :)
    • JO
      JOHN O.
      11 December 2020 @ 23:49
      I agree, but - here in the US the financial advisors Rich is talking about have to comply with SEC regs, their firms' policies and client friendly reporting and education standards. I run an RIA, I own a few types of coins and have used Gemini and Coinbase, but I haven't found anything that is user friendly enough to plug into our portfolio accounting system or allow my operations group to move cash to and from a client's bank account to a wallet or exchange to buy and sell crypto for our clients. The result - we don't offer it as an asset class; sadly. Fidelity Digital seems to be working on it but they still are having trouble getting out of their own way.
  • LH
    Luke H.
    10 December 2020 @ 04:06
    The ironic perspective I got from within this interview is Bitcoin doesn't need financial advisors, financial advisors need Bitcoin. Next step is educating financial advisors as to why and most importantly, given the acceleration of tech, what comes next. Cardano is leaps and bounds ahead of Ethereum. It'll be interesting to see how fast we'll all see the digital asset option within the milk toast 401K. Exciting times ahead :)
  • EA
    Emmanuel A.
    10 December 2020 @ 03:07
    Regarding bitcoin certification, one already exists: https://cryptoconsortium.org/certifications/CBP/
  • VF
    Vassilios F.
    9 December 2020 @ 01:21
    Can someone answer a simple question I haven't heard a response to: When the BTC ETF launches, does GBTC crash? GBTC has a 2% fee, which an ETF won't have. Or am I missing something?
    • PD
      Peter D.
      9 December 2020 @ 01:39
      When the ETF launches GBTC is finished. The process has already started. The Bitcoin Trust, a Canadian fund, which launched earlier this year, has been keeping its premium around 5% and will soon get noticed (though, I am not sure how US investors can access it). But the writing is on the wall. If I were GBTC I'd slash the carry immediately to 1%, or even less, to keep out the competition. However I think much of that is may be trailer fees, so they have no choice. Personally, I can't wait to divest.
    • VF
      Vassilios F.
      9 December 2020 @ 05:04
      @Peter D: So do you plan to divest before the ETF announcement? I wonder if you can get out in an "orderly" way between the announcement and the launch
    • TS
      Thomas S.
      9 December 2020 @ 23:41
      I think there is enough business for several products. Plus, GBTC has a huge head start, and remember, the real money behind it, i.e. accredited investors, have a 6-month lock-up period. Also, I expect that any ETF will have higher than normal fees given the "additional" costs surrounding custody, etc. To me, the first and most likely thing to happen is that the GBTC premium will see significant compression.
  • TH
    Terence H.
    9 December 2020 @ 14:25
    Raoul, you screen is a mirror image, made me dizzy. Great video but couldn't watch the picture - haha
  • JJ
    Jay J.
    8 December 2020 @ 13:07
    24:14 the self serving POS showed his hand “why would I tell a client to do something that isn’t in MYYY best interest” that’s a break breach of his fiduciary responsibilities It would’ve been nice if Raul called him on that
    • TM
      Tyler M.
      8 December 2020 @ 17:18
      I think he was just giving an example of why advisors wouldn't want to tell people to go to other places. Not speaking about his own opinions, but from the perspective of a professional advisor that collects fees.
    • TM
      Tyler M.
      8 December 2020 @ 17:19
      Which is a barrier to traditional adoption, which is why the ETF is needed.
    • JG
      JAMES G.
      8 December 2020 @ 17:39
      I noticed this too. An agent in that position is a fiduciary, and must act in the best interest of the client ahead of other interests. The law doesn’t exclude the agent from having a financial interest of their own. If Ric were truly self serving, it’s unlikely they would be pushing so hard for their clients to have access to new investments. Many people I talk to want to have investments directed for them. They will never take interest in their positions, beyond having whomever they believe is the right someone doing it for them. Often they sa “I have a guy.” Hence, here will never be a shortage of clients for these services. I feel that the industry is full of agents who have no duty to their clients best interest, nor any more knowledge or expertise than you or I. That is why I self direct as much as possible, but it still seems to be the exception.
    • JE
      J E.
      9 December 2020 @ 12:53
      Agreed.. as Jefferson below mentions too.. crypto is a revolution *against* coin clippers.. fiduciaries should be fee-based ONLY and not dependent on AUM or commissions etc... This is a core reason why crypto set out to gut the entire industry from head to toe in the first place... feels like 2 steps backwards.
  • NF
    Neal F.
    8 December 2020 @ 13:12
    I run a fund and an RIA. Very easy to buy/custody BTC in the fund. Nearly impossible on the RIA side (unless you want paper BTC). We have found no prime broker in our research that will custody BTC that also connects to any of the major portfolio accounting systems. You can find 3rd party custodians but no RIA is going to open hundreds of individual custody accounts in client names with a 3rd party custodian, xfer cash out, and manually shadow account the asset in their portfolio accounting system. Several broker/dealers are working on this but are 12-18 months out. When it happens it is a path to BTC's second comma.
    • SC
      Sam C.
      8 December 2020 @ 19:04
      Hey Neal, I'm doing some research. Can you share with me the major portfolio accounting systems you are referring to? Thank you.
    • NF
      Neal F.
      9 December 2020 @ 12:50
      Portfolio Center, Advent, Tamarac.
  • MO
    Master O.
    8 December 2020 @ 10:26
    Nassim Taleb loves bitcoin! When can we have him at RV?
    • HV
      Hector V.
      8 December 2020 @ 10:55
      oh man that would be amazing.
    • TE
      Tito E.
      8 December 2020 @ 13:33
      I'd like to see Oprah Winfrey on here
    • PB
      PHILLIP B.
      9 December 2020 @ 07:43
      Great suggestion. Who would be the best person for an interview Taleb?
  • TS
    Thomas S.
    8 December 2020 @ 20:44
    This guy obviously knows his stuff and is highly successful. However, continuing to listen to him, I wonder if getting RIAs and related investors involved is really necessary for bitcoin. Sure, it will add some breadth and depth to the crypto market but bitcoin has done fine so far without this base of investors. Contrary to his statement, BTC is available to the average investor. No one is denying access to investors. If you can't figure out how to buy and store it, maybe you shouldn't get involved. Does it need to be dumbed down for clients ? Does every investment have to be available to every investor ? I've got to believe that most RIA managed accounts are not the "common" man but tilted to those with a reasonable amount of assets. This is just another way for RIAs and Wall Streeters to take over and make money off people. I suppose the only way for me to make money is to front run these guys.
    • JC
      James C.
      9 December 2020 @ 05:58
      I think you've hit the nail on the head here, that there's smart money and dumb money. Smart money takes the time to read and learn about what they're investing in and make sure it aligns with their personal goals. Dumb money sees a high rate of return and just shoves the money into the markets or lets someone else take care of all of that 'nonsense'. Bitcoin has survived thus far because of smart money investors, people who have done their research. Dumb money is money, after all, but does it provide something useful to the space rather than just piling in during the FOMO phases to drive up price?
  • CP
    Constantin P.
    8 December 2020 @ 22:44
    Raoul, something is wrong with your living room ;)
    • RP
      Raoul P. | Founder
      9 December 2020 @ 00:45
      Whats wrong?
    • JR
      Jorge R.
      9 December 2020 @ 04:32
      Pretty sure Constantin is commenting on that your video is flipped horizontally.
    • DT
      Denis T.
      9 December 2020 @ 05:46
      I noticed it too. For some reason the editor inverted Raoul's footage, which is why Raoul looks so different.
  • DR
    Derrick R.
    9 December 2020 @ 04:23
    Had anyone else noticed the video controls don’t work anymore?
    • DR
      Derrick R.
      9 December 2020 @ 04:24
      Cant skip to section or specific time in the video, etc
  • WT
    William T.
    9 December 2020 @ 01:25
    A suggestion to the RV producers; Can you guys please do a sound check before your interviews because terrible audio can really ruin what otherwise would be a very good interview. No band would ever hit the stage before doing a thorough sound check....test test one two, one two, test! PLEASE.
  • PL
    Pete L.
    8 December 2020 @ 08:24
    Gents great interview. But here’s the thing. Here in the U.K. until recently we had two Bitcoin ETFs available to buy. Recently the FCA/BOfE effectively made them impossible to buy via increased regulation. Therefore cutting the little guy and the IFA (RIA) out of the market. Real Vision has a huge amount of positive crypto content, maybe it is time to get some regulators on here to explain why they are making the decisions that they are?? I’d love to hear from the FCA on this. Pete
    • JT
      Jefferson T.
      8 December 2020 @ 12:56
      You know, that's not a bad idea. And also, getting regulators talking to buys like Raoul who can speak both the crypto language and the traditional investment language, it might help warm the regulators to crypto on a more personal level (which can go a long way).
    • GF
      George F.
      8 December 2020 @ 14:47
      What will be interesting is the potential game theory here. If the US regulators over the next 30 days or so give the green light to a BTC ETF with fewer restrictions than the U.K. and money starts flowing to the US, would the U.K. sit by and casually watch? I bet that they would relax some of those regulations to be at par with the US. As stated in the interview, no one really wants to be first but everyone wants to be second! My takeaway from this interview is that this may be one of the few opportunities where the little guy, me, is frontrunning institutional money AND I don't need to pay them a fee to store my value. #HODL
    • TM
      The-First-James M.
      9 December 2020 @ 00:59
      Are you talking about the Swedish listed XBT.BTC and XBT.ETH ETN's? If so, they tracked via swaps (hence the name ETN - Exchange Traded Note) and did not hold the underlying. You're right though - many brokers pylled them since the FCA banned the sale of Crypto derivatives to retail investors. Think they were mainly targeting BitMEX futures, but this was a possible unintended consequence. However, you can still get access via Nasdaq-listed Microstrategy which, to all intents and purposes, is now effectively a Bitcoin ETF with a Business Intelligence software company attached to it. ;) Additionally, there is Canadian-listed Galaxy Digital - Mike Novogratz's outfit - which has Bitcoin on its balance sheet (probably no longer trading at a NAV discount though). You do therefore have a couple of listed company options that will help you get around this piece of bullshit regulation.
  • JB
    Juris B.
    8 December 2020 @ 12:39
    At 28:20 he mentions potential players who will come out with a BTC ETF. One is Bitvise, what was the other one? Couldn't quite understand it with the audio. :)
    • JB
      Joe B.
      8 December 2020 @ 22:12
      VanEck
  • SR
    Steve R.
    8 December 2020 @ 15:51
    Gentlemen, I need some assistance in "crossing the crypto chasm." I am a private investor who, like Mr. Edelman, fell prey to an unscrupulous or incompetent advisor when I was in my 20's (why does my portfolio balance stay the same as the market goes up?). I decided to leave the world of investment advisors and invest in real estate and small businesses. Thirty five years later, I have sufficient passive income to no longer need to work. My investing philosophy became "I get paid every month from my assets." I drank the realvision kool-aid on precious metals (tasty kool-aid) and consider them to be a currency and hold them as "cash" (1% of my wealth, but growing). Based on the "crypto series," I see the crypto currencies as the same thing - with advantages and disadvantages. I don't consider either precious metals or cryptos to be an "investment" because there is no yield. I have an empty coinbase wallet, so the mechanics of acquisition are not a concern. What is your take on the "yield" problem?
    • JV
      Jerry V.
      8 December 2020 @ 16:33
      Steve, I too had a similar take. Yes I see a long term capital appreciation of the underlying asset but what I really want is yield. I found platforms that I lend my assets to and they pay me interest in the form of the underlying asset ( ROA). I have been drawing 80% of that ROA every month and couldn't be happier for the decision I made - Pura Vida
    • TM
      Tyler M.
      8 December 2020 @ 17:13
      There is definitely avenues for yield in crypto. Staking being the main one, where you provide network functionality by simply holding assets in a wallet. In return, you receive rewards, usually in the form of the asset you are staking.
    • JB
      Joe B.
      8 December 2020 @ 22:07
      Hi Steve, we have a video yesterday that talks about earning yield on crypto holdings: https://www.realvision.com/shows/the-interview-crypto/videos/celsius-network-regulations-yield-on-crypto-assets And one from last month: https://www.realvision.com/shows/the-interview-crypto/videos/blockfi-earning-with-your-crypto
  • TP
    Timothy P.
    8 December 2020 @ 18:55
    Mr Edelman "gets it", and it is refreshing to see. Boiling down the argument to its essence: "The obsoleted industry has no standing to make demands to what replaces it." I'm sure carriage makers would've loved to enforce restrictions on early cars to be more "horse friendly", or lamplighters be able to restrict the usage of electric bulbs -- but it doesn't work that way. The financial industry has two choices - adapt, or go out of business.
    • TS
      Thomas S.
      8 December 2020 @ 20:55
      maybe bitcoin doesn't need the financial industry, it's more that the financial industry needs bitcoin. did satoshi envision a GBTC product ? did he/she/they envision large institutional investors and high net worth individuals being able to short GBTC and then do an end around and buy-in at NAV, something not really available to the common man ? wasn't bitcoin created for the little guy ?
  • NM
    Nicholas M.
    8 December 2020 @ 18:59
    Anyone familiar with a modeling tool that looks at historical price action at the time of new ETF launches? They mentioned inflows to gold following the gold etf launch....wondering what a tool like that could say about a BTC etf launch?
  • CF
    Christopher F.
    8 December 2020 @ 14:28
    This needs to be on YouTube for other RIAs to see
    • JV
      Jerry V.
      8 December 2020 @ 16:28
      RV Crypto is a free platform - so lets tell our RIA's to sign up and learn. BTW that is what I have done and both have told me that they appreciated the referral
  • YB
    Yannick B.
    8 December 2020 @ 14:17
    Know that is right on the spot !!!! Seems very logical that mutual fund don’t want people to get them self custody of their own assets because what is the point of them after that ! Great interview! Thx Raoul for getting with us in this extraordinary world that is crypto 🙏
  • TT
    Tokyo T.
    8 December 2020 @ 12:11
    This is a joke. You don't need financial advisors or rent collectors to invest in Bitcoin. The next generation isn't going to pay a monkey to manage their money. The whole point behind Bitcoin is avoiding advisors and unnecessary coin clippers. Bitcoin doesn't need money from rent collecting financial advisors. Raoul is right about BTC's price going up, but he doesn't get the technology's nuance and disruption of the old guard, including dinosaur financial planners.
    • JT
      Jefferson T.
      8 December 2020 @ 13:11
      While I agree with you on principal; I think there's a ton of people who would find wallets and exchanges and storing your own keys intimidating. It's getting better (man, when I got into crypto, there wasn't even very many YouTube videos on how to buy and store crypto - I had to learn and take some chances and comb the web. Certainly it has and is - getting better). The kind of people who go to financial planners and read the WSJ are more likely to want to keep doing that. Over time, banks and institutions are going to make it easier - look at PayPal. Now I'm not the kind of guy who would use these (not your keys, not your crypto), but I think you are overestimating the normies. Especially the older normies. Also, the way institutions are buying all the BTC produced, it's a matter of time before they hoard most of the BTC. In the future, I would not be surprised if it's near impossible to find BTC that you can hold the keys for (i.e. only captive BTC will be available. They won't let you withdraw it, only buy/sell on their platform and take profits/withdrawals in dollars). This is another reason to get your BTC in your own hands while you can. As people take profit on their BTC, I think that BTC will get bought by big players and not see the light of day ever again.
  • JT
    Jefferson T.
    8 December 2020 @ 13:03
    It looks like there's a Binance logo on the far left about the height of Ric's head LOL. Coincidence I'm sure. But fun.
  • JT
    Jefferson T.
    8 December 2020 @ 11:49
    Ric Edelman. Wow. I remember reading his book 'The Truth About Money' in 2001. I still use the term 'Don't be SNIOPed' (Susceptible to the Negative Influence of Other People).
  • DW
    Daniel W.
    8 December 2020 @ 11:31
    Great!