The crypto winter continues; AI; Facet; and interactive brokers

Bitcoin has surged in 2023 and financial advisors continue to jump on the bandwagon, but that doesn’t mean all is well in the world of digital currencies.

Sorry, I meant digital securities. No? What about digital uncorrelated assets? Except that cryptocurrency coincided with the stock and bond markets. Hmm, what about digital gold as a hedge against inflation? Damn, that doesn’t work either.

Regardless, the digital place to deposit real money continues to struggle even as the largest digital asset, bitcoin, shows some price stability. Crackdown on the industry goes far beyond FTX founder Sam Bankman-Fried, with the Securities and Exchange Commission turning its sights this week on Do Kwan, founder of the company behind the Terra “stablecoin” that proved unstable. Crypto giant Binance could be next and is considering pulling out of its US operations.

Crypto investors whose accounts have been frozen are now facing tax bills, and former NBA star Paul Pierce agreed to pay $1.4 million to settle charges related to the alleged token without disclosing that he was paid for it.

Speaking of sports, notice how there were no crypto ads during the Super Bowl this year? Just one year after celebrity endorsements filled the broadcast, crypto ads were completely absent from the 2023 game (although there were plenty of ads for gambling).

The total number of cryptocurrencies has fallen to 8,685 – 1,700 fewer than in early 2022, when nearly 1,000 new products were launched each month, according to Statista.

Punxsutawney Phil saw his shadow this year and predicted six more weeks of winter. But for the digital resource world, the crypto winter could be much longer.

AMERICANS ARE READY FOR AI INVESTMENT

A recent study by Magnifi, a digital marketplace for investments from fintech provider Tifin, found that 41% of people in the US would embrace investment guidance from an artificial intelligence. A third of respondents said they are most looking forward to using AI to analyze historical data and trends, while a quarter want it to perform faster investment research and 17% want it to help monitor the economy to ensure they stay on track towards their goals. Only 16% reported feeling negatively about AI.

As I wrote in a recent column, the idea that “people always want a human advisor” cannot last forever. People are not only increasingly seeing the value automation can bring to their financial lives, they are also increasingly comfortable with it. Yes, financial advisors will continue to have jobs for the foreseeable future, but those who do not evolve their attitudes with consumers will find themselves back.

FACET DROPS’ WEALTH‘

Facet Wealth is dropping the “wealth” from its name as part of a brand overhaul that includes a complete redesign of its user experience. The company requires an annual membership fee to access a certified financial planner, and the rebranding to just “Facet” aims to better represent that the company provides financial planning to more than just the wealthy.

The company has raised significant funding and now serves 18,000 customers. However, this rebrand is another significant shift for the company in just a few years. In 2018, Facet’s strategy was to buy small, unprofitable accounts from traditional RIAs. The company later focused on partnering with employers to provide financial planning as a benefit. For a few years, the emphasis has been on how the business model serves the public better than traditional AUM fees, and the newly shortened name seems to drive that home.

INTERACTIVE BROKER EXPANDS TO TAIWAN

Digital brokerage Interactive Brokers was named the primary international broker for Sinopac Securities, a Taiwanese investment banking firm. Through Interactive Brokers, Sinopac’s institutional and retail clients can trade US stocks, ETFs and fixed income securities, and Interactive Brokers clients elsewhere in the world can access the Taiwanese stock market.

We don’t often cover international markets, but the development fits with something Interactive Brokers recently told me while researching my upcoming cover story on the Schwab-TD merger. Part of IB’s pitch to advisers as an alternative custodian is access to investment products they cannot get elsewhere, for example international securities. This collaboration with Sinopac shows that.