Brian Ginsler Interview with Digital Assets Council of Financial Professionals

Hi, I am Don Friedman, president of the Digital Assets Council of Financial Professionals. Welcome to another edition of DAC FP tv. This episode we have Brian Gensler, founder of Gensler Wealth, a Canadian independent wealth management firm. Brian, welcome to the show.

Thank you very much.

So we'll jump right into this. The first question we have is what percentage of your client assets are you allocating to digital assets and why?

Thanks, Don. I'm really pleased to be speaking with you today. First of all, I'd say like anything you do with clients, it's definitely dependent on the individual client, their assets, their comfort level, goals, objectives, et cetera. And obviously as advisors, we spend a lot of time getting to know our clients. That's number one. Number two, when then determining what an allocation might be, really the first thing I do, and I generally have full discretion over client investments and making investment decisions. But in this space, I feel it's very important to have a discussion with clients ahead of time, make sure to understand their comfort level with this asset class, whether they understand it or not. You just need to get a sense from clients and ensure they understand that you will or might allocate to this asset class, just given that it's a little bit different, a little bit more volatile, perhaps a little bit more risky than other asset classes. And then once we've agreed that this is something that we're going to do, and of course I give clients lots of detail on what it is and why I think this makes sense, we're really talking very, very low single digit allocations at this point. No matter how wonderful one might think this space might be or is it is volatile, there is a risk of downside and, you know, you don't want to. It's a little bit early days still to make it too big, too large of an allocation. That being said, you know why I recommend this to clients where appropriate, why I like this asset class? I mean, I think we're looking at the next sort of realm of a digital revolution that you know that the world's evolving into. Here you have Bitcoin that may become, you know, the next sort of digital gold or the store of value. You have Ethereum, which may be sort of the future of the Web, Web 3.0 Smart contracts and just all the related blockchain technology that will utilize these types of assets in sort of their process. So I don't think you want to miss this. And I think that with a very low single digit allocation, you get these sort of asymmetrical potential upside that could be very, very large here, coupled with a sort of downside that I think using the word asymmetrical. Asymmetrical is sort of relatively smaller than the potential upside here. So, you know, you can get a pretty big impact on a portfolio, but do it in a very measured, small way so that if something does go wrong and you know, no one has a crystal ball, it's not really a dramatic at all impact on the client's overall assets.

That makes sense. Sounds like very prudent advice. Our next question is, in this rapidly changing digital asset space, how should an investor or advisor execute on that allocation?

Yeah, so you know, at Gensler wealth, we have a sort of a standard process or standard sort of way of thinking about asset allocation. And we put digital assets in the same sort of overall process as any other asset class. So first of all, as I said, once we decide we want to allocate to it, it's sort of, that's the high level asset allocation. And then we look at sort of one layer deep, almost like a sub asset allocation. So you got the main asset class. How can we slice different slices of that pie to create some diversification within that asset class? And then the next layer down is what are the actual investments that are going to do that. So one way we do is direct allocation. And so again, trying to determine exactly what is the right sort of assets to allocate to. In Canada, we're lucky. We have a spot Bitcoin and we have many actually spot Bitcoin and Ethereum ETFs. Right now that's the simplest and easiest way to get direct exposure to the underlying digital assets. And so we will do that for some clients. Number two is, you know, we generally, this is a very, as you mentioned, a very rapidly changing space. We spend a lot of our brain power on this space. But the reality is it still makes up, as we've discussed, only a few percentage points of a client's overall assets. So we do have another job which is looking after the other 97, 98%. And that involves meeting with managers in those areas and looking at other strategies. And so we take the same approach here. Let's go find experts in this space that have strategies, have potentially investable funds that we can allocate our clients to where we're getting to sort of use their brain power and they're sort of being finger on the pulse of what's happening to hopefully get the best results for clients. So we've spent a lot of time due diligencing managers all over the world and have identified a few funds, a few managers and strategies that we think are really knowledgeable, really smart in this area. And we will begin to allocate to them imminently, frankly. And the final thing that we're actually working on very, very hard is to figure out a way that we can help our clients get direct digital asset ownership, not exposure through ETFs, but ownership. And that is a project that we're continuing to work on. It's not very simple to do. And we think ultimately the best approach to owning digital assets, if you are going to own some of the currency, some of the assets directly, is to hold them directly. And so that's in the works, I would say, and we're hoping that we'll have a solution for that over the next couple months. So we just try to tackle it from a couple different areas. And by doing so, we think you get a little bit of diversification within the asset class. You rely on other people's really smart brains and. And again, mitigate risk in this rapidly changing space.

Great. Thanks for your insight, Brian, and thanks for being a guest on dac FP tv.

My pleasure. Thanks for having me.