Not all financial advisors understand Bitcoin, and fewer still have the expertise to integrate it properly into a comprehensive wealth strategy. The right questions can reveal whether an advisor has genuine Bitcoin knowledge or is simply riding the cryptocurrency trend.
Questions About Credentials and Expertise
"Are you a fiduciary, and are you fee-only?"
Why this matters: Fiduciary advisors are legally obligated to act in your best interest. Fee-only means they're compensated by you, not by commissions on products they sell.
What to look for:
- Clear "yes" to both fiduciary and fee-only status
- CFP® (Certified Financial Planner) designation strongly preferred
- RIA (Registered Investment Advisor) registration
- Willingness to provide Form ADV Part 2 (disclosure document)
Red flags: "I'm a fiduciary most of the time" or "I'm fee-based" (not fee-only) suggests conflicts of interest.
"What percentage of your clients hold Bitcoin?"
Why this matters: Reveals whether Bitcoin is core to their practice or a novelty they're exploring.
What to look for:
- At least 20-30% of clients hold Bitcoin (shows genuine expertise)
- Growing percentage over time (shows commitment to learning)
- Ability to discuss client case studies (anonymously) and outcomes
Red flags: "You'd be my first" or "I've been researching it" suggests you'll be their guinea pig.
"Do you personally hold Bitcoin?"
Why this matters: Skin in the game indicates conviction and firsthand experience with volatility.
What to look for:
- Yes, with specific allocation percentage
- Held through at least one bear market
- Personal experience with self-custody or various custodians
Red flags: "No, but I recommend it to clients" raises questions about conviction.
Questions About Bitcoin Philosophy and Approach
"Why do you think Bitcoin has value?"
Why this matters: Their answer reveals depth of understanding and whether they grasp Bitcoin's fundamentals.
What to look for:
- Discussion of fixed supply (21 million cap) and scarcity
- Understanding of decentralization and censorship resistance
- Recognition of network effects and Lindy effect
- Comparison to gold or other stores of value
- Acknowledgment of volatility and risks alongside benefits
Red flags: "It's a good trading opportunity" or focus solely on price appreciation without fundamentals.
"What's your view on Bitcoin versus other cryptocurrencies?"
Why this matters: Tests whether they understand Bitcoin's unique properties versus speculative altcoins.
What to look for:
- Clear differentiation between Bitcoin and "crypto"
- Focus on Bitcoin's security, decentralization, and network effect
- Skepticism toward most altcoins and their value propositions
- Understanding of why Bitcoin is the only truly decentralized cryptocurrency
Red flags: "I like Ethereum just as much" or recommending a diversified crypto portfolio suggests lack of Bitcoin-specific knowledge.
"What Bitcoin allocation would you recommend for someone in my situation?"
Why this matters: Tests whether they think systematically about allocation based on individual circumstances.
What to look for:
- Questions about your time horizon, risk tolerance, and financial goals
- Discussion of allocation ranges (1-3% conservative, 5-10% moderate, etc.)
- Consideration of your age, liquidity needs, and other assets
- Thoughtful approach rather than one-size-fits-all percentage
Red flags: Immediate percentage without asking about your situation, or "as much as possible" without risk discussion.
Questions About Custody and Implementation
"What custody solution do you recommend for Bitcoin?"
Why this matters: Custody is critical for Bitcoin security, and the answer reveals their sophistication.
What to look for:
- Thoughtful discussion of self-custody vs. custodial solutions
- Awareness of different custody providers and their trade-offs
- Understanding of hardware wallets, multi-sig, and security models
- Recommendation tailored to your technical comfort and holdings size
- Discussion of insurance, regulation, and counterparty risk
Red flags: "Just keep it on Coinbase" without discussing alternatives or risks.
"How do you recommend implementing Bitcoin exposure—ETF, direct ownership, or something else?"
Why this matters: Different vehicles have different tax, custody, and liquidity implications.
What to look for:
- Discussion of spot Bitcoin ETFs for simplicity and traditional account integration
- Understanding of when direct Bitcoin ownership makes sense
- Awareness of tax implications for different account types (IRA vs. taxable)
- Explanation of expense ratios, tracking error, and liquidity
Red flags: Recommending Bitcoin futures ETFs (higher costs, tracking error) or not knowing spot ETFs exist.
"How would you handle Bitcoin in my estate plan?"
Why this matters: Bitcoin's unique properties require specific estate planning that many advisors overlook.
What to look for:
- Understanding of step-up in basis benefits
- Discussion of how heirs will access Bitcoin
- Awareness of custody-specific inheritance procedures
- Collaboration with estate planning attorneys
- Documentation and letter of instruction protocols
Red flags: "We'll treat it like any other asset" ignores Bitcoin's unique access requirements.
Questions About Tax Strategy
"How do you approach tax-loss harvesting with Bitcoin?"
Why this matters: Bitcoin offers unique tax-loss harvesting opportunities due to volatility and (currently) no wash sale rule.
What to look for:
- Awareness that wash sale rule doesn't currently apply to Bitcoin
- Proactive approach to harvesting losses during downturns
- Understanding of when to harvest losses vs. when to wait
- Coordination with overall tax planning
"Which account types do you recommend for Bitcoin—taxable, IRA, Roth?"
Why this matters: Account location dramatically affects after-tax returns for high-appreciation assets like Bitcoin.
What to look for:
- Strong preference for Roth IRA for Bitcoin (tax-free appreciation)
- Understanding of trade-offs between account types
- Discussion of self-directed IRAs for direct ownership
- Coordination with overall asset location strategy
Questions About Rebalancing and Portfolio Management
"How do you handle rebalancing when Bitcoin becomes a much larger portion of the portfolio?"
Why this matters: Bitcoin's volatility creates rebalancing challenges and tax implications.
What to look for:
- Specific rebalancing thresholds (e.g., rebalance if allocation drifts 30% from target)
- Tax-aware rebalancing strategies
- Discussion of when to let winners run vs. trim
- Consideration of long-term vs. short-term capital gains
"What would cause you to recommend I sell my Bitcoin?"
Why this matters: Reveals whether they have a thoughtful framework or will panic-sell during volatility.
What to look for:
- Focus on personal financial needs, not market timing
- Discussion of rebalancing discipline rather than market calls
- Recognition that Bitcoin is long-term hold, not trading vehicle
- Emphasis on systematic approach rather than emotional reactions
Red flags: "If it drops below X price" or "If the trend changes" suggests trading mentality, not long-term investment approach.
Questions About Fees and Compensation
"What is your fee structure, and how does it apply to Bitcoin holdings?"
Why this matters: Fee transparency is essential, and you should understand exactly what you're paying.
What to look for:
- Clear, transparent fee schedule (typically 0.5% - 1.5% AUM annually)
- Same fee applies to Bitcoin as other managed assets
- Disclosure of all fees (advisor fee, custodian fee, ETF expense ratio)
- Willingness to provide fee calculation examples
Red flags: Vague fee descriptions, unwillingness to disclose fees, or higher fees for Bitcoin holdings.
"Do you receive any compensation from Bitcoin custodians or ETF providers?"
Why this matters: Conflicts of interest could influence recommendations.
What to look for:
- Clear "no" for fee-only advisors
- Transparency about any referral relationships
- Willingness to recommend solutions regardless of compensation
Questions About Communication and Service
"How will you communicate with me during Bitcoin volatility?"
Why this matters: Bitcoin can drop 50%+ during bear markets; you need an advisor who'll keep you on track.
What to look for:
- Proactive communication during major market moves
- Educational approach to explain volatility context
- Focus on long-term plan rather than short-term noise
- Examples of how they helped clients through previous bear markets
"Can you provide references from clients who hold Bitcoin?"
Why this matters: Speaking with existing Bitcoin clients provides valuable perspective.
What to look for:
- Willingness to provide 2-3 client references (with their permission)
- Clients with similar situations or Bitcoin allocations
- Long-term clients who've been through Bitcoin volatility
Remember: The right advisor will welcome these questions and provide thoughtful, detailed answers. If an advisor seems defensive or unable to answer Bitcoin-specific questions, that's a clear signal to keep looking.
Due Diligence Checklist
Before hiring a Bitcoin advisor, verify:
- ☐ CFP® certification or equivalent credentials
- ☐ Fiduciary status (RIA registration)
- ☐ Fee-only compensation structure
- ☐ Personal Bitcoin holdings and experience
- ☐ Significant percentage of clients hold Bitcoin
- ☐ Deep understanding of Bitcoin fundamentals (not just "crypto")
- ☐ Thoughtful custody recommendations
- ☐ Tax-loss harvesting and account location strategies
- ☐ Estate planning integration for Bitcoin
- ☐ Clear, transparent fee structure
- ☐ Positive references from Bitcoin clients
- ☐ Proactive communication approach during volatility