Bryn Mawr’s Jamie Hopkins Weighs in on Crypto and Retirement Plan Regulations

Do you even crypto, bro? That may soon be a question facing investors using 401(k) accounts to save for retirement. 

Last month, the Department of Labor proposed regulations that provide broad legal protections for the selection of investment options within tax-qualified retirement plans, so long as the plan’s fiduciaries follow a prudent and well-documented process detailed in the proposal. While they apply to the selection of any investment option, much of the early response to the regulations has focused on their potential to facilitate access to cryptocurrencies and private assets. To Jamie Hopkins, CEO of Bryn Mawr Trust Advisors and chief wealth officer at Bryn Mawr Trust, that’s both an exciting and concerning proposition. 

The DOL’s move signals growing mainstream acceptance of digital assets, he said. It also raises new questions for retirement and estate planning, as many investors are unprepared for the unique planning challenges these asset classes introduce. Ultimately, Hopkins predicted, financial advisors will need to play a central role in helping plan fiduciaries and participants deploy novel investment options. He recently sat down with Advisor Upside to talk through these dynamics. 

As a general matter, what is your broad view on the role of cryptocurrency investments? How do you see their upsides and potential downsides? How are they similar or different to other asset classes you might assess for clients?

Cryptocurrency has a place in a diversified portfolio, but for most investors it should be viewed as a supplemental allocation rather than a core holding. Its correlation to traditional asset classes has shifted over time, which means the diversification benefits that once made a strong case for inclusion are less reliable than they once appeared. It should be in the 1% to 2% realm as an investment allocation as long-term returns remain very speculative today. You need to be comfortable with loss if you look at crypto.

The risks associated with digital assets should not be ignored. Volatility can be severe, regulations continue to evolve, and custody, taxes and security are more complicated than many investors expect. Unlike stocks, many cryptocurrencies do not generate earnings or dividends. Unlike bonds, they do not provide steady income. What they do offer is exposure to a new technological infrastructure, which may prove to be long-standing. 

The real question is whether investing in cryptocurrency fits within an investor’s goals, timeline and tolerance for risk. A disciplined allocation can be part of a broader strategy, but a reactive one can create problems.

Can you speak specifically about the custodial complexity of digital assets? It’s an issue both inside and outside 401(k) plans, right?

Custody is one of the most important, and least understood, aspects of digital asset investing. Buying an asset is one step. Safely storing it, maintaining access to it and ensuring it can be transferred when needed are equally important.

With traditional investments, custody is largely handled behind the scenes through established financial institutions. Digital assets shift much of that responsibility onto the investor or the plan. Private keys, wallet security, exchange counterparty risk and cybersecurity all become potential concerns. If credentials are lost or an exchange fails, recovery may be limited or impossible.

That issue exists both inside and outside retirement plans. Outside a 401(k), responsibility often rests with the investor. Inside a plan, sponsors and fiduciaries must evaluate security controls, recordkeeping, participant education and operational safeguards. 

You should look at both online custody offerings, but consider and look up cold-storage, which is where you custody your digital currency key on a hard drive-style storage device.

What did you make of the DOL’s recent rulemaking that is, in part, about opening access to private assets, crypto and more?

The broader takeaway is that retirement investing continues to evolve, and investors are asking for access to a wider range of opportunities. Policymakers appear to be responding to that demand by creating more flexibility around what plans may consider. But access should not be confused with endorsement. Retirement plans exist to help participants build long-term security, so any new investment option should be measured against that purpose. When more complex assets are introduced, fiduciary oversight becomes even more important.

The real test is whether these options improve outcomes in practice. That means evaluating fees, liquidity, valuation, transparency and participant understanding. Innovation has value, but retirement plans should remain focused on readiness.

How can clients properly incorporate digital assets into estate plans to ensure access, transferability and security? Do you see any common mistakes?

Digital assets should be treated like any meaningful part of a client’s balance sheet and intentionally included in an estate plan. Too often, investors focus on growth and accumulation and overlook the necessary planning for end-of-life or a potential health event.  

A strong plan includes documentation: what assets exist, where they are held, how they are accessed and who has legal authority to act on them. Wills, trusts, powers of attorney and beneficiary strategies may all need to be revisited with digital holdings in mind. Some assets may also require specific technical instructions that traditional estate planning documents were never designed to capture.

The most common mistakes are straightforward, but costly. Family members often do not know the assets exist. Even when they do, there is frequently no secure, accessible process for transferring credentials or wallet access. In a number of cases, wealth is not lost through market performance, but because no one could access it.

Finally, how should advisors go about educating their clients about this emerging asset class? Do they need to know all the technical complexities, or is it better to focus on the risks and upsides?

Advisors do not need to become blockchain engineers to help clients make sound decisions. They do need enough working knowledge to explain how digital assets function at a practical level, where the meaningful risks lie, and how those risks interact with a client’s broader financial picture.

For most clients, the conversation should center on fundamentals: volatility, portfolio sizing, custody, tax treatment, fraud exposure and how crypto may or may not fit into a broader financial plan. Clients benefit more from clarity than from technical jargon. An advisor’s role is to help clients distinguish between signal and noise, leading to considered allocation rather than decision making driven by headlines.