Money Rehab with Nicole Lapin - Could Your Retirement Plan Be Secretly Invested in Crypto? Here's How To Check

Episode Date: September 4, 2024

You could be invested in crypto, and not even know it. Nicole explains how this could happen, and what to do if you're secretly invested in this volatile asset.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a it's time for some money rehab. You guys, I have been so happy not talking about crypto for a few months now. Even with all the market craziness, if there's no crypto craziness, I'm a pretty happy camper. But there is new news in the crypto world making the rounds, and as it will come as a surprise to no one, I am not a big fan. The news is that some pension plans are starting to consider dipping their toes into the world

of crypto. Yep, the very thing that keeps your retirement nest egg safe and secure might be getting hosy with one of the most volatile, unpredictable assets out there, cryptocurrency. Here's what's going on. Manuel Nordist from Fidelity Digital Assets said at an event in London that he's seeing bigger, more traditional players like pension funds starting to have conversations about investing in crypto. So to be clear, this story does not end with me telling you that every major pension fund has moved everyone's life savings into crypto and now all the grandmas and grandpas out there are living out their twilight years on Dogecoin. It is not that dark. These conversations are just beginning. But let

me tell you, it is a slippery slope. And yes, this is a guy on the digital assets team, so he is living in a crypto world. But still, the fact that this came from Fidelity, which is one of the top five biggest brokerages in the U.S. and one of the largest keepers of 401k plans, signals to me the spark of a potential new dangerous chapter. And it's not just this one guy at Fidelity. BlackRock, another huge financial institution, has said that the company expects to see pension funds trading the Bitcoin spot market through ETPs, which stands for exchange-traded products like ETFs, which are exchange-traded funds that we know and love. Bitcoin spot ETPs are investments that mirror the price of Bitcoin and actually hold Bitcoin. that mirror the price of Bitcoin and actually hold Bitcoin. Bitcoin spot market ETPs were approved by the SEC in January of this year.

Despite my protests, I guess the SEC is not necessarily listening to money rehab. What a shame. And while there's been speculation that Bitcoin ETPs will make crypto investing safer, let's not kid ourselves. Even with these so-called safe options, the underlying asset is still highly, highly speculative. Pension plans are not supposed to be high-risk, high-reward playgrounds. They are meant to be the most secure, steady part of your financial future. After all, we are talking about money that you'll rely on in your golden years here. And if you're like me, just the thought of tying that to something as volatile as crypto

is enough to make you break out into a cold sweat. The idea of crypto in pension plans seems like mixing oil and water. Pensions are designed to be conservative. They are supposed to grow steadily over time without putting your future at risk. But crypto? It is like the wild west of investing. One minute you're up, the next minute you're down. Sometimes you're way down. Another thing to consider is that the infrastructure for crypto is still in its early days. Traditional assets come with a network of trusted intermediaries like custodian banks that help manage risk. But in the crypto world that kind

of safety net is just starting to develop which means the risk is higher and less predictable do you really want your retirement fund to be the guinea pig in this scenario i don't so what do you do if you're as concerned about this as i am well first things first it's crucial to understand exactly what's in your pension plan if you have one a lot of people don't realize that they do have the right to ask their employers for a detailed breakdown of where their pension is invested but you absolutely do and it's actually pretty easy first contact your hr department or your pension plan administrator and ask for a detailed statement of your pension investments this will show you exactly where your money is going. Then, once you have the statement, take a closer look at your investment options. Are there any funds that

sound unfamiliar? Are you seeing terms like digital assets that raise a red flag? If you're not comfortable with what you see, do not stay silent. You can and should give feedback to your employer. Ask for a meeting with the HR department to talk about your concerns. It's your money. You can and should give feedback to your employer. Ask for a meeting with the HR department to talk about your concerns. It's your money. You have every right to have a say in how it's invested. If your pension plan does start investing in crypto and you are not on board, look into whether your plan offers alternative investment options. Some plans allow you to choose different funds or even opt out of certain investment categories altogether at the very least most pensions and employer-sponsored retirement plans allow you to

set your risk tolerance so you might want to consider asking if there's a certain risk tolerance level that you can select that would prevent your pension from being invested in crypto if that's the only way to do it, I probably would do it. And then complain. I know no one wants to be a Karen, but if the only way to protect yourself from having crypto in your pension fund is to become a more moderate investor, then you're potentially missing out on higher risk, higher reward stocks that are, yes, risky, but not as risky as crypto. At the end of the day, the idea of crypto in pension plans makes me very nervous, and it should make you think twice, too. Your pension

is supposed to be a rock-solid foundation for your retirement, not a speculative bet. So please stay informed, keep an eye on what's happening with your money, and don't be afraid to speak up if something is just not sitting right with you. For today's tip, you can take straight to the bank. While you're doing an audit of your retirement plan, see how you're invested in your own company. Meaning if you're employed at a public company, your retirement account probably owns some of your own company's stock. But you want to make sure you're diversified there.

You also may want to see if there are any stocks that you're invested in that you're ethically or politically not aligned with. If you see any investments that you would avoid as an individual investor, you have every right to speak up being part of a company plan. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok

at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.