9/22/23: Delaying Dementia

These easy fixes can help you delay the onset of dementia

Ric Edelman: It's Friday, September 22nd. I want to start today off with something that affects all of us Alzheimer's disease. This entire month is World Alzheimer's Month. For several years now, Alzheimer's has ranked as the one thing you are most afraid of and for good reason. 6 million Americans have Alzheimer's disease. And that means, I bet you know somebody who has it or who has already died from it. It's not only a horrible condition, it's the most expensive disease to treat because patients typically need 24/7 care. They last, on average, 12 years from onset of symptoms to death. There's not much covered by insurance or Medicare because the care is just for the ADLs, the activities of daily living, and those are not covered by insurance or Medicare.

That's why most care is provided by a spouse or children. They spend their own money. They give up their own careers. That's why the cost is so devastating. And the statistics are staggering. By age 60, one, in ten Americans will have Alzheimer's. By age 80, it's 1 in 3. By age 90, it's 1 in 2.

So what can we do to avoid or at least delay the onset of Alzheimer's disease or dementia? New research says you ought to learn a new language. Software that helps you learn has now been shown to strengthen cognition and combat loneliness in older adults. And you don't have to achieve fluency to see benefits no matter how old you are. When you start, you still benefit, so your excuses are gone. Go ahead and learn a new language.

Another thing you can do to reduce your risk of getting dementia. Don't take heartburn medicine. Prilosec, Nexium, Prevacid. No, no and no. A new study says that people who took these drugs for four years were 33% more likely to develop dementia. Well, how do you avoid the need for heartburn medicine? Well, duh. Stop eating the foods that cause heartburn. When you have heartburn, your body's telling you that you ate something or lots of somethings that are bad for your body. Stop it. You'll probably not only lose weight; you'll feel better without the meds and you reduce the risk of Alzheimer's. You should also stop eating within three hours of going to bed. And while you're sleeping, elevate your head.

And if you want to know if you might be developing symptoms of Alzheimer's, sniff. Loss of smell could be a warning sign of future Alzheimer's disease. If you carry the ApoE4 gene, you have a higher risk of both Alzheimer's and of losing the ability to detect odors. Loss of sense of smell is generally noticed between ages 65 and 69. 

So we're all hoping for a cure soon. But in the meantime, there are steps we can take to reduce our likelihood of  Alzheimer's.

-----

The Quest for Clean Water

Look at the heat we had this summer and the wildfires. I think we're thinking about water more than ever. And it's crazy because 70% of the Earth's surface is water. But almost all of that 96% is saltwater. We can't drink saltwater. Only 4% of the earth's water is clean and drinkable, but 85% of that is locked in polar ice caps and glaciers and buried in the soil. Well. It's just crazy situation. Only one half of 1% of the Earth's water is drinkable. Are we all going to die of thirst? I don't know about you, but this is making me want to have a drink.

Well, maybe there's a better idea than drinking over this. Our water shortage has created a whole new clean water industry. And there are three major trends that this new industry is paying attention to. First is extreme weather. Climate change is affecting agriculture. It's causing sea levels to rise. It's triggering wildfires. It's causing droughts and floods. Half of the world's population lives within 125 miles of a coastline. By 2050, sea levels and storm surges could be existential threats for 4 billion people. That's motivation to fix this. 

Second, we've got a lot of hungry people in the world. We know that there's poverty worldwide. That means we need to produce more food. And to do that, we need more water. That's a big challenge for water resources and ecosystems. We need sustainable and efficient irrigation techniques like erosion prevention, flood warning systems, precision farming. And finally, we need to figure out how to reuse wastewater. Sludge isn't all bad. It's got lots of nitrogen and phosphorus and other nutrients. By reusing water, we don't have to try to find or create more of it. There's a lot of exponential technologies being applied in the clean water industry. Carbon nanotubes are being used to filter out impurities from water. Bacteria that eat toxins are being developed. Ceramic purification discs can be placed into water. They kill almost 100% of pathogens. Other devices use ultraviolet light to purify water.

You can't smell water, but I can smell an investment opportunity. That's why I own the Invesco Water Resources ETF. The symbol is PHO. It's based on the Nasdaq OMX US Water Index. Advisors, talk to your wholesaler at Invesco or check them out at invesco.com. The link is in the show notes. If you're an investor, ask your financial advisor about the Invesco Water Resources ETF, symbol PHO.

 -----

Exclusive Interview: My conversation about crypto custody with Fidelity’s Chris Baker and L1 Advisors’ Miguel Kudry

Ric Edelman: Back in June, I hosted the fifth Annual VISION Conference in Austin. It was presented by my company, the Digital Assets Council of Financial Professionals. DACFP VISION is the longest running Digital Assets Investment conference that is specifically for financial advisors and accredited investors. This year's conference was our biggest ever. It was attended by advisors and investment professionals from all over the country, and VISION 24 is in the planning stages. I'll keep you posted here so you can block your calendar. One of our sessions featured Chris Baker, director of Fidelity Digital Assets, and Miguel Kudry, who's CEO of L1 Advisors. The topic is the custody of digital assets.

I want to share our entire conversation with you. Here it is unabridged and uncensored. Aside from regulation, the other huge conversation is custody. You bought it. Now where do you store it? And so to share with you a really innovative couple of approaches, a brand new startup and the most storied, well known asset manager in the US. So Chris Baker, director of Fidelity Digital Assets, and Miguel Kudry, who's CEO of L1 Advisors. Gentlemen, good to have you both here on stage.

Let me start with you, Chris. You know, as I just said, custody is the hot issue. Advisers are scared to death, especially, you know, who would have thought? And now we've got Binance. The SEC is really taking a critical look at all of this. So it's one thing to decide you want to buy bitcoin. Where do you put it? Where do you store it? So talk about what Fidelity is doing. 

Chris Baker: Yeah. So as you've heard, I work for Fidelity Investments. So Fidelity Digital Assets we are about a 500 person team now. And so we built out an entire custody infrastructure. And so to Ric's point, a lot of people are trying to take the first step. And I'd say, one, understand what Bitcoin and digital assets are. But then the second part is what do you do with it once you decide you actually want to purchase and store it? And so that's a need that we saw pretty apparent back in 2017. And so we basically launched this business where Fidelity is going to be offering and what we've done for the last five years is effectively offer cold storage offline vaulted custody of Bitcoin and Ethereum for wealth managers, for hedge funds, family offices, kind of the full gamut of institutions. And so that's the business that I represent. It's a, I'd say, critical need. It's become even more a part of the spotlight recently, and we've seen obviously a lot of interest in counterparty review over the last six months to 12 months. 

Ric Edelman: So a lot of initially Fidelity digital assets totally under the radar. Nobody knew what was going on in Fidelity there. And initially it was bitcoin only and it was for institutional clients. You were helping them buy it, trade it, and you were providing custody for it. You've now extended that to Ethereum and you've extended it more broadly to retail accounts. So anybody can open a Fidelity digital account and the minimum investment is $1. Talk about the democratization and the demonetization of this digital asset. I mean, you're really speaking to this. So what are you seeing in terms of level of interest? What's the attitude among both the institutions and retail investors? 

Chris Baker: Yeah, it's strong. And I would say it's continuing. And I'll say that in the way that many people in the room might say, I'm at varying stages of understanding. I have clients that are asking about it. I have maybe a personal interest. What we've seen is there's kind of this slow cascading of like institutions are coming. I won't sit here and say it's ever going to be a moment where everybody just jumps in, right? But I think what we've seen over five years is as teams and as clients get more educated and understand the space, they're looking for solutions. And so I think one of the anecdotes we continuously see in my day to day and talking to advisors, a lot of them in 2017 thought it was a fad or thought it was going to come and go. And then they see a bear market back into another bull market. They're getting more questions again and again from clients and it's what is the solution? Maybe I do need to have an answer to this. So I think we always start with education. That seems to precipitate a lot of the interest and kind of educational conversations with clients, because I look at a lot of people and I say, we're all human, right? You don't really want to go into a conversation with a client and say, Do you own digital assets? If you don't have an answer after that of an opinion or potentially an operational solution that might be out there for you? So to Ric's point, we actually did expand. 

It's been really exciting to watch. Fidelity Digital Assets is almost like the nucleus of, we'll call it digital asset services within Fidelity. We do have direct relationships out to clients, but more recently we've actually expanded to our 401(k) offering it to plan sponsors. And then late last year we offered it to retail. So now as an individual consumer, right Chris Baker can go to Fidelity.com and I can open up a retail account. The next phase of that this summer, which we're really excited about, is expanding it to those in this room, right? So those that work with Fidelity today as a wealth manager, we're offering Fidelity Crypto for wealth managers, which is essentially integrated and embedded for the ability to buy and hold bitcoin and Ethereum on behalf of clients within Wealthscape. So something that we've heard for a long time, integrating the traditional workflow to allow for spot exposure to bitcoin and Ethereum. And that's really the work that's being done in coming live this summer. 

Ric Edelman: And really thanks to Abby for taking this leadership position. She was engaging in crypto, including mining a decade ago when nobody in the financial services sector was paying really any attention to this asset class. And let's face it, if you're suggesting to your client that they ought to add this to their portfolio, that's a risky proposition for all the reasons everybody knows, including your client. But then being able to follow that up by saying and it's being custody, that Fidelity that carries not a little weight, that's a pretty significant thing. Why do you suppose, Chris, that Fidelity and Abby [Johnson] first and then through the downline leadership, why do you suppose Fidelity has done what really no other major financial services company has done?

Chris Baker: Yeah, I think you nailed it. We're coming up on ten years. I think that's not something to kind of be brushed off. It's something I'm very proud of. I've been at Fidelity my entire career. Half of it was in traditional, but the last five years have been in this group. But before that, which predated me, we were mining Bitcoin from 2014 to 2018 when we launched the business and we continue to mine. But to your question, we started with I'll call it a thought exercise. You know, we've seen some teams do that where they go and they say we need to learn about it. What do we need to know? How does this actually operate? Is there value there? And so to Abby's credit, she did the work kind of herself and then with her executive team.

And so we have a team within Fidelity called Fidelity Center for Applied Technology. Think of it as like an in-house incubator. They went and approached the team back in 2014 and said, this could be monumental and it could be disruptive or it could be an opportunity for us. And to Abby's credit, she said, let's take this as an opportunity where a private company, we can look at this, we can learn about it, understand it. 

And so we started with mining, then we did payments and our cafeteria, you could actually buy and you still can you can buy food with bitcoin. It wasn't super utilized, but we were kind of learning the different use cases. And along the way obviously we were accumulating bitcoin and so Fidelity had to say we need to custody this. So we started with self-custody and then it expanded to the 2017 bull market to say there is a client demand out there. Maybe it's mixed and matched across who's interested and who's trying to meet client needs. But there was an ask if I want to do this, how could I do it? And to this point, I think we've really just stayed the course. We've said we're going to build this really methodically and take it very slow, very conservative approach. I always say like we put Fidelity's name on it, Fidelity, Digital Assets. That's purposeful, right? We're in this space, We're here to stay, but we do have to build it with the pace that Fidelity feels most comfortable. 

Ric Edelman: Talk about it logistically, how does it really work? What's the client experience? 

Chris Baker: Yes, there's a few different client experiences, but if you were working directly with Fidelity, right, we have kind of a custody relationship with wealth managers and family offices today. That's really the ability for clients or families to open up accounts. That offering right now is relatively more focused towards, I'd say like higher net worth offering. And then the new Fidelity crypto for wealth managers will have no minimum, right? And so that's kind of opened up to individuals and joint accounts and that's the ability for clients to have a digital onboarding experience work with their wealth manager, which I think is really important. Ric was talking about it with Dave this morning, You know, allowing advisors to be a part of the picture. Both helps those in this room build your business, right? But also the clients, right? They're looking out into the marketplace and saying, I'm kind of doing this alone. I would love to bring this into the 98% of the rest of my portfolio and work with advisors.

So the experience should look and feel a lot like a Fidelity experience. It's just working with a new asset class and our attempt is really to make that workflow feel, I would say, as seamless and as natural as possible, almost extrapolating a lot of the blockchain and kind of crypto experience, if you will. There's a lot of cool things happening there and obviously Miguel will talk about that, but Fidelity's experience is really guiding towards that, I'd say seamless traditional experience there. 

Ric Edelman: And traditional exactly is the phrase, but this is not a traditional asset and there are so many different ways of pursuing it as we know. One of the interesting elements is that advisors find themselves very often in the situation where you aren't allowed to buy it on behalf of a client, even though it's through as storied an organization as Fidelity. But your clients own it. Well, you know nothing about their holdings. You therefore aren't able to provide your client with any advice or involvement of any kind. Is there a solution if you can't access the Fidelity route? That is what I think is so fascinating by what Miguel is doing with L1. So, Miguel, talk about what your firm is doing and how you're doing it, because this is from my exposure, unique. 

Miguel Kudry: Yeah. Thank you, Ric So we've been hearing most advisors are aware that their clients are investing in crypto on their own and they tend to do that with self-custody. I'm holding a ledger. This is a crypto wallet. I can carry my assets around wherever I go and through our product L1 Advisors. I can give my financial advisor read only access to my assets and within a minute or two my advisor can actually start to not only track these assets and bring the positions and the balances and everything that I'm doing on chain to their back office, but they can make transaction recommendations as well, all in a completely non-custodial and non-discretionary manner. So we kind of sit on the other side of the spectrum on the on the non-custodial side, which is where we're more and more people are going. Are we here? Not sure. Key is not your coins. We saw what happened with FTX. And so more and more people have taken to self-custody to hold their assets. And that's the gap we're addressing for the market. 

Ric Edelman: And how does it work? 

Miguel Kudry: So advisors create an account on one advisors and they simply invite their clients to join. They can send an invite via email or they can send them a link. And then as a client, I connect my wallet to L1 never comes into contact with user funds. We never have access to user funds and neither does the advisor. And as soon as the client connects, the advisor gets read only access to those assets They we kind of aggregate. Many people will have not just one wallet but a number of different wallets. So we aggregate all of those balances and positions on a single dashboard, show them to the client. So the client now has a portal to track their portfolio. And then we similarly give that dashboard access to the advisor. So that's kind of the first part of the product and what most advisors should be doing. If they have clients investing on their own, they should at least incorporate those assets and track those assets in real time because they're so volatile. It's not enough to just write down the balance at the beginning of the month or the year or whenever you have your client review meeting, you should be tracking them in real time and you should be plugging them into your into your client's financial picture. So that's the first thing.

And then when you're comfortable, you can start to make recommendations. And so that's when you get into recommendations for rebalancing, tax loss harvesting, getting into new positions or taking profits and a growing number of different use cases like staking, borrowing against your collateral. If your client needs liquidity and they hold a significant amount of digital assets, they don't need to necessarily liquidate them. They can just collateralize it and borrow against them. So there's a lot of different things that they can do through DeFi. Again, we're not building any of those products ourselves. We are an interface between advisors and DeFi. So through L1 you get access to DeFi and you get to stay connected to your clients’ self-custody digital assets. 

Ric Edelman: You've been doing this for how long? 

Miguel Kudry: So I've personally been invested in crypto since 2016, started my first company in crypto in 2017 and then I stayed in. I've been working in crypto ever since. I haven't looked back. I haven't met someone who goes down the rabbit hole of crypto and then gets out and just doesn't look back. I think there's just so much going on and everything needs to be built and start at the company because I became more and more invested. Most of my liquid net worth at least is on chain and in self-custody.

Ric Edelman: And you’re walking around with your liquid net worth?

Miguel Kudry: No, no, no. This is just a test wallet and I don't recommend it. But as a crypto native individual and I started a family in 2021, I wanted to get serious about my finances. I wanted to start financial planning around my finances. And no financial advisor could actually talk about my assets. They were like, Yeah, just liquidate those assets and let's open up a brokerage account. And for me, that was a nonstarter. And there are hundreds of thousands of people like me in the US who are very comfortable with crypto, who are self-custody and they're the new generation of clients for all of you here. 

Ric Edelman: So, it seems that it solves two problems. One, it solves the problem of the investor who wants to continue to self-custody and it also solves the problem of the advisor who doesn't want to custody or who can't. And yet who wants to be able to track and follow those assets the way that you do the rest of the portfolio and you're trying to create yourself as the bridge between those two. 

Miguel Kudry: Absolutely. There's I mean, we've seen the SEC proposed custody rule around crypto. You are considered as having custody. Even if you only have discretion. You may not actually hold your clients keys, but if you have discretion, you are considered a custodian. There's now a lot of overhead. Thankfully, we have Fidelity in the space. I think you're going to have a wide spectrum of custody options. I think qualified custody and self-custody will coexist. And it serves different types of clients, different types of use cases. But I do think that self-custody is just going to get easier and easier. So we're excited about the market and see it grow. 

Ric Edelman: I think you're absolutely right about that point that there. Are the need for both of these approaches. I think of Choice Kingdom Trust, which is one of your large institutional clients. Kingdom Trust and Choice is a qualified IRA custodian that manages, last I looked, around $2.122 billion in assets, most of it crypto. They also custody cows, but that's kind of separate. And even though they're decades old and very large crypto IRA custodian, they aren't custodying their crypto. They're giving it to Fidelity to custody. And it raises another level of confidence. Even though you're dealing with a multi-billion dollar organization in AUM, that they are using a firm as solid as Fidelity. And it just demonstrates that even in the institutional world, when hedge funds are starting to do crypto, some of them are going to self-custody, but a lot of them are going to say, No, that's not our expertise. We don’t want to deal with sharding and all that nonsense so they turn to an organization like yours. 

Miguel Kudry: You mentioned hedge funds. We've actually been approached by hedge funds who are now setting up strategies geared towards self-custody clients. So we saw what happened with Rake. I think one of the great things about the crypto community is that we learn from terrible mistakes and these hedge funds that are being set up are designed to not have any custody, to not be able to do what Three Seas did. And I think that's just a fascinating new use case. 

Ric Edelman: Yeah, it's a good point. One hedge fund manager that I know well had 80% of their assets with FTX's. They're gone. They're out of business. Not only are they out of business, not only are their clients lost all their assets, but his career is over because of the very basic due diligence question nobody thought to ask before, Where are you? Custodying now becomes a very fundamental issue. And if the hedge fund can solve that problem by saying there is no custodian, you are the custodian. I simply will have read rights of what you've got and tell you what to trade and when to trade them. This gives everybody a level of confidence that didn't exist before. It raises the question, Chris, about the regulatory environment. Miguel mentioned the custody rule that's in place. Talk about Fidelity's response to the custody rule as well as the broader regulatory environment we're finding ourselves in in the world of crypto.

Chris Baker: Yeah, I mean it's, it's easily one of the biggest topics, right? People oftentimes when I talk to them, you hear volatility regulation. Like it's one of the main reasons that people feel that they want to sit on the fence or they don't feel like they can enter the space. And I do think it's a little bit of a misnomer. I think we do have enough regulation to participate. Do I think there's enough? I think we would like for maybe more clarity. And so at Fidelity, I know what we're doing. So the custody rule recently, there's a public letter that we did respond to the SEC. It's out there. It's about an 18 page document, not the shortest. But if anybody would like to read it, it is out there. We make some key points where we feel the SEC was hitting it on the nail and then other areas that we feel were redundant with some other things or overlapping and maybe inconsistent. So we try to just have this thoughtful, I'd say, holistic approach where Fidelity does have a lot of relationships with advisors. There's thousands of advisory relationships across Fidelity's traditional business. I don't think it's going out on a limb, but I think we understand the advisory business pretty well. 

And so trying to do that and kind of bridge it over to this digital realm in our eyes, it doesn't need to be as elongated as maybe it's been. So we're looking for kind of a pace where there's clarity in the market and very thoughtful regulation to be put in place. We have a government relations team. We actually have 2 or 3 individuals that they're specifically focused on crypto policy. And so what they do, they sit on our government relations team. They're independent of any of the commercial businesses that operate digital assets. But what they're doing is working with politicians and looking at lobbyists and kind of saying, what is the regulation that may be put in place? How can Fidelity be influential and helpful to what is potentially coming down the pipe? So the custody rule is the most recent. I think beyond that, obviously, a lot of it is to be determined, but it was nice to hear from the SEC this morning. But I think there's still more clarity that everybody's looking for and Fidelity is trying to be and do our part in that entire sphere. 

Ric Edelman: Do you disclose how much you have in AUM and digital assets? 

Chris Baker: We do not. So we still have not five years in. We get the question quite often. I would say it's in the billions of dollars of bitcoin and Ethereum, but we've never to this date actually stated a public number. 

Ric Edelman: Can you tell us this? Over the past year the debacle of crypto pretty much began about a year ago with Celsius and Terra Luna. Have the number of institutional clients increased or decreased? 

Chris Baker: It has increased. Um. Yeah. So funny. I got married a year ago. I went on my honeymoon. Right when Three Arrows Capital is happening, I came back and it was. The whole market was up in flames. But I would say it's been a unique time for the space. I think Fidelity has been a position of safety in a way. People came to us many, many times post Three Arrows Capital, Terra, Luna, FTX and kind of basically said, we're doing a review of our counterparties. We should have taken it more seriously or we are doing a review. And I would say from accounts and from asset size, we were the benefactor. 

Ric Edelman: And so these are institutional clients who weren't necessarily new to crypto. They were just moving their accounts to you where they felt more secure, more comfortable holding and custody in their crypto. Were there institutions who are who joined Fidelity in the past year who are in fact new to crypto? 

Chris Baker: Yeah, we definitely saw a mix, I would say more recently. Flip side, have. 

Ric Edelman: You seen others sell out? Because you know the prices are horrible and the regulators are worse and I'm out of here as that happened as well. 

Chris Baker: We've seen a mix, right? I think we've seen all of it. You know, we've seen wealth management teams. Some clients have closed their positions. They either took a gain or a loss. It was, you know, maybe tax purposes, some hedge funds. Right. They're a little bit in and out of the market anyways. That's the nature of their strategies. I would say incrementally, though, our business has grown, right. So over the last 12 months, without a question, our business has grown from accounts and from the asset size. So, you know, that kind of goes back to the point of like institutions are here. And I think to your point, once people go into the space, we don't tend to see them leave too often. And so even if for those advisor relationships, right, if you have ten clients, maybe two of them didn't want to have a position anymore, but you might have two more that actually have outside positions that they're now bringing in. So trying to create more of those bridges, create education out there and help with that facilitation. 

Ric Edelman: For years, Abby was Bitcoin maximalist. That was it. Only relatively recently you've added Ethereum and he plans to add other coins or tokens. 

Chris Baker: So we're always reviewing. I think I would maybe just say I don't know if Abby would ever coin herself fully as a Bitcoin maximalist. I just say. 

Ric Edelman: That because she was doing only bitcoin. 

Chris Baker: Definitely. We had a large focus on bitcoin, I think both from a regulatory scope and demand. So anybody that asks about asset coverage, we're always looking at what's the market demand, what's the size of that asset, Is there enough interest in it? And for right now, for us, bitcoin and Ethereum is where we're comfortable. Our regulator has about 29 assets listed on our green list, so we're reviewing those at any time. But I think the market demand for us still hasn't quite caught up for others. 

Ric Edelman: Whereas Miguel, because you are not custodying, you are agnostic as to what the client owns. They can own any coin, any token, any NFT. That's right. It doesn't matter to you. 

Miguel Kudry: Yeah, we are asset agnostic. We, we we're software provider and we try to just make it up to the advisor to design which tokens they're comfortable with, which protocols they're comfortable with using. I think there's no such thing as just being set up and overnight being proficient in every single protocol and being able to make all types of recommendations. I think it should be a process that maybe starts off with reading your client's positions, understanding what they're holding, understanding even what protocols themselves they are using, and then becoming proficient in those and start to make recommendations that way. But yeah, we're asset agnostic, we're wallet agnostic and just that layer on top of your practice. 

Ric Edelman: Any questions?

Conference Attendee: Yeah. Chris You mentioned that it's open to your advisors. Is that on the NFS side as well or is it just on the Fidelity side? 

Chris Baker: I'd say on the Fidelity side, to start, I would say this is we're doing kind of a slow roll right now. So we've talked to maybe some people in the room right now. So it's Fidelity Custody, RIAs that are interested in integrating it to.

Conference Attendee: Okay. Thanks. And then Miguel, on your information in terms of security. Right. So a lot of the things that we talked about obviously is a cyber issue, right? And so if you were we were going to adopt that, how do we prove to the client or have in on our side and due diligence that that that your system is secure? 

Miguel Kudry: Right? Yeah. So first of all, we can't do evil. So we never are exposed to client funds. I think there's a there's a big element of security when you're when you don't have a honeypot. So an exchange like FTX has had all client funds aggregated in an omnibus account by default, Self-custody is segregation of client funds. And so each client holds their own keys and their own their own funds. So on that front, we can never get in the middle of a client and their assets and then. Since we're a layer between advisors and defi protocols, we actually make it so that neither advisors nor clients have to go and figure out how to use a decentralized protocol on their own, which it's a very easy way to get scammed or get your wallet drained. You're interacting with these protocols through our interface so you can trust that you're actually assigning the right type of transaction on the right protocol when you're doing that through one advisor. So we add a huge element of trust on that on that front. 

Ric Edelman: And we have another question, a couple other questions on this side. 

Conference Attendee: Chris. When you allow the IRAs within the Fidelity fold to start using your custody services, will that also mean that compliance releases them to fully recommend bitcoin and all the other services that they would do, say, for stocks? 

Chris Baker: If I'm understanding the question, I don't know if our compliance would be responsible for the recommendation. So it's essentially the RIAs are allowed to open up, help open accounts for clients. They would own an account linked to a brokerage and then they would own the asset, the discretionary and non-discretionary component we've seen typically leans towards non-discretionary. But I don't know if it would necessarily be our responsibility. If I'm understanding it correctly. It would be the RIAs compliance team deciding if it was appropriate or allowed

Conference Attendee: Thank you. Yep. 

Ric Edelman: Another question over here.

Conference Attendee: For Chris. If someone already has an existing Fidelity account, is the Fidelity digital assets a separate account or is that part of the regular Fidelity account? Can they buy it through the regular Fidelity account? 

Chris Baker: Yeah, it'll be it'll be a new account. Right. So it would be a new account linked to a brokerage. So we're a separate entity. We're all owned under FMR, LLC, the parent company. But Fidelity Digital Assets LLC is its own trust company. So we're regulated by New York. So it would be an account opened with Fidelity Digital Assets and linked to a traditional brokerage account. 

Ric Edelman: So you have to have a Fidelity brokerage account. And then once that is in existence, you then open a Fidelity digital account and they're linked. Any other questions? So one final question for each of you. Start with you, Miguel. Talk about what you see the future, given what I would call headwinds at the moment politically regulatorily pricing versus the technological activities going on. Talk about what you see coming in the next few years. 

Miguel Kudry: I think more and more people are becoming interested and curious about holding their own assets, being their own custodians, not just with what's going on in crypto, but what's going on in the banking system. I think more and more companies are going to make it easier for them to be their own banks, their own custodians. Today it's this device. Tomorrow it'll be your iPhone and you're going to carry your money securely and your private key is going to be encrypted in the cloud. And that changes the business of advising on those assets. So yeah I'm excited about being early and just hopefully making the market grow in the market together. 

Ric Edelman: Chris, final word. 

Chris Baker: Yeah, I would say it's creating less barriers to entry, right? And so I think as we get more clarity both from advisory levels to financial services firms to individuals, whether it's taxes or whatever it might be. And I think the spectrum you see on the stage today, like that becomes even more bridged. You have these options. And I think gold's the easy analogy. You can get physical gold; you can get exposure to gold. And I think this new realm Ric talked about earlier, we see it as a piece of broader financial services, not necessarily replacing everything that exists today. So everything that we're doing, we're really trying to just support this industry and also integrate it as best as we can to what you've known today and what you've experienced already. 

Ric Edelman: Thank you very much. That's Chris Baker, director of Fidelity Digital Assets, and Miguel Kudry, who's CEO of L1 Advisors at our recent VISION conference in Austin.

Right now, you can check out and hear all the other sessions with our special guests and highlights of vision. It's all on my Facebook and Instagram pages, and the links are in the show notes.

You're listening to The Truth About Your Future. I'm Ric Edelman. You understand stocks and bonds and real estate and you know how to evaluate them. You know how to choose among them. But do you know how to evaluate and choose among digital assets? Come learn how on my next webinar. It's Wednesday, October 11^th at 1 p.m. Eastern. I'll be joined by Christopher Jensen, director of research at Franklin Templeton Digital Assets. And we'll show you tokenomics and how you can use this new research to make informed decisions about crypto coins and tokens. You'll get one CEU credit to stay informed about the latest in the investment management field. You can register for this webinar right now. It's Wednesday, October 11th at 1 p.m. Eastern. The link is in today's show notes.

 -----

Crypto Explainer: CBDCs

Ric Edelman: You're listening to the Truth about your Future with Ric Edelman. Have you ever heard of a CBDC, a central bank, digital currency? Virtually every government in the world is going to launch their own, most likely this decade. Our own Federal Reserve is working on it. What's the whole point? Well, quite simply, you've got to ask the question, why is our Federal Reserve still printing money? When's the last time you used cash to buy anything? We use credit cards. We wave our phone at the cash register. Or shopping online. Why on earth is the government still printing money and distributing it with armed guards and big, fancy bullet proof trucks? It's expensive. Why don't they just distribute the money digitally? You already get your paycheck digitally, your Social Security check, your pension check that way. You're using PayPal and Venmo. You've got your bills on autopay. Why on earth is the government still dealing with paper money?

Well, that's what a CBDC is. Central bank, digital currency. It's a form of money issued by the government, the central bank. And it's digital money. Digital currency - it's faster, cheaper, safer. And it's the future. It's going to be in your personal finances this decade. If you want to learn more about it, read my number one Amazon bestseller, The Truth About Crypto. 

Ric Edelman: Thanks for joining us today. You know, we've got a new episode of the podcast every weekday. So if you miss one or if you're looking for info on a specific topic, you can find all our past shows at TheTruthAYF.com.

 -----