Curb Your Enthusiasm and Seinfeld creator Larry David in an FTX commercial promoting crypto investment. Source: FTX via YouTube.

It turns out the best thing by a very long shot about the cryptocurrency exchange FTX was its ads starring Larry David.

Today the deep irony of these ads is that David, who plays a series of historical characters dismissing a range of new and revolutionary ideas (the wheel, the fork, the toilet, coffee, the Declaration of Independence, electric light, the dishwasher, putting people on the moon, the Walkman), ends the ad by dismissing FTX as a smart way to invest in crypto.

It seems David might have had a better idea of what was going on than did the 30,000 people who traded on FTX in Australia and are now staring at the possibility of losing everything they invested.

The spectacular implosion of the crypto trading platform took a further turn his week when it was revealed the platform avoided the usual regulatory scrutiny by acquiring another company that already held an Australian financial services licence.

Holding an AFSL ought to be a big deal. It should be difficult to get, and it should require some effort to hold on to. FTX seems to have exposed one apparent shortcoming in the regulatory regime.

But there are anecdotal stories of licenses being issued to financial advice firms and to advisers who have been moved on by their previous licensees, or left in a hurry, and who have been unable to gain authorisation by any other licensee in the market. But that may be a discussion for another day.

FTX reveals another issue that regulators should take note of – it’s something that came up in discussion I had recently with Andrew Varlamos, head of OpenInvest. Andrew’s view is that once again it’s the little guy who gets burned by a financial collapse, and this will happen again and again, and it will happen in many cases to those who can least afford it, because access to high-quality, professional financial advice remains out of reach for far too many people.

It takes a particular kind of individual to think trading crypto is a good idea in the first place and some of the people caught up in the FTX collapse probably would never have sought advice anyway. But access to affordable advice may have stopped some of them, or at least mitigated the damage by ensuring they didn’t punt everything on crypto and therefore wouldn’t be ruined when they lost it all.

The role of professional research and advice in investing in cryptocurrencies will be covered in a session at the Professional Planner Researcher Forum in Sydney on 1 December. In the current environment it is likely to be a lively discussion.

I have a half-formed thesis that the way people aged under about 30 invest exhibits more gambling behaviour than it does classical investment behaviour. They commonly do it using apps that are – to me, at least – functionally indistinguishable from gambling apps. Picking a stock or a cryptocurrency or a runner in the third race at Randwick, it’s all the same to them. I just need to find a research firm willing to test this idea for me before I take this line of thought further.

What happened to traders on the FTX platform could happen to anyone who chooses to navigate the choppy waters of financial services unadvised. It could also happen to some who are advised, of course, but it’s a tragedy because it didn’t have to happen. Crypto is an inherently risky… well, what? I hesitate to describe it as an asset class. Let’s just say it’s inherently risky.

One of the many things financial advisers do exceptionally well is help people manage risk. But advisers can’t help anyone who can’t access advice because they can’t afford it or because they don’t perceive the value in it.