LPL’s cash sweep practices draw lawsuit; FINRA fees, executive compensation on the rise; tech to help with secure document storage
Financial Planning
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CASH SWEEPS: A new lawsuit against LPL Financial purports to lift the veil on just how dependent some wealth managers have become on so-called cash sweeps for profits.
A putative class action suit filed against LPL in federal court in San Diego paints a picture of a firm that has steadily become more and more reliant on interest earned on clients' uninvested cash to juice its total returns. In the last quarter of 2015, according to the suit, LPL derived 8.5% of its return on assets from its cash sweeps accounts. By the first quarter of this year, the suit alleges, that figure had risen to "an astounding 37.3%."
REGULATION AND COMPLIANCE: Even as most top executives at the Financial Industry Regulatory Authority (FINRA) saw their compensation go up, the regulator plans to raise fees for member firms, it revealed in its annual financial report. FINRA reported a net loss of $22.2 million in 2023, driven by operating and other losses of $119.1 million and $5 million, respectively, that were offset by investment gains of $101.9 million.?
"We currently anticipate filing with the SEC later this year our plans for fee increases in subsequent years, and we will provide further details regarding these plans in due course," the report stated.?
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TECHNOLOGY: Tech platform Trustworthy started in 2019 with a seemingly difficult business model: Get families to upload documents detailing their livelihood — financials, IDs, assets, taxes, wills, even info about their children and dogs — onto a single digital platform where authorized users can easily access it when needed.?
From its products to the problems it has encountered, here’s what you need to know about Trustworthy.
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