RCS Capital, which has a network of over 9,500 independent advisors, may need to split its retail advice business from its wholesale broker/dealer business, Citigroup analyst Bill Katz suggested last week. While the firm’s wholesale business is turning around, Katz said the different business lines could be “a distraction to the underlying value of the company,” TheStreet.com reports (The firm reported a loss of $14 million in the first quarter of the year. Shares closed at $8.00 Monday, giving the firm a valuation of a little over $600 million.) The company heeded Katz’s advice in December, when he called for Chairman Nicholas Schorsch’s resignation. Schorsch stepped down on Dec. 30.
The Good, The Bad, and The Really Bad
A couple of financial cowboys in Mansfield, Texas have been sued by the SEC for selling life settlement interests (fractional shares of life insurance policies) to unqualified investors by allegedly falsely guaranteeing the investments were “risk-free,” “cannot lose,” and “safe as CDs” with annualized returns of 7 to 11 percent. The duo pushed the product on their weekly “Retirement Experts Radio Show” airing in Dallas and Fort Worth, where they promise listeners they “don’t sell," they "educate.” Worse, the two self-proclaimed “licensed financial consultants” had selling agreements with two providers that required investors to be accredited; so the "retirement experts" allegedly just went ahead and calculated their buyers’ net worth by including the entire value of their anticipated payments from social security and other pensions for the next 20 years.
Financial Services Disruptors
Most Silicon Valley start ups are promising to disrupt a business model. But few actually do, which makes the 50 companies on CNBC’s third annual Disruptor list so incredible. Amid the Ubers, SpaceX and Airbnbs, six disruptors are moving into the world of advisors and financial services. This year’s list features DocuSign (13), Personal Capital (18), Motif Investing (23), WealthFront (34), Betterment (36) and Hearsay Social (39).