Lowlights of 2014: From Schorsch Drama to LPL's Regulatory Woes
From the family feud that rocked Nicholas Schorsch's REIT and IBD empires to LPL's regulatory lapses and a wealth management crisis sparked by a CEO's private fund, the advisory industry had a healthy share of lowlights in 2014. Here are some of the most memorable. -- Charles Paikert
Be sure to check out the highlights as well: Highlights of 2014: From Online Alliances to Mega Deals
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RCS Capital, Nicholas Schorsch's advisory business, got into a legal battle with American Realty Capital Properties, Schorsch's property and REIT company, following an accounting scandal at ARCP.
Impact: A black eye for Schorsch, who resigned as chair of ARCP and a suspension of sales of Schorsch-controlled REIT products by scores of IBDs, including LPL Financial.
Image: Bloomberg, RCS Chairman Nicholas Schorsch
Erstwhile Bond King Bill Gross' head-scratching public appearance at a Morningstar conference in June confounded advisors. Gross left Pimco to join Janus Capital Group as a portfolio manager in October, with about $1 billion in net deposits following him over the last few months.
Impact: Pimco scrambles to regain bond fund flows while Gross scrambles to regain his former stature.
Image: Bloomberg, Pimco co-founder Bill Gross
David Zier, CEO of the $8.4 billion wealth management firm, died of an apparent suicide after irregularities were found in a private fund he ran outside the firm -- but which was monitored by the firm. Steve Lockshin, Convergent chairman and long-time friend of Zier, stepped down in early December.
Impact: Convergent, a subsidiary of City National Bank, faces regulatory scrutiny, potential lawsuits and defections by advisors and clients.
Motivational speaker Tony Robbins targets advisory business as his next cash cow, publishing a new book about financial advice for consumers and delivering a three-hour speech at the MarketCounsel conference.
Impact: Robbins' mixed message leaves the industry unclear on how much he intends to boost advisors or himself.
Image: Bloomberg, Author Tony Robbins
A Financial Planning story reports that less than 3% of RIAs are African-Americans.
Impact: Industry associations vow to boost minority programs as university financial planning programs begin to reach out to African-Americans.
How to Fix the Industry's Race Problem
Issues with systems, policies and procedures at the country's largest IBD resulted in major regulatory fines.
Impact: LPL saw a 4.2% drop in Q2 net income and was forced to spend $23 million in regulatory expenses in the third quarter, $18 million more than it had anticipated. LPL was "not happy," CEO Mark Casady made clear.
Read more: Regulatory Woes Hammer LPL Profits
Image: LPL CEO Mark Casady
James "Jeb" Bashaw, a former star broker at LPL Financial, was cut loose by the IBD after regulatory concerns. He spent only 10 days at Wunderlich Securities before landing at a small B-D in Orlando.
Impact: Bashaw contests FINRA findings, highlighting a lack of clarity over regulatory issues that concerned some firms but not others.
Read more: Plan C for 'Discharged' LPL Advisor
Image: James "Jeb" Bashaw
From the family feud that rocked Nicholas Schorsch's REIT and IBD empires to LPL's regulatory lapses and a wealth management crisis sparked by a CEO's private fund, the advisory industry had a healthy share of lowlights in 2014. Here are some of the most memorable.