The New Bubble in Portfolio Loans

Posted by

Wall Street’s brokerages are pushing securities-based lending in their wealth management divisions to stunning effect. Individual investors are being billed both investment management fees and interest on the same assets, while exposing themselves to additional retirement risks. If you’ve ever wondered where the hell all these “all-cash” bids for real estate were coming from, now you know.

My new piece at Fortune Magazine has just gone live, I think the implications here are significant for everyone should something go wrong:

Lindsay (we’ll call her Lindsay to protect her identity) took a job in the securities-based lending department at Morgan Stanley right after college graduation. She had dozens of colleagues in her group when she first started and now she’s got hundreds, nearly all of them entry-level workers looking to get their foot in the industry.

They are there to support the brokers—ahem, financial advisors—as they turn as many of their clients’ investment portfolios into loan collateral as possible. Processing paperwork and assisting the firm’s wealth-managers-turned-loan-officers is their business—and business is booming.

Securities-based lending, also known as non-purpose lending, is Wall Street’s hottest business. From UBS to Bank of America Merrill Lynch to JPMorgan, high net worth investors are being enticed to take out loans against their brokerage accounts at a blistering pace.

Keep Reading:

The Rise of Rich Man’s Subprime (Fortune) 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. immediate edge review 2020 commented on Sep 23

    … [Trackback]

    […] Find More Info here on that Topic: thereformedbroker.com/2014/12/10/the-new-bubble-in-portfolio-loans/ […]

  2. devsecops Services commented on Dec 01

    … [Trackback]

    […] Find More Info here to that Topic: thereformedbroker.com/2014/12/10/the-new-bubble-in-portfolio-loans/ […]

  3. morphine for sale usa cheap commented on Dec 10

    … [Trackback]

    […] There you can find 88041 additional Information on that Topic: thereformedbroker.com/2014/12/10/the-new-bubble-in-portfolio-loans/ […]

  4. Click commented on Dec 12

    … [Trackback]

    […] There you can find 71670 additional Information to that Topic: thereformedbroker.com/2014/12/10/the-new-bubble-in-portfolio-loans/ […]

  5. CICD commented on Dec 20

    … [Trackback]

    […] Here you can find 86782 more Info on that Topic: thereformedbroker.com/2014/12/10/the-new-bubble-in-portfolio-loans/ […]

  6. tangerine bank account log in commented on Jan 21

    … [Trackback]

    […] Find More Information here on that Topic: thereformedbroker.com/2014/12/10/the-new-bubble-in-portfolio-loans/ […]

HowIInvestMyMoney