Altruist’s Fully Paid Lending program provides clients the opportunity to earn income on eligible stock positions they already own.
Fully Paid Lending (FPL), also known as Fully Paid Securities Lending (FPSL), is a common lending practice whereby individuals can receive passive income by allowing their broker – in this case, Altruist Financial LLC (“Altruist”)– to lend out stocks they have fully bought and paid for (as opposed to those purchased on margin).
Let’s calculate the hypothetical monthly income of a client with 10,000 shares on loan with a market price of $10 – assuming all shares are lent and your client's lending rate is 8.25%. Note: based on eligibility, those 10,000 shares likely represent only a portion of the client's total portfolio.
No, unlike other programs, Altruist has no minimum account balance to participate in Fully Paid Lending.
Enrollment happens during the account opening process when clients acknowledge the Altruist Fully Paid Lending Agreement and Risk Disclosures (which can be found on altruist.com/legal).
All account types are eligible except for Solo 401k and UTMA/UGMA accounts.
Yes, clients can opt-out of the Fully Paid Lending program at any time by contacting support@altruist.com
No, opting in/out is on an account level.
Yes, you may sell any position in their account even if the position is currently on loan.
Client statements will identify positions on loan.
Client accounts will accrue income daily for all positions that are on loan. Any accrued revenue will be posted to the account within the first 5 business days of the following month for all positions that were on loan in the preceding month.
There’s no guarantee that any portfolio’s eligible securities will be lent out, as there may be no demand for the securities.
When shares are lent out, clients receive cash payments in lieu of dividends; these payments (loan income) are treated as ordinary income rather than taxed at the dividend rate. Consult a tax professional for additional information.
There is no preferential treatment provided for any account. Each loan is on a pro-rata basis; each Altruist account that holds a position in a security on loan receives a pro-rata allocation to be fair and equitable to all eligible Altruist accounts.
When securities are on loan, clients lose their ability to exercise voting rights.
Securities on loan are not covered by SIPC, but each loan is fully collateralized with cash or US treasuries. The collateral is sent by Altruist to a secure bank account and collateral management is administered by a third-party company. The collateral is equal to the market value of all shares on loan. If Altruist were to default on its obligations as defined in the MSLA, you would have the right to withdraw the collateral from the custodian bank.
All investing involves some amount of risk, however, Altruist receives cash collateral for each loan, which is secured daily until the shares are returned. Shares on loan do not retain voting rights, are not eligible for dividend payments or Securities Investor Protection Corporation (SIPC) coverage. Company default risk also applies. Additionally, we recommend consulting a tax professional regarding any income earned through the program. Further details can be found in the Fully Paid Stock Lending Risk Disclosures, available at altruist.com/legal.
