Exclusive: Three billion-dollar RIAs take out PPP loans


Three RIAs, each with around $ 1 billion in assets under management, accepted a loan from the government-backed Paycheck Protection Program (PPP), according to recent Securities and Exchange Commission (SEC) filings.

Planning Alternatives, a $ 1.17 billion RIA based in Bloomfield Hills, Mich., Took out a loan of $ 403,100. Meanwhile, the Covington, Kentucky-based MCF Advisors store for $ 1.8 billion and the Cincinnati-based Wealthquest store for $ 993 million each took out loans in April for undisclosed amounts. .

The existence of the loans has not been previously reported. The companies did not respond to requests for comment, but provided an explanation in their separate documents.

The Planning Alternatives ADV Update of May 6 contained language in the PPP disclosure that was almost identical to that of Polaris Greystone Financial Group, an RIA in San Rafael, Calif., Which revealed in its recent ADV update that ‘she had accepted a PPP loan of $ 976,000.

Both companies said market volatility has and is likely to continue to have a “negative impact” on their businesses. The companies also said state-issued stay-at-home orders and related orders, including workplace safety protocols, have and will continue to “require significant unanticipated operating expenses.”

“Without the PPP loan, we would have been forced to reduce our staff, which we believe could have negatively impacted customer service,” Planning Alternatives said in its ADV, corresponding to the Polaris Greystone disclosure. “We intend to use the proceeds of the PPP loan to pay the payroll and other expenses specifically authorized under the PPP. “

MCF Advisors and Wealthquest, both of which submitted their ADV updates this month, used similar language in their disclosures.

Both RIAs said they did not reasonably believe they would be unable to meet contractual commitments, but that, despite this, companies are “uncertain of the negative financial impact of Covid-19”.

“In light of this economic uncertainty,” MCF Advisors and Wealthquest said in their respective publications, each company has said it wants to “maintain a level of fiduciary service for all of its clients (especially in times of crisis).”

While MCF Advisors said it intended to use the loan for salary costs, rent, and utilities, Wealthquest said it intended to use the loan for salary costs, the continuation of health care and insurance benefits for its employees, mortgage interest, rent, utilities and other related business expenses.

PPP loans are government guaranteed loans issued by the Small Business Administration (SBA) intended to encourage employers affected by the coronavirus pandemic to keep their employees on their payrolls instead of firing them. Small businesses can take out loans through the program up to 2.5 times their monthly payroll or $ 10 million, whichever is less.

A company that takes out a PPP loan must certify that the financing is “necessary to support the applicant’s ongoing operations”.

The SBA may cancel up to 100% of loan proceeds used for payroll, rent, mortgages, and utilities if the borrower does not lay off a full-time employee within eight weeks of loan funding and upon completion of the loan. minus 75% of the amount remitted is used to cover the payroll.

RIAs have seen their businesses take a hit in recent months due to the pandemic, as falling asset prices saw them earn less income from market-linked assets below management fees. Several large companies took out PPP loans during the pandemic, including $ 12 billion Carson Group, $ 1.2 billion Robertson Stephens, $ 4.9 billion RegentAtlantic and $ 1.96 billion Wealth Consulting Group. Coldstream Holdings, the parent company of $ 3.3 billion RIA Coldstream Wealth Management, also accepted a PPP loan

Adviser Investments, which manages about $ 5.5 billion, has turned down about $ 2.2 million in PPP funding. Its chairman, Daniel Wiener, wrote in a recent guest column for Citywire that RIAs involved in the program should return the money so it can go to businesses hardest hit by the pandemic.


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