Almost 2,000 companies in retail financial services received Paycheck Protection Program (PPP) loans for economic relief during the COVID-19 pandemic, according to data released by the Treasury Department on Monday. That number included more than 1,400 registered investment advisory firms and over 300 securities brokerage firms, as well as a significant number of technology and business support vendors.
In addition to previously reported firms such as Ritholtz Wealth Management (which has since repaid the loan) and Sanctuary Wealth, recipients include Aspiriant LLC, a Los Angeles-based investment management firm with about $12 billion in assets under management, which received a loan totaling between $2 million and $5 million, as well as TradePMR, a technology and custodial services provider for RIAs.
Other recipients related to financial advisors include fintech provider Riskalyze, which also received a loan between $2 million and $5 million; tru Independence, which consults to advisors who are seeking to go independent; and Berthel Fisher, a Cedar Rapids, Iowa-based independent broker/dealer. WealthManagement.com reported that the firm was in advanced discussions to be acquired by Cetera in May.
Additionally, IFP Advisors, an IBD with about $5.2 billion in AUM, received a loan between $1 million and $2 million; RIA Moisand Fitzgerald Tamayo received a loan between $150,000 and $350,000; and Sullivan, Bruyette, Speros & Blayney, with about $4.3 billion in managed assets, also received a loan.
Dynasty Financial Partners received a loan between $1 million and $2 million, according to Treasury Department data.
All this even as most fee-based advisory firms will see only a short-term revenue fall in second-quarter billings, given the significant bounceback in market valuations.
But the precise number of RIAs, brokerage firms and other companies in the industry that took out a loan is difficult to ascertain for certain, due to the type of data released by the Treasury Department.
Some small businesses supplied their own information on the application form with little to no vetting and, in many cases, weren’t clear about the specific codes required to indicate the industry within which they operate.
Businesses are categorized by industry according to a six-digit North American Industry Classification System (NAICS) code.
One of the codes (523930) is for investment advice, which is defined as businesses that are “primarily engaged in providing customized investment advice to clients on a fee basis, but do not have the authority to execute trades,” according to documentation from the president’s Office of Management and Budget.
But the full list of loan recipients released Monday under that code includes companies that clearly don’t belong there, including a South Florida air conditioning service and maintenance company, a roadside BBQ joint based in the Hamptons and a Boston-based floral design company, among many others.
WealthManagement.com analyzed the list of recipients with this code attached and removed around 60 of the more obvious ones outside the space. It is possible that this list still includes companies that are not RIAs, or does not include some RIAs that should be here:
VIEW THE FULL INVESTMENT ADVICE LIST
Also included are lists for companies with two other NAICS codes: 523120, which is the code for “securities brokerage,” and 523220, which is the term used for “portfolio management.” Like the prior list, these lists also included dozens of companies that did not seem to pertain to the industry. While we have removed some, there may be recipients included here that do not operate in the financial services space:
VIEW THE FULL SECURITIES BROKERAGE LIST
VIEW THE FULL PORTFOLIO MANAGEMENT LIST
A review of the list reveals additional recipients of PPP loans include Matson Money, an RIA with about $8 billion in AUM; Veris Wealth Partners, a New York-based wealth management firm with more than $1 billion in managed assets; and Prospera, an IBD with about $2.2 billion AUM. Others include LaSalle Street Securities, Aegis Capital and Lucia Capital, an RIA with $1.5 billion AUM that was recently acquired by LPL Financial.
The PPP loans were included in March’s CARES Act, which Congress passed to help businesses retain employees in the midst of the economic tumult caused by the pandemic. Numerous financial services firms applied, with some initially criticizing the application process..
Additionally, as more firms disclosed that they received a PPP loan there has been an ongoing debate as to whether registered investment advisors should be pursuing these loans at all. Before the release of this data, RIAs were one of the few types of businesses with a mandate to disclose that they’d received a PPP loan, according to SEC guidance.
Though the PPP loan application window was originally scheduled to end last Tuesday, Congress recently approved (and President Trump signed) an extension through August. Currently, there is still about $130 billion allocated for the fund.
The Treasury Department was originally wary to release any information about businesses that received loans but changed direction last month. The data includes information on more than 660,000 applicants that received $150,000 or more. The number is dwarfed by the 4.9 million total number of businesses that received loans, most of which fell under the $150,000 mark.
