‘Wealth’ taps PPP loan $$

Wealth managers are some of the many firms that have benefited from the Small Business Administration’s Paycheck Protection Program that was designed to aid small companies struggling during the pandemic.

More than 1,400 firms that identified as providing investment advice have sought PPP loans of greater than $150,000, according to data from the SBA.

Registered investment advisers (RIAs) have come under fire for taking PPP loans. Critics claim the firms, which sometimes manage billions of dollars of assets, don’t need the money because they are positioned to ride out market volatility.

RIAs typically charge their customers recurring fees — usually a percentage of assets under management — for their services, which include investment management and financial planning.

Those fees can decline when the markets drop but RIAs still receive significant revenue. This is much different from other small businesses, which completely lost their revenue when COVID-19 caused them to shut down.

The loans, which are backed by taxpayer dollars, have helped many Wall Street firms. More than 280 investment banks applied for loans of more than $150,000, Barron’s reported.

Government help also went to firms that took part in mergers and acquisitions. PagnatoKarp Partners, of Reston, Va., was approved for a PPP loan in April. In June, Cresset Asset Management acquired PagnatoKarp. The deal boosted Cresset’s AUM to $9.5 billion. A spokesman for PagnatoKarp confirmed they received a PPP loan but declined to comment further.