Investment advisors advising over trillions have received tax loans

BOSTON (Reuters) – RV Kuhns & Associates Inc, an investment advisory firm advising on retirement plans and other $ 2.5 trillion assets, sent a message of confidence to a Securities and Exchange Commission filed earlier this year when COVID- 19 wrecked economies across America. The company is ready to “maintain all of the services we provide”.

FILE PHOTO: A page from the PPP loan application that must be completed to receive financial assistance due to the ongoing coronavirus disease (COVID-19) outbreak is pictured on a desk in New York, United States on May 7, 2020 . REUTERS / Lucas Jackson / File Photo

The Portland, Oregon-based company known as RVK announced in the filing that it was backed by additional cash: an unsuccessful loan of between $ 2 million and $ 5 million from the Small Business Administration’s Pandemic Relief Fund.

It wasn’t alone in the world of big money advice. RVK is one of at least 40 pension plan and other institutional investor advisors who have received $ 37 million in total loans to support staff and pay rent. That came out from a Reuters review of government data released earlier this month. It was not always clear why the consultants found it necessary to apply, as incomes are usually stable and based on client fees from long-term contracts for portfolio design or management services.

Graphic: Paycheck Protection Program – Here

RVK president James Voytko told Reuters that his company sought government support because its nearly 200 clients – including large public pension plans and charitable foundations – were “under significant financial pressure” and were seeking increased support from the company whose employees have worked unusually long hours.

According to the government, the loan to RVK should protect 119 jobs in the company. Voytko said in an email that RVK followed program guidelines and maintained staff levels but declined to answer written questions about how the coronavirus pandemic had affected the company’s finances.

He confirmed that almost all of RVK’s revenue comes from fixed annual redemption fees. But he said, “While the advisory assets are large, our company is not compensated through an asset-based fee.” And he added, “We don’t have a well-funded parent who has access to working capital from many sources.”

Kyle Herrig, president of the Washington, DC-based monitoring group Accountable.US, told Reuters that investment advisors who take out the taxpayer-funded loans are an “egregious” example of how the program has too often benefited relatively healthy companies , especially during its fast maturity -depleted first round of financing.

The Small Business Administration and Treasury Department did not respond to an email asking for a comment on the Paycheck Protection Program (PPP) loans they jointly managed.

Graphic: Industrial jobs and PPP loans – Here

Another large consulting firm, Meketa Investment Group Inc, told Reuters that taking out a $ 2 million to $ 5 million PPP loan was a “prudent” move to protect employees and provide world-class service to customers.

“We believe this and other preventive steps are the responsible business of trustees,” the company said in a statement, given the likely future impact of COVID-19.

Meketa, headquartered near Boston with $ 1.5 trillion in assets advised as of March 31, said in a June filing for approval, “We don’t believe that without receiving the loan, we will be no contractual Obligation could have fulfilled. However, we believe the loan was required to support our existing business operations, including maintaining full staffing levels. “

The company’s customers include major public retirement plans such as the California Public Employees ‘Retirement System and the New York City Employees’ Retirement System.

Another firm, LeafHouse Financial Group LLC of Austin, Texas, which was consulting $ 9.6 billion as of Dec. 31, raised up to $ 350,000 in PPP funds to help its 19 employees amid business uncertainty in mid-April and to protect against lost sales spokeswoman Kassandra Hendrix.

Hendrix said LeafHouse had heard from its mostly small businesses and nonprofit customers that they were under pressure from a variety of factors, including a falling stock market and lower retirement contribution rates.

“We applied for the loan to prepare for this temporary storm and to maintain all staffing levels while we strive to provide the best possible service to our customers when they need it most,” she wrote. LeafHouse, she said, typically charges less than 0.05% on assets it advises on.

Other major investment advisors who have received up to $ 1 million in PPP loans each include Advanced Capital Group Inc, which advises $ 23 billion; Pensionmark Financial Group LLC, advising $ 14.7 billion; and Newport Capital Group, which advises more than $ 13 billion as of December 31, according to government and regulatory filings.

These companies did not respond to emails asking for comment. The government record only included loans that were approved, and it did not indicate which of them were actually disbursed or whether they had been returned or granted.

In total, the PPP loans protected around 51 million American jobs, the Trump administration announced on July 6 Herehow it found out how small businesses got $ 521.4 billion in taxpayers’ money. However, problems in the data have cast doubt on the job bailout forecast, according to Reuters Here.

Reporting by Lawrence Delevingne. Editing by Tom Lasseter and Nick Zieminski

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