Daniel Wiener, chairman and co-founder of Adviser Investments, a $5.5 billion registered investment adviser, is calling out the fee-based financial planning industry for taking what he describes as government handouts.
“Shouldn’t any wealth management company that purports to provide sound investment and financial-planning advice be maintaining a robust balance sheet for just those periods when the economy, the markets or an exogenous event require emergency funding?” Wiener wrote in Citywire RIA after learning that several multi-billion-dollar RIAs were taking the forgivable government loans designed for rescue businesses impacted by COVID-19.
As InvestmentNews pointed out in March when the first wave of stimulus money was moving through Congress, Wiener believes the fee-based business model, unlike hair salons and restaurants forced to close their doors, continues to charge fees based on portfolio performance.
Jeff Benjamin: Why are you so passionate about the way some RIAs are taking forgivable loans through the Coronavirus Aid, Relief and Economic Security Act Paycheck Protection Plan?
Daniel Wiener: Because the RIA business model is very simple, it’s based on assets under management and it is a business model that should be able to accommodate both bull and bear markets.
Taking a government bailout just because it’s easy to get is immoral and unethical.
JB: What do you think about fee-based firms taking these loans?
DW: If the business model is so broken they feel they need a government backstop and don’t have other sources of capital such as bank lines of credit already established, these are not viable businesses and shouldn’t be propped up in the first place.
JB: Can you see any justification for RIAs taking these loans?
DW: Absolutely not. Full stop.
If the business model is broken, it’s broken. The justifications I’ve been reading in some of the disclosures are completely at odds with the intent of the program. If the business is not at risk, why take the money?
JB: Should these RIAs do a better job of disclosing these loans?
DW: Yes. It behooves anyone who takes my tax money for a bailout to disclose not only that they took it, but how much they took.
JB: How should clients and potential clients view advisory firms that take these forgivable loans?
DW: There’s going to be a lot of false justification given for taking these loans, but clients should read through it and understand that one of two things happened: Either the firm is in a weaker financial situation than they thought, or the firm has some issues around the morality of taking government handouts. Take your pick.
Advisors can set their practice apart and win more business with a powerful graphic describing their unique business and value proposition.
The Labor Department's reversal from its 2022 guidance has drawn approval from crypto advocates – but fiduciaries must still mind their obligations.
With $750 million in assets and plans to hire a RIA Growth Lead, Autopilot is moving beyond retail to court advisors with separately managed accounts and integrations with RIA custodians such as Schwab and Fidelity.
Elsewhere on the East Coast, a Boca Raton-headquartered shop has acquired a fellow Florida-based RIA in "a natural evolution for both organizations."
After advising on nearly $700 million in retirement assets, 27-year veteran Greg Mykytyn is bringing his expertise in ESOP and 401(k) plans to the national RIA in Texas.
How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave
From direct lending to asset-based finance to commercial real estate debt.
