Bob Kargenian’s Article Published in InvestmentNews
Bob Kargenian was published in InvestmentNews, a leading source for news, analysis and information essential to the financial advisory community.
In the article, Bob begins, “In 1940, Fred Schwed wrote a book called ‘Where Are the Customers’ Yachts?’ He was a second-generation stockbroker turned author, and his book would become Wall Street lore. It’s a story about a man visiting New York City who admires the yachts Wall Streeters had purchased with money earned from giving financial advice to customers — only to wonder to himself where the customers’ yachts were. (There weren’t any.)
“Today, that title is more relevant than ever. On Monday, the Small Business Administration released information on Paycheck Protection Program loans of $150,000 or more. The PPP is a forgivable loan program created by Congress to help struggling small businesses survive during the COVID-19 pandemic economic lockdown.
“More than 1,400 companies in the government database were identified as investment advisory firms, the vast majority of which use a compensation model that pays them a percentage of assets under management, known as the AUM model. If assets grow, either because the firm brought in new money or markets went up, fee revenue goes up. If assets decline, either because of losing clients or down markets, revenue goes down. It’s the foundation of running the business.”