Current Expected Credit Losses (CECL)

12 Months Ended

Dec. 31, 2021

Credit Loss [Abstract]

Current Expected Credit Losses (CECL)

Current Expected Credit Losses (CECL)

The CECL reserve reflects management’s current estimate of potential credit losses related to the receivable balances included in the Company’s consolidated statements of financial condition. See Note 3—“Summary of Significant Accounting Policies” for further discussion of the CECL reserve methodology.

As described in Note 1—“Organization and Basis of Presentation,” upon adoption of the new CECL guidance on January 1, 2020, the Company recognized an initial CECL reserve of approximately $1.9 million, of which, $1.1 million was in “Loans, forgivable loans and other receivables from employees and partners, net,” and $0.8 million was in “Accrued commissions and other receivables, net,” against its receivables portfolio with a corresponding charge to “Retained deficit” on the Company’s consolidated statements of changes in equity.

As required, any subsequent changes to the CECL reserve are recognized in “Net income (loss) available to common stockholders” in the Company’s consolidated statements of operations. During the years ended December 31, 2021 and 2020, the Company recorded a decrease of $0.2 million and an increase of $0.7 million, respectively, in the CECL reserve against the receivables portfolio, bringing the Company’s total CECL reserve to $2.4 million and $2.6 million as of December 31, 2021 and 2020, respectively.

This total CECL reserve is comprised of $1.7 million and $1.6 million for “Loans, forgivable loans and other receivables from employees and partners, net” as of December 31, 2021 and 2020, respectively. The total CECL reserve is

further comprised of $0.7 million and $1.0 million for “Accrued commissions and other receivables, net,” as of December 31, 2021 and 2020, respectively. For the year ended December 31, 2021, there was an increase of $0.1 million, in the CECL reserve pertaining to “Loans, forgivable loans and other receivables from employees and partners, net” as a result of employee terminations, bringing the CECL reserve recorded pertaining to “Loans, forgivable loans and other receivables from employees and partners, net” to $1.7 million as of December 31, 2021. For the year ended December 31, 2020, there was an increase of $0.5 million in the CECL reserve pertaining to "Loans, forgivable loans and other receivables from employees and partners, net."

For the year ended December 31, 2021, there was a decrease of $0.3 million in the CECL reserve against “Accrued commissions and other receivables, net,” due to the updated macroeconomic assumptions resulting from an increase in the GDP growth rate, and the downward credit rating migration of certain receivables in the portfolio, bringing the CECL reserve recorded pertaining to “Accrued commissions and other receivables, net” to $0.7 million as of December 31, 2021. For the year ended December 31, 2020, there was an increase of $0.2 million in the CECL reserve against "Accrued commissions and other receivables, net."