Edelman Financial Engines Review
Edelman is a financial and investment advisory firm with approximately $291 billion AUM. Learn what you can expect from its services here.
Sean Canonica
Senior Finance Writer
Sean is a finance writer and content strategist for ComparisonAdviser. He has over three years of experience writing about various topics, such as insurance, financial advisors, and investing. Additionally, he is a co-founder and the CEO of RateSonic, an online insurance resource. Sean values helping readers understand difficult topics by creating easy-to-read and thorough content.
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Edelman Financial Engines is a financial advisory firm based in Santa Clara, California. Additionally, it’s registered as an investment advisor with the SEC. The firm specializes in providing financial planning and investment advice to various types of clients all over the country.
In this guide, we’ll give you an overview of what Edelman Financial Engines’ advisory and wealth planning services offer you. You’ll also learn about its fee structures and account minimums. Finally, we’ll provide you with details about the company’s disclosure history, as well as how to open an account.
Assets Under Management
$291 billion
Number of Employees
1,500
Date Founded
1986
CEO
Larry Raffone
Fee Structure
Fee-only
Headquarters Address
3315 Scott Blvd, 4th Floor, Santa Clara, California 95054
Phone Number
Pros and Cons of Edelman Financial Engines
Pros
- Strict fiduciary duty
- No disclosures
- Offers both discretionary and non-discretionary services
- Transparent investment philosophy
- Doesn’t take a commission
Cons
- Steep account minimums for beginners
- Primarily directed toward employees with employer-sponsored plans
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Types of Clients Edelman Financial Engines Serves
Edelman Financial Engines offers its services to both individuals, employees through workplace programs, small businesses, and corporations. No matter the client type, Edelman has set account requirements which vary depending on the service. Below are the initial contributions one must make for each account type:
| Client Type | Minimum Account Size |
|---|---|
| Legacy Clients | $5,000 (or $3,000 for legacy employee clients) |
| Workplace IRA | $10,000 |
| New Wealth Planning Clients | $50,000 |
| Institutional Investors | $500,000 |
Financial Advisor Services It Offers
Edelman Financial Engines’ services encompass investment advisory for employees with employer-sponsored retirement accounts, such as a 401(k), as well as wealth/financial planning for individual investors. Most of the company’s services are discretionary, which means that an advisor may manage your portfolio on your behalf. In general, the firm’s services break down into three different categories, which we explain below:
Discretionary Advisory Services for Employees
Edelman directs much of its services toward employees needing investment advisory for employer-sponsored retirement plans. This includes discretionary portfolio management, which offers clients:
- A cohesive plan that an advisor will adhere to as they build your portfolio. This includes achieving proper asset allocation and diversification to balance risk and reward.
- Consistent monitoring and, as needed, rebalancing of your portfolio.
- Access to an advisor via phone or online.
Clients can also gain access to Edelman’s Personal Advisor service if their employer has decided to offer it. With this, you’ll be able to utilize the expertise of a financial planner and investment manager for both workplace and non-workplace accounts. Keep in mind that this offering includes an additional fee, which you’ll be responsible for.
Discretionary Financial Planning
Provided you can meet the account minimums, Edelman also offers discretionary financial planning and investment advisory for tax-advantaged and non-tax-advantaged accounts. With this service, you’ll sit down with a professional and provide information about your goals, risk tolerance, and time horizon to come up with a strategy that works for you. Generally, the firm recommends you invest in a pre-set model portfolio, which includes the following security types:
- Equities
- Bonds
- Certificates of deposit (CDs)
- Cash and cash equivalents
- Mutual funds
- Exchange-traded funds (ETFs)
Non-Discretionary Online Advice
Edelman also provides an online portal through which you can receive financial advice. This service allows you to submit key information about your finances, and then receive assistance. Per the firm’s Form ADV 2A, you can typically expect the following from this offering:
- Access to a financial advisor via phone (toll-free).
- Predictions regarding your account’s value and how long it will take you to reach your goals.
- Advice regarding your retirement age and savings rates.
- Investment recommendations in a non-discretionary capacity, which includes:
- Advice on when to buy and sell certain assets.
- Guidance on how to achieve proper asset allocation within your portfolio.
- “Educational content,” which typically includes risk analyses and performance monitoring of various mutual funds.
Keep in mind that this service is non-discretionary. All transactions, even if made based upon a recommendation from the firm, are up to you to carry out if you wish.
Fee Structure
Edelman Financial Engines charges clients via a fee-only model. For most services, this is a percentage of your assets under management (AUM), which varies depending on what you select and how much you have. As we broke down above, the firm’s services mainly split into those through the workplace, as well as wealth planning for individual investors. Here’s how much each one will charge:
Discretionary Services Through the Workplace
This category includes both professional investment management and the firm’s Personal Advisor offering. The former charges up to 0.60% (or up to 0.75% for IRAs). For the latter, you’ll pay up to 1.35% and, potentially, an additional $225 flat advisory fee.
Wealth Planning
Edelman’s wealth planning service charges a percentage of your AUM, which scales down as your assets increase. Below is a table that illustrates the sliding scale based on how much you have in your account:
| AUM | Annual Fee Percentage |
|---|---|
| $0 to $400,000 | 1.75% |
| $400,001 to $750,000 | 1.25% on an additional $350,000 |
| $750,001 to $1,000,000 | 1.00% on an additional $250,000 |
| $1,000,001 to $3,000,000 | 0.75% on an additional $2,000,000 |
| $3,000,001 to $10,000,000 | 0.60% on an additional $7,000,000 |
| $10,000,001 to $25,000,000 | 0.50% on an additional $15,000,000 |
| $25,000,000+ | Varies/negotiable |
Edelman Financial Engines’ Investment Philosophy
Because Edelman’s services are primarily discretionary, the firm is committed to adhering to a fiduciary standard at all times as it manages clients’ accounts. Additionally, the company aims to base its recommendations on its understanding of your goals, risk tolerance, and time horizon. Once an advisor has these factors in mind, it’ll typically recommend a model portfolio that includes a combination of the following:
- Equities
- Bonds
- Certificates of deposit (CDs)
- Cash and cash equivalents
- Mutual funds
- Exchange-traded funds (ETFs)
Additionally, the firm does not collect a commission from clients for investments you make. This is, in large part, due to its effort to follow a fiduciary standard. Edelman pays its advisors a percentage of what it earns from the percentage it takes from your AUM.
Disclosures
Because Edelman Financial Engines is a registered investment advisor (RIA), it must report any legal actions or proceedings involving it or its representatives to the SEC. According to the firm’s Form ADV, it has no disclosures to report. This speaks well to the company’s trustworthiness and ethical standards, as most other firms often have several against them.
Customer Service
If you have questions or would like to contact Edelman Financial Engines, the firm gives you a few different options:
- Via its contact page
- By calling (833) PLAN-EFE
- By visiting a planner at a local branch
How to Get Started with Edelman Financial Engines
You can begin working with Edelman by visiting its website and searching for a planner near you. Additionally, if the firm offers services through the workplace, your employer may have more information on how to begin in that capacity. Once you connect with one of its advisors, you’ll be able to sit down and start carving out an investment strategy that fits your goals, risk tolerance, and time horizon.
Tips for Choosing a Financial Advisor Firm
With all of the companies to choose from, it can be hard to find the right financial advisor firm. As you search for one, it’s important to pay attention to key details that set each one apart from the others. Perhaps most important are the qualifications of individual advisors, as well as the firm. Be sure you select a registered investment advisor, as well as a professional who has credentials like Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Chartered Financial Consultant (ChFC) to their name.
It’s also critical to be aware of a firm’s account minimums and fee structure. Some firms are more geared toward wealthier clients and thus have steep minimums. Fees can also add up quickly, especially if they’re based on a percentage of your AUM, which most are.
Finding a professional you can work with locally may also be of importance to you. If you need help locating a vetted fiduciary advisor in your area, we recommend using this free matching tool. Once you fill out a quiz to understand your financial situation, it’ll present you with up to three options near you.
Methodology
The information in this review is based on publicly available information directly from Edelman Financial Engines’ website and the SEC. Neither the firm nor its representatives have any say on what we’ve included on this page.
Frequently Asked Questions
Is Edelman Financial Engines a fiduciary?
Edelman adheres to a strict fiduciary standard. It maintains its status as an RIA with the SEC and doesn’t charge clients a commission for any of its services, eliminating potential conflicts of interest. Additionally, the company has no disclosures on its Form ADV, which is emblematic of its commitment to a high ethical standard.
Is Edelman Financial Engines worth it?
This depends on what services you’re looking for. The firm heavily focuses on discretionary investment management and financial planning, especially for employees with employer-sponsored retirement plans. If you need assistance with growing your employer-sponsored retirement accounts, Edelman may be a good option.
How much does Edelman Financial Engines charge?
What you pay depends on the services you select. For its employee programs, you’ll pay up to 0.60% of AUM for investment management and up to 1.35% for its Personal Advisor service. However, the company’s Wealth Planning offering can be more expensive, depending on your asset level. For the first $400,000, Edelman charges 1.75%.
How do Edelman financial advisors get paid?
The firm pays its advisors a percentage of the AUM fee you pay. None of Edelman’s investment representatives earn a commission due to the company’s commitment to being a fiduciary.