Pros explained
- Dedicated advisor: Wealth management clients get access to a dedicated financial advisor who tailors their investment strategy to the client’s individual goals and creates a comprehensive financial plan that considers every aspect of the client’s financial life. Not all advisory firms offer dedicated advisors; some use a team-based strategy, which means you might not always interact with the same professional.
- Meet in-person or online: If you live near an Edelman Financial Engines office, you have the option to meet with your advisor in person. Virtual meetings are also available.
- Customized portfolios: Edelman offers custom and model portfolios that are diversified across a wide range of investment classes and industries, depending on a client’s needs. If you have complex finances or specific needs, your advisor might customize your portfolio with investments and an asset allocation that can better help you reach your goals.
Cons explained
- Potentially high AUM fee: You’ll pay an assets under management (AUM) fee of 1.75% on the first $400,000 of your assets managed by Edelman. Once you pass that threshold, the AUM percentage starts to go down. A 1.75% AUM fee is high compared to other financial advisor firms Buy Side has reviewed, so you might find a different company to be more affordable.
- Must choose from three partner custodians: To have Edelman Financial Engines manage your portfolio, you have to keep your assets in a Charles Schwab, Fidelity or Axos account. If you don’t already have an account with one of these brokerages, you’ll need to open one and transfer your assets there to work with Edelman. It’s not uncommon for financial advisors to require that clients keep their assets with a specific custodian, but if you don’t want to open an account with one of these companies, you’ll have to work with a different firm.
- Doesn’t disclose minimum balance requirements: Edelman Financial Engines doesn’t disclose the minimum account size it will work with, but says that in some cases it will waive its minimum requirements. This means you have to reach out to the company to find out if you qualify for its wealth management services.
Who should consider Edelman Financial Engines?
Consider Edelman if you have substantial assets and you’re looking for an advisory firm that offers holistic planning with a dedicated advisor. However, Edelman might not be the right choice for everyone, especially considering its wealth management services are generally offered through a wrap fee program.
Those with smaller balances (say up to $400,000) might be better off working with an advisor with lower AUM fees.
FAQ
What types of accounts does Edelman Financial Engines support?
Edelman Financial Engines supports taxable brokerage accounts and individual retirement accounts. It also offers services to participants in employer-sponsored retirement plans.
Is Edelman Financial Engines safe?
Yes. Edelman Financial Engines is a fiduciary financial advisory firm that serves 1.27 million clients nationwide. When you work with Edelman, your assets will be held with either Charles Schwab, Fidelity or Axos, which are all members of the Securities Investor Protection Corporation (SIPC). SIPC insurance protects investors in the event of brokerage failure, up to $500,000 per account. However, it does not protect you from losses due to market volatility or bad advice.
Anytime you work with a financial advisor, even if they work for a reputable firm, you should search their name on the Securities and Exchange Commission’s (SEC) investment advisor public disclosure website to see if they’ve been subject to any disciplinary actions or have a criminal history related to their advisory work. Edelman Financial Engines has not faced any disciplinary actions or violations from the SEC or Finra in the last five years.
How does Edelman Financial Engines compare to other advisors?
Edelman offers comprehensive financial planning with a dedicated advisor who manages your investments and advises you on every area of your financial life. However, it’s costly compared to other advisors, particularly for investors with fewer assets.
Is Edelman Financial Engines suitable for beginners?
Edelman could be a good option for beginner investors since you’ll get to work with a dedicated advisor who can provide hands-on investment management and financial planning advice. However, it also charges a relatively high AUM fee for balances below $400,000. The fee goes down for higher balances, but it might be worth shopping around to see what you could pay with other firms.
What customer support options are available with Edelman Financial Engines?
You can meet with your dedicated advisor in person or virtually. Advisors work with in-house specialists, such as tax experts, to optimize your financial plan to your specific needs and goals.
Methodology
We analyzed hundreds of data points and assigned ratings on a scale of 1 to 5 stars to create a list of advisors that cater to different preferences. We assign points based on weighted factors, with a maximum score of 100. Advisors with the highest point values are assigned 5 stars, and other advisors are assigned their ratings based on their total point values, with the lowest-scoring firms receiving 2 stars.
Each factor is weighted based on our assessment of how important features are to consumers, using information and data collected from Dow Jones surveys and the expertise of Buy Side team members.