AE Wealth Management is a financial advisor firm headquartered in Topeka, Kansas. As a registered investment advisor (RIA), AE Wealth Mangement works with a network of advisors throughout the country, offering asset management and financial planning services to thousands of clients. These clients are a mix of individuals, high-net-worth individuals and institutions.
As a fee-based firm, certain AE Wealth Management advisors may earn commissions when recommending products and services in their additional capacities as brokers and/or insurance agents.
AE Wealth Management Background
AE Wealth Management was founded by David Callanan and David Bach in February 2016. Callanan is the founder of Advisors Excel, LLC, while Bach is a popular writer and speaker with expertise in investing and personal finance.
Today, the firm is owned by DDC Holdings, LLC, the Karlun M. Callanan 2016 Irrevocable Trust A, and the Jennifer A. Foster 2016 Irrevocable Trust A. David Callanan and Cody Foster are the primary owners of DDC Holdings LLC. David Callanan is also the trustee of the Karlun M. Callanan 2016 Irrevocable Trust A, while Foster is the trustee of the Jennifer A. Foster 2016 Irrevocable Trust A.
AE Wealth Management Client Types and Minimum Account Sizes
AE Wealth Management works with individuals, high-net-worth individuals, trusts, estates, charitable organizations, retirement and profit-sharing plans, as well as corporations and other business entities.
The firm requires that you have at least $10,000 in order to open an account. The firm can make an exception at its discretion, particularly if you anticipate making additional deposits in the near future or a member of your immediate family is also an AE client.
Services Offered by AE Wealth Management
AE Wealth Management offers three broad categories of services to clients: direct asset management services, model portfolio solutions and financial planning services. The direct asset management services are offered on a discretionary basis, which means the firm will be able to buy and sell securities for your account without your specific permission. That said, you will be able to impose restrictions ahead of time if you wish to ensure that your account avoids certain securities or products.
Model portfolio solutions allow you to review a collection of model portfolios and choose one that you feel aligns most closely with your financial preferences. AE Wealth Management consults with third-party firms to create the collection of model portfolios.
The firm’s financial planning services typically address at least one of the following areas:
- Investment planning
- Retirement planning
- Insurance planning
- Tax planning
- Education planning
- Portfolio review
- Asset allocation
AE Wealth Management Investment Philosophy
AE Wealth Management advisors focus on delivering consistently reliable returns to their clients rather than hunting for home-run style transactions that may bring unnecessary risk. When determining securities to recommend, the firm looks at past performance, potential sensitivity to business cycles and broader macroeconomic factors.
The firm generally prizes a buy-and-hold approach over active trading, and it also engages in tactical asset allocation and value investing. Tactical asset allocation establishes a range of percentages for each asset class in your portfolio, which allows you some flexibility but also ensures that you’re keeping your portfolio diverse. Value investing involves looking for stocks that you feel have good long-term potential but the market is undervaluing for one reason or another.
Fees Under AE Wealth Management
AE Wealth Management calculates fees for its asset management services based on a percentage of assets under management (AUM). The exact rate is negotiable depending on the type of client, the complexity of the account, the client's relationship with the firm and the size of the account. The firm may charge clients as much as 2.50% of assets under management. These fees will be paid monthly in arrears.
Here are the maximum asset-based fees you may pay, based on the size of your account:
|*Estimated investment management fees do not include brokerage, custodial, third-party manager or other fees, which can vary in amount.|
|Estimated Investment Management Fees at AE Wealth Management*|
|Your Assets||AE Wealth Management Fee Amounts|
|$500K||Up to $12,500|
|$1MM||Up to $25,000|
|$5MM||Up to $125,000|
|$10MM||Up to $250,000|
For financial planning services, clients will be charged an hourly fee or a fixed fee. Hourly fees can range from $0 to $500 per hour based on the complexity of the account. Fixed fees typically range from $0 up to $10,000. The exact rate will be specified before you enter into a financial planning relationship, so you’ll know what you’re paying from the outset.
What to Watch Out For
AE Wealth Management has 13 disclosures on its SEC record, meaning that the firm and its advisory affiliates have been cited for violations of investment-related regulations in the last 10 years. All but two of these disclosures involve advisory affiliates, not the firm directly. However, in one case, AE Wealth Management was accused of "negligence, breach of fiduciary duty, negligent retention and supervision" in a lawsuit. The firm paid $12,673 to settle the case in 2019.
Also, certain advisors at AE Wealth Management are also registered representatives of Madison Avenue Securities, which is a registered securities broker-dealer. While these advisors won’t receive commissions in their capacity as AE Wealth Management advisors, they are permitted to conduct security transactions and receive commissions for those transactions in their capacity as Madison Avenue Securities representatives. This ability creates a potential conflict of interest since advisors may be incentivized to steer clients toward securities that will generate commissions.
Additionally, AE Wealth Management advisors may be licensed as independent insurance agents with Advisors Excel, LLC or Asset Marketing Systems Insurance Services, LLC. This means they could earn commissions by selling insurance products to clients. A conflict of interest also exists here because advisors would have an incentive to recommend insurance products to clients instead of focusing exclusively on the client’s needs.
That said, the firm discloses these conflicts before beginning any relationship with a client, and you are under no obligation to follow recommendations. Furthermore, the firm is bound by fiduciary duty, meaning that it is legally obligated to act in your best interest at all times.
Opening an Account With AE Wealth Management
If you’re interested in opening an account with AE Wealth Management, the easiest way to get started is to head to the firm’s website and click on “Find an Advisor” on the left sidebar. From there, you can find the AE advisor closest to you and reach out either by phone, email or in person to set up an initial consultation.
All information is accurate as of the writing of this article.
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