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Edelman Financial Engines Review

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Edelman Financial Engines

Edelman Financial Engines is a financial advisor firm that has $205.60 billion in assets under management (AUM). The firm, which is headquartered in Sunnyvale, California, has 467 advisors across its 180 branches located throughout the country. Edelman Financial Engines offers an assortment of services focused on financial planning, investment management, retirement planning and money management.

Edelman Financial Engines Background

Edelman Financial Engines was officially formed on November 1, 2018 via the merger of Edelman Financial Services, LLC and Financial Engines Advisors, L.L.C. Both of these two firms were in the advisory business for some time before merging. Edelman was established in 1986 by Ric and Jean Edelman, and Financial Engines was created in 1997. Edelman Financial Engines is under the principal ownership of Edelman Financial Engines, L.P.

Prior to the merger, Edelman Financial Services and Financial Engines Advisors each received a number of accolades from various financial publications. In fact, Barron’s ranked Edelman Financial Advisors as the top independent financial advisor in the U.S. in 2018*. Financial Times ranked both firms on its list of the top U.S. registered investment advisors (RIAs)**.

What Types of Clients Does Edelman Financial Engines Accept?

As a firm with more than 1.15 million clients, Edelman Financial Engines serves a wide range of individual and institutional investors. More specifically, Edelman Financial Engines works with non-high-net-worth individuals, high-net-worth individuals, estates, trusts, investment advisors, small to mid-size businesses, employer-sponsored defined contribution plan participants, pension plans, profit-sharing plans, retirement plans, associations, foundations and other charitable organizations.

Edelman Financial Engines Minimum Account Size

Edelman Financial Engines’ required account minimum varies by service type. The firm’s requirements are as follows:

  • Edelman Managed Asset Program® (EMAP) wrap fee program
    • Individuals: $5,000
    • Institutions: $500,000
  • EFS Edelman Retirement Program (ERP): no minimum
  • IRA management through the workplace: $10,000
  • Independent IRA management: $50,000
  • Defined contribution plan participant services: maintain an account balance of $5

Services Offered by Edelman Financial Engines

Edelman Financial Engines offers a multitude of services that span different areas of financial planning, investment management and retirement account management. Here is the firm’s full list of offerings:

  • Financial planning
    • General goal-based financial planning
    • Retirement savings planning
    • Retirement income planning
    • Insurance analysis
    • Tax considerations
    • Credit and debt advice and planning
    • Home ownership and mortgage analysis
  • Investment management
    • Fiduciary services
    • Investment recommendations and advice for:
      • Mutual funds
      • Separate accounts
      • Commingled funds
      • Exchange-listed equities
      • CDs
      • Bonds
      • Variable annuities
    • Portfolio forecasting analyses for: 
      • Foreign exchange stocks
      • Options
      • Warrants
    • Account monitoring
  • Retirement income solutions
    • Employer-sponsored defined contribution accounts
      • 401(k)
      • 457
      • 403(b)
    • IRAs
    • Taxable accounts

Edelman Financial Engines Investment Philosophy

Though Edelman Financial Engines has a company-wide investment ideology, it says that it focuses primarily on the personal needs of each client. More specifically, the firm looks at each client’s financial goals, risk tolerance, liquidity needs, time horizon and any preferred investment types or styles.

On the whole, Edelman Financial Engines is focused on long-term goals. The firm says that it achieves long-term investing success through strict diversification, cost-effective investment choices and periodic and purpose-driven rebalances and reallocations. Edelman Financial Engines also typically avoids short-term strategies, as the fees and other costs associated with frequent trading can lower a portfolio’s return potential.

Fees Under Edelman Financial Engines

The merger between Edelman and Financial Engines resulted in a new fee schedule with lower rates for both new and legacy accounts. Edelman Financial Engines’ fees vary depending on which service you use. Generally, the firm bases its fees on a percentage of assets under management. Occasionally, you may encounter other fee types, such as hourly fees and fixed fees.

For the most part, Edelman Financial Engines charges clients on a quarterly basis. Fees are charged in arrears and are calculated based on the average daily balance of your account during the prior quarter. The firm will automatically deduct most charges from your account, though you first may have to give authorization.

New Client Fees
Assets Annual Fee
First $400k 1.75%
Next $350k 1.25%
Next $250k 1.00%
Next $2MM 0.75%
Next $7MM 0.60%
Next $15MM 0.50%
Over $25MM negotiable

  

EMAP Institutional Fees
Assets Fee
Up to $999,999 1.40%
$1,000,000 - $1,999,999 1.00%
$2,000,000 - $4,999,999 0.75%
$5,000,000 - $9,999,999 0.60%
$10,000,000 - $24,999,999 0.50%
Over $25,000,000 negotiable

Check out the table below to see how Edelman Financial Engines’ fees for its asset management services compare to those at other financial advisor firms. Note that these fees are only estimates and actual costs may vary.

*Fee estimates only consider the maximum base fees for the services each firm provides. You may also pay manager fees and other fees, which can vary in amount. **All figures are based on median fee levels according to Bob Veres' 2017 Planning Profession Fee Survey. The above estimates solely take into account AUM-only fees. Total costs will likely be higher due to additional expenses.
Estimated Fee Comparison*
Your Assets Edelman Financial Engines New Client Fees National Median Advisory Fees**
$500K $8,250 $5,000
$1MM $13,875 $8,500 - $10,000
$5MM $40,875 $25,000 - $32,500
$10MM $70,875 $50,000

What to Watch Out For

Edelman Financial Engines participates in both E*TRADE and TD Ameritrade’s client referral programs. Although the firm does not receive financial compensation in either case, its participation in these programs could present a potential conflict of interest. This is due to the fact that the firm has an incentive to recommend that clients select either E*TRADE or TD Ameritrade as their account custodian. Edelman Financial Engines is a fiduciary, though, which requires the firm and its advisors to act in clients’ best interests under all circumstances. It should also be noted that this is a fairly common occurrence in the financial advisor industry.

Disclosures

Edelman Financial Engines has no legal or regulatory issues on its record.

Opening an Account With Edelman Financial Engines

The best way to get in touch with Edelman Financial Engines is to either visit its website or call the firm at (888) 752-6742. Whichever route you choose, the firm will then help you to locate advisors in your area so you can get started as soon as possible.

Where Is Edelman Financial Engines Located?

Edelman Financial Engines has a massive presence throughout the country. It currently has more than 180 branches. The firm’s headquarters is in Sunnyvale, California, at 1050 Enterprise Way. Additional offices are located in Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin.

How to Build an Investment Portfolio

  • Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.  
  • Investors can sometimes neglect to consider taxes when evaluating their investments. Capital gains taxes will impact your return on investment, though, so it’s important to know how much you can expect to pay when Uncle Sam comes knocking. SmartAsset’s capital gains tax calculator can help you calculate the total capital gains tax you’ll pay.
*Barron's Top 40 Independent Advisory Firm Ranking is based on a combination of qualitative and quantitative factors, including AUM, number of advisors and compliance record. The ranking does not account for investor returns. The 2018 ranking refers to Edelman Financial Services, LLC before its merger with Financial Engines Advisors, L.L.C. in November 2018.
**Financial Times' list of the 300 top U.S. registered investment advisors in 2018 is based on six factors, which include AUM, AUM growth rate, companies' years in existence, compliance record, industry certifications and online accessibility. This list was compiled prior to the merger that created Edelman Financial Engines.

How Many Years $1 Million Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about the cost of living in retirement for that location.

Least
Most
Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology To determine how long a $1 million nest egg would cover retirement costs in cities across America, we analyzed data on average expenditures for seniors, cost of living and investment returns.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city. Using this data, SmartAsset calculated the average cost of living for retirees in the largest U.S. cities.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%. This reflects the typical return on a conservative investment portfolio. Then, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would cover retirement expenses in each of the cities in our study. Cities where $1 million lasted the longest ranked the highest in the study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research