First Trust Advisors L.P. is a fee-based registered investment advisor (RIA) that’s based in Wheaton, Illinois. The private, limited partnership manages billions in assets. Its client base primarily includes individual and institutional clients.
First Trust Advisors Background
First Trust was established in 1991, along with its affiliate, First Trust Portfolios L.P. (FTP). FTP provides supervisory, administrative and evaluation services for unit investment trusts (UITs). First Trust’s general partner is The Charger Corporation, and the firm’s only limited partner is Grace Partners of DuPage.
First Trust Advisors Client Types and Minimum Account Sizes
The firm’s client base consists of individuals and high-net-worth individuals, FTP-sponsored UITs, trusts, corporations, foundations, pension and profit sharing plans, mutual funds, variable annuity sub-accounts, exchange-traded funds, closed-end funds (CEFs) and collective investment funds (CIF).
If you’re interested in investing with First Trust, you’ll need at least $100,000 to establish an advisory relationship.
Services Offered by First Trust Advisors
First Trust specializes in the following advisory services:
- Portfolio management
- Selection of other advisors
- Security ratings or pricing services
- Publication of periodicals or newsletters
First Trust Advisors Investment Philosophy
First Trust’s core principles are to “know what you own, invest for the long-term, employ discipline, re-balance and control taxes," according to its LinkedIn page. The firm’s philosophy is rooted in the belief that a company’s long-term value is determined by the cash flow it produces.
Though the firm mainly focuses on equity securities, fixed income securities and alternative asset classes, it has multiple investment committees that oversee its research and securities analysis. Its investment committee consists of the Equity Sub-Committee, the Fixed Income Sub-Committee and the Alternatives Sub-Committee.
Fees Under First Trust Advisors
First Trust earns its compensation through the following three services: FTP-sponsored UITs, separately managed accounts (SMAs) and its management of CEFs, ETFs, open-end mutual funds and variable annuity sub-accounts (the funds). For its FTP-sponsored UITs, the firm assesses fees as a fixed amount per unit. Each trust’s prospectus specifies the exact fees. First Trust charges non-negotiable asset-based fees for the funds, and each fund’s prospectus also includes specific fees.
Individual or institutional clients with SMAs pay a standard annual fee of 0.50% of AUM if they’re invested in equity and balanced portfolios. Management fees are negotiable for individual clients with fixed income securities. In providing portfolio advice, First Trust says it may also rely upon the services of non-discretionary portfolio consultants or investment strategy providers. For instance, First Trust works with Morningstar Investment Management, LLC to provide such services. The firm then pays a portion of its compensation to these providers.
What to Watch Out For
Though the firm has a fiduciary duty to prioritize each client’s best interest, certain First Trust advisors may sell securities that generate compensation that is in addition to its management fees. This creates a conflict of interest if such advisors become incentivized to recommend investment products purely for personal gain.
First Trust doesn’t have any disclosures, according to its most recently filed Form ADV.
All information was accurate as of the writing of this article.
Tips for Retirement Planning
- Though budgeting and saving are two effective ways to grow your money for retirement, you can also benefit from employer-sponsored plans that allow your money to grow tax-free. These include 401(k)s, individual retirement accounts (IRAs) and Roth IRAs.
- If you’re looking for a financial advisor, SmartAsset’s free financial advisor matching tool matches you, within minutes, with up to three advisors. You can interview your advisor matches at no cost to decide which one is right for you.
