With a national footprint, Valic Financial Advisors, Inc. has $17.63 billion in assets under management. It is a broker-dealer and an investment advisor. Its name is an acronym of its parent company, The Variable Annuity Life Insurance Company, and the firm also goes by the name of AIG Retirement Services.
Though advisors are employees of the company, they are technically independent advisory representatives (IARs). They are also broker-dealer representatives and most are insurance agents as well. The company is headquartered in Houston.
Valic Financial Advisors Background
Like many corporate subsidiaries, Valic Financial is part of a large (read: confusing) organizational structure. It is wholly owned by The Variable Annuity Life Insurance Company (VALIC), which in turn is owned by AGC Life Insurance Company, which in turn is owned by AIG Life Holdings, Inc., which in turn is owned by SAFG Retirement Services, Inc., which in turn is owned by American International Group (AIG), Inc. This is all to say that Valic Financial is a part of AIG.
According to the company’s most recent SEC filings, it employs 2,115 people, of whom 1,358 are IARs, 1,674 are brokers and 1,528 are insurance agents.
Valic Financial Advisors Client Types and Minimum Account Sizes
The vast majority of clients are not uber-wealthy. The exact numbers are 309,010 individual clients who do not have a high net worth and 381 who do. The company also works with participants in employer-sponsored retirement plans, trusts, corporations and other business entities, depending on the advisory program.
Minimum account sizes also depend on the advisory program. For the Managed Investment Program (MIP), Valic Financial requires $5,000 to $250,000, depending on the portfolio. There is no minimum for the Guided Portfolio Services (GPS) Program, which is available only to participants in a retirement plan with VALIC or VALIC Retirement Services Company. There’s also no minimum for the Guided Portfolio Advantage (GPA) Program, though you need to purchase a Porfolio Director (PD) Freedom Advisor contract to participate and the contract has a minimum premium payment of $25,000.
Services Offered by Valic Financial Advisors
Valic Financial provides discretionary investment management services through three wrap fee programs. MIP accounts can choose from 15 model portfolios. Ranging from very conservative to very aggressive, these portfolios are managed by advisors from Envestnet Portfolio Solutions, Inc., Russell Investment Management, LLC and CLS Investments, LLC.
Accounts in the GPS program invest in a VALIC Portfolio Director variable annuity or in a mutual fund program. Again, participants are limited to those in retirement plan accounts where VALIC or VALIC Retirement Services Company is the plan service provider.
To be eligible to enroll in the GPA Program, you must purchase a VALIC PD Freedom Advisor fixed and variable annuity contract. Contributions are invested in diversified model portfolios that are designed and managed by Morningstar. The portfolios use a tactical asset allocation.
Financial planning is also available, though only to investment clients.
Valic Financial Advisors Investing Philosophy
Valic Financial’s IARs are not investment managers. The actual work of constructing portfolios is outsourced to people who specialize in securities analysis. The models they use run the gamut, providing an appropriate asset allocation for every kind of risk profile.
Fees Under Valic Financial Advisors
Clients who have MIP accounts will be charged a program fee. This program fee is a percentage of assets under management (AUM) and includes the fees and costs for services provided by the IAR, Valic Financial, Envestnet, the investment manager and National Financial Services. It doesn’t include underlying mutual fund or exchange-traded fund fees or other costs. Here are some sample tiered annual program fee schedules:
|MIP Progam Fee|
|AUM||MIA Portfolio; Index Plus MIA Portfolio; MIA Retirement Income Portfolio; MIA AIG Funds Portfolio; MIA California Residents Portfolio|
|More than $5,000,000||0.57%|
|MIP Program Fee|
|AUM||MIA ActivePassive Portfolio|
|More than $5,000,000||0.49%|
|MIP Program Fee|
|AUM||Integrated MIA Portfolio|
|More than $5,000,000||0.82%|
For the GPS program, fees are determined with the employer-sponsor. For the GPA program, clients pay an annual advisory fee rate of up to 1.12% of AUM. Finally, financial planning is done on a flat-fee basis and may amount up to $1,500.
What to Watch Out For
IARs wear multiple hats. When they are advising you on investments, they are legally bound by a fiduciary duty to put your interests first. But when they are selling you products or acting as your broker, they do not have to bide by a fiduciary standard. This can be confusing to clients.
In its most recent SEC filings, Valic Financial reported 17 disclosures. Five involved advisory affiliate individuals and three involved affiliate companies. Of the 9 actions involving Valic Financial itself, most involved regulatory issues. Fines ranged from $50 to $1,750,000.
All information was accurate as of the writing of this article.
Tips for Finding the Right Financial Advisor
- Want to talk to a fee-only advisor - who doesn't sell products? SmartAsset’s free, five-minute matching tool can help. After answering questions about yourself, you’ll be matched with up to three advisors based on your preferences.
- Ask prospective advisors if they adhere to the fiduciary standard of putting clients’ interests first. Yes is the ideal answer, of course. But they may follow a lower standard of providing only suitable recommendations.