Waddell & Reed is a fee-based financial advisor firm with nearly $27 billion in assets under management (AUM). The firm has one of the largest advisor pools in the U.S., as it is affiliated with around 1,700 advisors. The Overland Park, Kansas-based firm's client base totals around 180,000, with most of these clients being individuals with less than a high net worth.
Although Waddell & Reed's advisors work with clients directly, these advisors are technically independently partnered with the firm. This means your advisor utilizes Waddell & Reed's investment and financial planning services, but they aren't actually employed by the firm. Waddell & Reed also offers partnered advisors access to its in-house investment and broker-dealer services.
Waddell & Reed Background
This firm functions as a wholly owned subsidiary of Waddell & Reed Financial, Inc., a publicly traded mutual fund company. Waddell & Reed has provided various advisory services since 1937. The firm was founded by World War I veterans Chauncey Waddell and Cameron Reed. The firm offers its services through around 400 offices throughout the country.
Waddell & Reed Client Types and Minimum Account Sizes
This Kansas-based firm’s client base consists of mostly non-high-net-worth and high-net-worth individuals. The firm's institutional clients include pension and profit-sharing plans, trusts, estates, charitable organizations, corporations and government entities.
This firm doesn’t specify any minimum account size requirements for its financial planning services, though investment advisory services can vary.
Services Offered by Waddell & Reed
Clients with an account under Waddell & Reed’s management have access to an array of advisory services, including:
- Portfolio management
- Custom portfolio creation
- Periodic rebalances
- Independent analysis
- Long-term investment needs planning
- Financial planning
- Estate planning
- Retirement planning
- College fund planning
- Home purchase planning
- Life insurance needs analysis
- Investment planning
- Pension consulting
- Advisor referrals
The firm’s financial planning services also encompass survivor income needs, disability income, long-term care, asset allocation, business planning and income tax planning. In addition, the firm offers fee-based asset allocation and wrap fee programs.
Waddell & Reed Investment Philosophy
Waddell & Reed generally recommends that clients diversify their assets across a range of asset classes. This can protect them from being overly reliant on returns from a specific area of the market. The firm’s three key principles include listening to the client, build a plan based on their needs and continued advising as their needs and goals change. Waddell & Reed says on its website that it builds its investment products and services them in a way that meets different and specialized client needs.
The firm says it also uses planning tools, which can adjust to economic changes, tax laws and life changes. This is also related to the firm's rebalancing services.
Fees Under Waddell & Reed
At Waddell & Reed, financial planning fees are negotiable between the advisor and the client. The firm determines financial fees based on the complexity of each client’s financial situation. To determine this difficulty level, Waddell requires each client to complete a complexity worksheet, which is part of the financial planning services agreement. The firm then uses three levels of rating to determine a client’s complexity: basic, intermediate or advanced.
According to the firm's Form ADV, the maximum amount advisors can charge for "Basic Complexity" is $2,500, while the maximum fee for "Intermediate Complexity" is $5,000. For clients with an "Advanced Complexity," $10,000 is the most that can be charged.
When it comes to investment advisory services, Waddell & Reed typically charges clients a specific percentage of their assets under management. Between the firm's four main advisory programs (Choice MAP, Classic MAP, MAPDirect and MAPLatitude), fees vary wildly, with rates dropping as the client's AUM pool grows in size.
What to Watch Out For
Waddell & Reed has eight disclosures listed on its Form ADV. Each of the disclosures were related to regulatory violations. Most recently in 2016, the firm reportedly violated New Hampshire securities law, as one of the firm’s investment advisors was found to have verbally misrepresented the financial planning fees he charged to clients. The New Hampshire Bureau of Securities also found the firm’s supervision of the investment advisor to be deficient.
As a result of this situation, the firm entered into a consent order and paid a fine of $300,000 to resolve the matter. Waddell also agreed to repay some of the financial planning fees paid by clients of the advisor under investigation.
This firm is fee-based, as advisors can offer affiliated mutual fund investments, which can earn them commission-based compensation. This can create a potential conflict of interest if advisors favor these over other investment solutions that would be more suitable to client needs. The firm’s fiduciary duty prevents such conflicts, though, ensuring advisors work in each client’s best interest.
Opening an Account With Waddell & Reed
Waddell & Reed offers a few options for getting in touch. Prospective clients looking to open an account can fill out the firm’s online contact form, and a firm representative will reach out with answers to any questions you may have. You can also visit any of the firm’s offices, or you can call the firm at (913) 236-2000 to speak with an advisor over the phone.
All information is accurate as of the writing of this article.
Tips for Investing
- If you’d like professional guidance with your investments, a financial advisor could be right for you. Our free financial advisor matching tool can connect you with up to three local advisors within minutes. Get started now.
- Investing can be a great way to save for retirement. Whether you’re a passive or active investor, you can generate significant returns through practices like portfolio diversification and asset allocation. If you’d like a better picture of how much money your investments can earn you over time, consider using our investment calculator.