Edelman Financial Engines Explained

Edelman Financial Engines
Type:Private
Industry:Financial services
Former Name:Edelman Financial Services
Financial Engines
Hq Location City:Santa Clara, California[1]
Num Locations:145[2]
Num Locations Year:2023
Areas Served:-->
Key People:Jay Shah (CEO)[3]
Owners:-->
Aum:US$270 billion[4]
Num Employees:1,500[5]
Num Employees Year:2024

Edelman Financial Engines is an American financial planning and investment advisory company. As of December 31, 2023, it has more than $270 billion in assets and more than 1.3 million clients.[6] [7] The company was formed by the 2018 merger of Financial Engines (founded in 1996) and Edelman Financial Services (founded in 1986).

History

Edelman Financial Services

Edelman Financial Services, a financial advisory firm, was founded in 1986[8] by married couple Jean and Ric Edelman.[9] Sanders Morris Harris Group, a publicly traded wealth management firm,[10] purchased a majority stake of Edelman Financial Services in 2005.[11] Sanders Morris Harris Group changed its name to Edelman Financial Group in March 2011, and Ric Edelman was named co-CEO of the company with George Ball.[12] Private equity firm Hellman & Friedman purchased a controlling stake in Edelman Financial Services in October 2015, at which point the company was managing $15 billion in assets.[13]

Financial Engines

Financial Engines was founded in 1996[14] by Nobel Prize-winning economist William Sharpe,[15] Stanford Law professor Joseph Grundfest, and attorney Craig W. Johnson.[16] In 1998, it offered its first retirement planning and fund picking software. The company launched its managed accounts offering to a small number of employers in September 2004. By December 2004, it had $1 billion in assets under management.[16] Financial Engines acquired registered investment advisory firm The Mutual Fund Store for $560 million in 2015.[17] By 2018, the company managed $160 billion in assets and was the largest provider of managed accounts in the defined-contribution market.[18] The company provided 401(k) investment advice managed by a proprietary technology platform with access to human advisers.[16] In 2018, its clients included Comcast NBCUniversal and IBM.[19]

Edelman Financial Engines

Hellman & Friedman acquired Financial Engines in 2018 for $3 billion and merged it with Edelman Financial Services. The new firm became the largest independent registered investment adviser in the United States, managing $191 billion.[14] Financial Engines CEO Larry Raffone became president and CEO of the combined company, while Ric Edelman was made its chairman of financial and investor education.[14] In November 2018, the merged company announced it would operate under the name Edelman Financial Engines.[20] One objective of the merger was to combine the companies' workplace retirement and financial planning services.[21]

For six consecutive years between 2018 and 2023, Barron's ranked Edelman Financial Engines as the #1 registered financial advisory firm in the United States.[22] [23] [24] [25] [26] Former Department of Labor assistant secretary Phyllis Borzi joined the company's board in November 2018.[27]

As of December 31, 2023, the company managed more than $270 billion in assets for more than 1.3 million clients, mostly in 401(k) plans.[28]

In March 2021, Edelman Financial Engines announced that Warburg Pincus would be taking a minority stake in the company. The transaction represented a valuation of $7.3 billion, a 62% increase in the company's value since its formation in 2018.[29]

In June 2021, Edelman Financial Engines announced that Ric Edelman would step down from his role as chairman of financial education and client experience but stay on as a strategic adviser and board member. He also remains the firm's largest individual shareholder.[30]

In January 2022, Edelman Financial Engines launched Everyday Wealth with Soledad O’Brien and Jean Chatzky, a financial and investment advice podcast hosted by Jean Chatzky and Soledad O’Brien. The weekly episodes covered personal finance, the economy, wealth management, and other financial topics. The podcast ended in early 2024.

Services

Wealth Management - As of January 2020, the company employed 320 financial planners overseeing nearly $40 billion across 92,000 retail clients.[31]

Workplace - This service manages 401(k) accounts for 1.1 million clients across 7,000 companies as of November 2020.[32] The company is the largest provider of managed accounts in the United States,[33] and has more clients than any other independent financial advisor.[34] It also offers Income+, an income service for customers entering or in retirement.[33] [35]

Tax Planning - In May 2021, to create a new internal tax planning division, Edelman acquired Viridian Advisors, a Washington State-based financial firm specializing in tax planning.[36]

Notes and References

  1. News: Ungarino . Rebecca . The CEO of $192 billion wealth firm Edelman Financial Engines lays out its post- pandemic roadmap, from 'doubling down' on digital to hiring more planners . 22 November 2020 . Business Insider . 20 May 2020.
  2. News: Edelman Financial Engines Picks Up PRW Wealth Management . 24 June 2024 . WealthManagement.com.
  3. Web site: Our Executive Team . Edelman Financial Engines . 22 November 2020.
  4. News: Edelman Adds $453M RIA in Pacific Northwest . 24 June 2024 . WealthManagement.com.
  5. Web site: EDELMAN FINANCIAL ENGINES - Investment Adviser Firm . 24 June 2024 . SEC.
  6. Web site: Sergeant . Jacqueline . Ric Edelman To Focus On AI, Crypto And More On New Radio Show, Podcast . FA-Mag.com . Charter Financial Publishing Network . 24 March 2022 . December 3, 2021.
  7. News: PE Daily: Strand Equity Bets on Studio McGee IPO Healthcare Exits Grow Hedge Fund Vet Adds Heft at Blackstone . 2 June 2021 . Wall Street Journal . 16 March 2021.
  8. News: Thrasher . Michael . Edelman Financial Engines Names Head of $40 Billion, 320-Advisor Retail Business . 15 April 2021 . RIA Intel . 23 January 2020 . en-gb.
  9. News: Caffrey . Michelle . $25M gift to transform Rowan University's fossil park into 'world-class destination' . 11 June 2020 . Philadelphia Business Journal . 17 October 2016.
  10. News: Jamieson . Dan . Why Ric Edelman is going private . 20 November 2020 . InvestmentNews . 26 April 2012.
  11. News: Wollman Rusoff . Jane . Ric Edelman: What's Wrong With IRAs, 401(k)s, and the Industry That Sells Them . 29 May 2020 . ThinkAdvisor . 12 May 2014.
  12. News: Giannone . Joseph A. . Adviser Edelman to lead renamed Sanders Morris . 22 November 2020 . Reuters . 15 March 2011.
  13. News: Wursthorn . Michael . Controlling Stake in Edelman Financial Sold . 20 November 2020 . The Wall Street Journal . 12 October 2015.
  14. News: Neal . Ryan W. . Financial Engines to be purchased for $3.02 billion, combined with Edelman . 20 November 2020 . InvestmentNews . 30 April 2018.
  15. News: Steverman . Ben . America's Biggest 401(k) Adviser Has a Plan to Manage All of Your Money . 20 November 2020 . Bloomberg . 12 September 2016.
  16. News: Anderson . Tom . Nest Egg-onomics: Financial Engines Revs Up Retirement Plans . 20 November 2020 . Forbes . 18 June 2014.
  17. News: Malito . Alessandra . Financial Engines' acquisition of The Mutual Fund Store a turning point in robo debate . 20 November 2020 . InvestmentNews . 17 November 2015.
  18. News: Neal . Ryan W. . T. Rowe Price expands partnership with Financial Engines . 20 November 2020 . InvestmentNews . 15 February 2018.
  19. News: Wenik . Ian . One year after mega-merger, Ric Edelman looks ahead . 20 November 2020 . Citywire . 5 August 2019.
  20. News: Edelman Financial Has a New Name . 20 November 2020 . Barron's . 6 November 2018.
  21. News: Salinger . Tobias . Edelman Financial Engines to be recapitalized at $7.3B valuation . 24 April 2021 . Financial Planning . 15 March 2021 . en.
  22. News: Garmhausen . Steve . Top Independent Financial Advisors . 22 November 2020 . Barron's . 14 September 2018.
  23. News: Fox . Michelle . 'It's going to get much uglier' — How to invest during the coronavirus pandemic, according to Ric Edelman . 22 November 2020 . CNBC . 27 March 2020.
  24. Web site: America's Best RIA Firms . Barron's . 22 November 2020.
  25. Web site: These Are the Top 100 Independent Advisors and Top 100 RIA Firms. Barron's. 25 October 2022.
  26. Web site: Barron's List of Top RIA Firms Brings Plenty of Movement but No Surprises. Financial Advisor IQ. 25 October 2022.
  27. News: Min . Sarah . Fiduciary leader Phyllis Borzi joins Edelman Financial Engines board . 20 November 2020 . InvestmentNews . 13 November 2018.
  28. News: Beltran . Luisa . Warburg to Invest in Edelman in Deal That Values RIA Firm at $7.3 Billion . 24 April 2021 . Barron's . 15 March 2021.
  29. News: French . David . Warburg Pincus acquires stake in Edelman Financial Engines . 24 April 2021 . Reuters . 14 March 2021 . en.
  30. News: Hallez . Emile . Ric Edelman to step down as chairman of Edelman Financial Engines . 2 July 2021 . InvestmentNews . 7 June 2021.
  31. News: Padalka . Alex . New Retail Business Head at Edelman Financial Engines . 22 November 2020 . Financial Advisor IQ . 27 January 2020.
  32. News: Steyer . Robert . COVID-19 uncertainty disturbs DC participants . 22 November 2020 . Pensions & Investments . 9 March 2020.
  33. News: Thornton . Nick . Managed accounts can save virus-panicked retirement savers from themselves . 22 November 2020 . BenefitsPRO . 3 March 2020.
  34. News: Hilton . John . Trillion-Dollar Advisory Firms On The Way, Tiburon Analyst Predicts . 22 November 2020 . Advisor News . 12 June 2020.
  35. News: Tergesen . Anne . Hayashi . Yuka . Income Options Are Coming to 401(k) Plans . 24 April 2021 . The Wall Street Journal . ProgramBusiness . 11 July 2019 . en.
  36. Web site: Foerch . Andrew . The $270bn mega-RIA is buying Viridian Advisors, a tax-focused shop based in the Seattle area . Citywire.com . Citywire Financial Publishers Ltd . May 19, 2021.

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