Edelman Financial Engines

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Edelman Financial Engines
FormerlyEdelman Financial Services
Financial Engines
Company typePrivate
IndustryFinancial services
Founded1986; 38 years ago (1986)
Headquarters
Santa Clara, California[1]
Number of locations
150[2] (2021)
Key people
Jay Shah (CEO)[3]
AUMUS$291 billion [4]
Number of employees
1,500[5] (2020)
Websiteedelmanfinancialengines.com

Edelman Financial Engines is an American financial planning and investment advisory company. As of March 2021, it has $291 billion in assets and more than 1.3 million clients.[4][6] The company was formed by the 2018 merger of Financial Engines (founded in 1996) and Edelman Financial Services (founded in 1986).

History[edit]

Edelman Financial Services[edit]

Edelman Financial Services, a financial advisory firm, was founded in 1986[7] by married couple Jean and Ric Edelman.[8] Sanders Morris Harris Group, a publicly traded wealth management firm,[9] purchased a majority stake of Edelman Financial Services in 2005.[10] 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.[11] 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.[12]

Financial Engines[edit]

Financial Engines was founded in 1996[13] by Nobel Prize-winning economist William Sharpe,[14] Stanford Law professor Joseph Grundfest, and attorney Craig W. Johnson.[15] 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.[15] Financial Engines acquired registered investment advisory firm The Mutual Fund Store for $560 million in 2015.[16] By 2018, the company managed $160 billion in assets and was the largest provider of managed accounts in the defined-contribution market.[17] The company provided 401(k) investment advice managed by a proprietary technology platform with access to human advisers.[15][13] In 2018, its clients included Comcast NBCUniversal and IBM.[18]

Edelman Financial Engines[edit]

Hellman & Friedman acquired Financial Engines in 2018 for $3 billion[19][20] and merged it with Edelman Financial Services.[13][21] The new firm became the largest independent registered investment adviser in the United States,[13] managing $191 billion.[18] 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.[13] In November 2018, the merged company announced it would operate under the name Edelman Financial Engines.[22] One objective of the merger was to combine the companies' workplace retirement and financial planning services.[23]

For five consecutive years between 2018 and 2022, Barron's ranked Edelman Financial Engines as the #1 registered financial advisory firm in the United States.[24][25][26][27][28] Former Department of Labor assistant secretary Phyllis Borzi joined the company's board in November 2018.[29] The company named Kelly O'Donnell, founder of its Women in Leadership program, as head of its workplace business in November 2019.[30][31] Jason Van de Loo became head of its wealth planning business in January 2020.[32]

As of August 2020, the company managed $291 billion in assets for more than 1.3 million clients,[4][33] mostly in 401(k) plans.[34]

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.[35]

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.[36]

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 cover personal finance, the economy, wealth management, and other financial topics.

Services[edit]

Wealth Management - Jason Van de Loo heads Edelman Financial Engines' retail wealth management. As of January 2020, the company employed 320 financial planners overseeing nearly $40 billion across 92,000 retail clients.[37]

Workplace - This service, managing 401(k) accounts for 1.1 million clients across 7,000 companies as of November 2020, is led by Kelly O'Donnell.[38] The company is the largest provider of managed accounts in the United States,[39] and has more clients than any other independent financial advisor.[40] It also offers Income+, an income service for customers entering or in retirement.[39][41]

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.[42]

References[edit]

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