Understanding Edelman Financial Engines Fees and Value

Edelman Financial Engines is a well-established financial services company that offers a range of investment and planning tools to its clients.

The company's fees are structured to be transparent and competitive, with a focus on providing value to its clients.

Edelman Financial Engines offers a range of services, including financial planning, investment management, and retirement planning, all of which come with associated fees.

These fees are calculated based on a percentage of the client's assets under management.

Edelman Financial Engines' fees are based on a percentage of your total investable assets. This percentage changes based on how much wealth is being managed by your advisor.

The firm's fee structure is designed to be highly competitive in the marketplace, according to Ric Edelman, the founder of Edelman Financial Services. Most clients don't pay the maximum 1.75% fee given the size of their accounts.

For accounts with $150,000 or less in assets, the annual fee is 1.75%, a reduction from the previous 2% fee. For accounts with more than $150,000, the fee cuts are negligible.

New accounts with $400,000 in assets will pay 1.75% versus 1.78% for legacy accounts, and new accounts with $1 million in assets will pay 1.3875% versus 1.4% previously. These changes are expected to take effect in early 2019.

In addition to the fees above, clients pay roughly another 30-35 basis points for the mutual funds or ETFs in which their accounts are invested.

Here's a breakdown of the firm's fees for different account sizes:

Edelman Financial Engines offers a range of specialized services to help clients maximize their wealth, including integrated wealth management, retirement planning, tax planning, insurance guidance, and estate planning.

Their financial advisors take a team-based approach to connect the different pieces of a client's financial life, providing a cohesive view of their overall wealth.

The company advocates for working with a fee-only financial advisor, who charges clients directly for their advice and ongoing management, minimizing conflicts of interest.

A Fee-Only financial advisor charges clients directly for their advice and/or ongoing management, with no other financial incentive from any institution.

This model minimizes conflicts of interest because Fee-Only advisors don't sell anything, they add value with their Philosophy, Strategy, Process, Transparency, and Ongoing Coaching.

We strongly encourage you to work with a fee-only Advisor, as it's the most transparent and unbiased way to receive financial advice.

Salaried advisors, on the other hand, are paid a salary by their firms, but they may still have conflicts of interest that influence their advice.

Salaried financial professionals offer a level of predictability in their compensation, which can alleviate concerns about advisor fees tied directly to product sales.

However, it's essential to understand any potential conflicts that might influence their advice, even if they're not directly tied to product sales.

Edelman Financial Engines offers a range of specialized services to help clients maximize their wealth.

Their team of experts takes an integrated approach to wealth management, coordinating with a dedicated financial advisor to connect different pieces of a client's financial life, including investments, taxes, insurance, retirement, and estate planning.

To get answers to some of your other services questions, see their Retirement Planning FAQ and Tax Planning FAQ.

Their services are designed to help clients build, grow, protect, and preserve their wealth, providing a cohesive view of their financial life.

Edelman Financial Engines' approach to risk is centered around matching each client's investment risk to their unique financial goals, personal circumstances, and risk tolerance.

They use a proprietary methodology that takes into account economic factors, asset class historical risks, and fund- and stock-level risks. This methodology has even been awarded a patent.

To accurately model investment risk, the company considers multiple factors, including economic conditions and the historical performance of different asset classes.

The company's investment portfolios are created to suit different client needs, with various risk levels available to match each client's comfort level.

Edelman Financial Engines will ask you to complete a client questionnaire to understand your financial goals, risk tolerance, time horizon, and other relevant factors.

Financial advisors get paid in a variety of ways, and understanding their compensation is crucial to making informed financial decisions.

You should always ask upfront how your financial advisor is compensated, as it's a fair question that shouldn't make you feel embarrassed.

Asking about compensation early on can help you avoid unexpected fees or biases in your advisor's recommendations.

Financial advisors may have fees based on the amount of assets you have to invest, but some may have other forms of compensation that might be preferable.

It's essential to understand how your financial advisor gets paid to make informed decisions about your financial goals.

Edelman Financial Engines' fees can be a bit steep, especially for smaller accounts. The starting fee can be a jaw-dropping 1.75%/year on the first $400,000.

You'll pay a combination of fees, including the internal expense of the investments used, which can add up to a total fee of 2.25%/year. This is because of Wall Street greed, which has unfortunately come to roost in many financial institutions.

The good news is that the fees are based on a percentage of your total investable assets, and this percentage changes based on how much wealth is being managed by your advisor. To get a better understanding of what kind of fee structure would apply to your account, you'll need to connect with a planner and answer a few questions.

In general, the management fee will vary depending on how much money is under management. For example, if your advisor is managing $500,000 worth of investments with a 1% management fee, they would earn $5,000 for the year. This fee is often paid quarterly.

Edelman Financial Engines has a low minimum account size of just $5,000, which is a bit lower than most other RIA firms. However, the top fee is set at 1.75%, which is at the higher end of financial advisory fees.

Here's a breakdown of the fees for different account sizes:

Keep in mind that these fees are in addition to the costs for trading and custodial services, which can range from 30-35 basis points for mutual funds or ETFs.