Edelman & Financial Engines merging

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davidkw
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Edelman & Financial Engines merging

Post by davidkw » Sun May 20, 2018 6:51 pm

Edelman Financial Engines

Ric Edelman, founder of Edelman Financial Services, says he personally drove one of the largest-ever RIA deals between his firm and robo advice giant Financial Engines. It's a marriage he believes will prove to be a bellwether.
Two shows that work the air waves well for their firms. Good to catch, but I would never invest with them.
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Re: Edelman & Financial Engines merging

Post by drk » Sun May 20, 2018 7:10 pm

Uh ...
Ric Edelman wrote: This thing was my idea. I think in the future we will turn and look backwards and say that this transaction was the beginning of a sea change in the financial services industry.
While Edelman's 35,000 clients are a rounding error in comparison to the larger firm's client base, they make his firm a giant among RIAs.
Ric Edelman wrote: Right now there are a couple of galaxies that are about to collide. When they do collide, no stars in either galaxy will actually hit each other because the universe if so big.
... right.

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Rick Ferri
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Re: Edelman & Financial Engines merging

Post by Rick Ferri » Sun May 20, 2018 7:18 pm

Every Financial Engines client will get the hard sell on Edelman Financial Services (fees up to 1.5% before fund costs) especially when they retire and roll out of their 401(k) plans. Considering that Financial Engines has over $160 billion in assets under advisement for tens of thousands of clients, this deal is very big in the RIA space (and a major blow for low fees).
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Re: Edelman & Financial Engines merging

Post by grettman » Sun May 20, 2018 7:27 pm

1.5%!!!! Yikes!

an_asker
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Re: Edelman & Financial Engines merging

Post by an_asker » Sun May 20, 2018 7:34 pm

One thing I don't understand about this forum - bash doctors (and/or their fees) and their brethren are up in arms against you; but bash a financial guy and his rivals pounce right on. Why don't we see similar behavior from doctors? In other words, if someone complains about paying an arm and a leg for a tooth, why do dentists on this forum say that it is what it is, you'd better pay up; instead of "wow, an arm and a leg for a tooth?! stay away from that dentist; you should be at most parting with a finger for a tooth, let alone an arm AND a leg?" ;-)

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privatefarmer
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Re: Edelman & Financial Engines merging

Post by privatefarmer » Mon May 21, 2018 1:54 am

an_asker wrote:
Sun May 20, 2018 7:34 pm
One thing I don't understand about this forum - bash doctors (and/or their fees) and their brethren are up in arms against you; but bash a financial guy and his rivals pounce right on. Why don't we see similar behavior from doctors? In other words, if someone complains about paying an arm and a leg for a tooth, why do dentists on this forum say that it is what it is, you'd better pay up; instead of "wow, an arm and a leg for a tooth?! stay away from that dentist; you should be at most parting with a finger for a tooth, let alone an arm AND a leg?" ;-)
maybe bc most of us have health insurance. we don't directly pay the crazy high medical costs, nor do we necessarily even see it. if we did pay cash for everything we probably would be smart enough to shop around for the most affordable medical providers. but with medicine, often when we need it it is for an urgent matter and we don't have the luxury to "shop around".

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Re: Edelman & Financial Engines merging

Post by IlliniDave » Mon May 21, 2018 3:26 am

I've resisted Financial Engines. Somehow or another they have become associated with my 401K, I guess my employer negotiated a discount rate to provide advising service to 401k participants. Since my employer seems very committed to providing a low cost plan, it will be interesting to see what happens over time if this merger results in an attempt to push high fee services.
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AtlasShrugged?
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Re: Edelman & Financial Engines merging

Post by AtlasShrugged? » Mon May 21, 2018 6:33 am

Ok, time for someone to say something nice about Ric Edelman. I am not an Edelman client - I did not want to pay the 1.5% AUM fee. :shock:

There is one service though that Edelman does provide that I feel gets lost in the Ric-Ripping: He does provide a free consultation, and in my case, it resulted in a fairly detailed, written plan. I will personally be grateful to Edelman's group for this service. It raised my awareness, and set me on a path where I found the Bogleheads. I do not know of many fee-for-service CFAs who do that (free consult which results in a written plan).

So yeah, the radio show is sort of bland, and has very 'plain vanilla' things. And yeah, that AUM fee is 1.5% is pretty steep (BTW, it goes down as your asset level increases, I think it was 0.5% for assets over 1.5MM). And yeah, I suppose this merger significantly broadens the pool for Ric Edelman. But it is not all bad; it is a mixed picture. Does the free consult bring about a pitch for business? Yup. Is that by definition bad? Nope.

Personally, I feel that Mr. Edelman does a really good thing for people with the free consult. He deserves credit for this. He preaches financial literacy which is woefully lacking in our society today.

Unlike doctors, at least you know what your fees will be when you use Edelman's service. :oops:
“If you don't know, the thing to do is not to get scared, but to learn.”

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Re: Edelman & Financial Engines merging

Post by Jags4186 » Mon May 21, 2018 6:41 am

These are Edelman’s fees. 1.4% on the first million. You need a bit over $2 million before you’re under 1% AUM.

Image
Last edited by Jags4186 on Mon May 21, 2018 6:44 am, edited 2 times in total.

JoeRetire
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Re: Edelman & Financial Engines merging

Post by JoeRetire » Mon May 21, 2018 6:42 am

an_asker wrote:
Sun May 20, 2018 7:34 pm
One thing I don't understand about this forum - bash doctors (and/or their fees) and their brethren are up in arms against you; but bash a financial guy and his rivals pounce right on. Why don't we see similar behavior from doctors? In other words, if someone complains about paying an arm and a leg for a tooth, why do dentists on this forum say that it is what it is, you'd better pay up; instead of "wow, an arm and a leg for a tooth?! stay away from that dentist; you should be at most parting with a finger for a tooth, let alone an arm AND a leg?" ;-)
By the time you know enough to select a high-quality dentist, you could probably pull your tooth on your own.
Or something like that...

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KSOC
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Re: Edelman & Financial Engines merging

Post by KSOC » Mon May 21, 2018 7:04 am

AtlasShrugged? wrote:
Mon May 21, 2018 6:33 am
Ok, time for someone to say something nice about Ric Edelman. I am not an Edelman client - I did not want to pay the 1.5% AUM fee. :shock:

There is one service though that Edelman does provide that I feel gets lost in the Ric-Ripping: He does provide a free consultation, and in my case, it resulted in a fairly detailed, written plan. I will personally be grateful to Edelman's group for this service. It raised my awareness, and set me on a path where I found the Bogleheads. I do not know of many fee-for-service CFAs who do that (free consult which results in a written plan).

So yeah, the radio show is sort of bland, and has very 'plain vanilla' things. And yeah, that AUM fee is 1.5% is pretty steep (BTW, it goes down as your asset level increases, I think it was 0.5% for assets over 1.5MM). And yeah, I suppose this merger significantly broadens the pool for Ric Edelman. But it is not all bad; it is a mixed picture. Does the free consult bring about a pitch for business? Yup. Is that by definition bad? Nope.

Personally, I feel that Mr. Edelman does a really good thing for people with the free consult. He deserves credit for this. He preaches financial literacy which is woefully lacking in our society today.

Unlike doctors, at least you know what your fees will be when you use Edelman's service. :oops:
+1

My wife and I went to one of his SS seminars about 5 years ago. I knew a little, she knew less. It was very informative, and I was surprised by the lack of sales push. And not only did my wife learn a lot, she seemed to enjoy it. We were entitled to a "Portfolio Review". We met with an advisor for about 1.5 hours. He was very nice. We talked about all our accounts & future income streams as well as our desires for retirement. I expected a big sell. Instead, we got "Well you look like you're doing very well. I think we could help you down the road with RMDs & SS stuff, but otherwise it looks like you are both on the right track. Think it over and call if you want our services". We were both a little stunned. I thought we'd get the car dealer squeeze. It made my wife at ease with our direction too.

The advisor called me about a month later, then a year later just to keep up, again no push. I really trust no one with our money. If something would happen to me I'm sure my wife would not want to be responsible, and would like advice. To her it would be worth at least a yearly review. The best part of Edelman was they believed in Indexing, ETF's & had no funds of there own to sell. I continue to go over our investments with her to make her more comfortable, and also show her their fees. Does this merger change Edelmans principles & advocate pushing certain funds?
Too soon old, too late smart.

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Re: Edelman & Financial Engines merging

Post by nisiprius » Mon May 21, 2018 12:54 pm

I hope Financial Engines was telling the truth, when they said they would delete all my data when I closed the free account I had with them. Some may recall that they were originally a completely free-as-in-beer website, and I opened an account with them in the year 2000 and gave them all my financial institutions' passwords. (Yes, I've since changed them).

While trying to refresh my memory of Financial Engines, I stumbled on this:

Image

I didn't know that. Sharpe, too? Isn't there any famous financial economist who is free from conflicts of interest?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

KSActuary
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Re: Edelman & Financial Engines merging

Post by KSActuary » Mon May 21, 2018 1:10 pm

Always ask for past returns for a similar type investor.

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Re: Edelman & Financial Engines merging

Post by peppers » Mon May 21, 2018 1:54 pm

Financial Engines came into our 401k plan about two years ago which is run by Fidelity. Go figure.

Fees for Financial Engines:

$50,000 or less 0.35%
$50,000 to $250,000 0.30%
$250,000 and over 0.25%

This does not include the ER's of the 401k funds which range from 0.01% to 0.31%

I do not use Financial Engines and have no desire to do so. I just don't see the value add by combining Edelman's firm to the mix.
"..the cavalry ain't comin' kid, you're on your own..."

JoeRetire
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Re: Edelman & Financial Engines merging

Post by JoeRetire » Mon May 21, 2018 4:40 pm

davidkw wrote:
Sun May 20, 2018 6:51 pm
Two shows that work the air waves well for their firms. Good to catch, but I would never invest with them.
Thanks.

I listened to some of the Financial Engines podcasts today (Investing Sense). Pretty interesting. Not unlike The Truth About Money podcasts by Edelman - some interesting questions and answers, a bit of industry news, decent bumper music, and lots of "talk to one of our advisers" answers.

Worth listening to overall, so I subscribed.

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Re: Edelman & Financial Engines merging

Post by sesq » Mon May 21, 2018 10:39 pm

AtlasShrugged? wrote:
Mon May 21, 2018 6:33 am
Ok, time for someone to say something nice about Ric Edelman. I am not an Edelman client - I did not want to pay the 1.5% AUM fee. :shock:

There is one service though that Edelman does provide that I feel gets lost in the Ric-Ripping:
Your point is taken but I think the forum has the Ric-Ripping correct. My sister-in-law is one of their clients. She was proud that she acquiesced to their suggestion that she save an additional $500/mo. The fees they charged here were a bit over $400/mo and north of 2% AUM inclusive of fund fees. My sister-in-law is emotional and I was told to back off, so I did. I hope Edelmen surprises us all and moves lower dollar value accounts onto the robo platform. I doubt it.

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Re: Edelman & Financial Engines merging

Post by SlowMovingInvestor » Tue May 22, 2018 2:43 pm

Jags4186 wrote:
Mon May 21, 2018 6:41 am
These are Edelman’s fees. 1.4% on the first million. You need a bit over $2 million before you’re under 1% AUM.
For larger asset bases, those fees are quite high. I assume the underlying funds have their own asset management fees, and transaction and recordkeeping costs shouldn't increase that much (if at all) for larger accounts, so what exactly does someone with a higher balance get for the extra $$ in Edelman FA's fees ?

More Exotic investments ? Tax and Estate Planning ? More hand holding :) ?

[ I realize of course, that Edelman is hardly unique in this -- indeed most FAs seem to charge as a prorportion of investment size, with some breaks at higher levels]

Twood
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Re: Edelman & Financial Engines merging

Post by Twood » Tue May 22, 2018 4:29 pm

peppers wrote:
Mon May 21, 2018 1:54 pm


< snip >


Fees for Financial Engines:

$50,000 or less 0.35%
$50,000 to $250,000 0.30%
$250,000 and over 0.25%

This does not include the ER's of the 401k funds

< / snip >
Looks like FE costs vary, because if I opted in, mine would be higher. Just an FYI for any readers who thought they didn't have to go look up their own after seeing a cost posted.

$100,000 or less - 0.60%
$100,000-$250,000 - 0.45%
Over $250,000 - 0.30%

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Taylor Larimore
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Re: Edelman & Financial Engines merging

Post by Taylor Larimore » Tue May 22, 2018 4:40 pm

Bogleheads:

I would like to see an actual portfolio designed by the Ric Edelman group.

Thank you and Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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unclescrooge
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Re: Edelman & Financial Engines merging

Post by unclescrooge » Tue May 22, 2018 4:51 pm

AtlasShrugged? wrote:
Mon May 21, 2018 6:33 am
Ok, time for someone to say something nice about Ric Edelman. I am not an Edelman client - I did not want to pay the 1.5% AUM fee. :shock:

There is one service though that Edelman does provide that I feel gets lost in the Ric-Ripping: He does provide a free consultation, and in my case, it resulted in a fairly detailed, written plan. I will personally be grateful to Edelman's group for this service. It raised my awareness, and set me on a path where I found the Bogleheads. I do not know of many fee-for-service CFAs who do that (free consult which results in a written plan).

So yeah, the radio show is sort of bland, and has very 'plain vanilla' things. And yeah, that AUM fee is 1.5% is pretty steep (BTW, it goes down as your asset level increases, I think it was 0.5% for assets over 1.5MM). And yeah, I suppose this merger significantly broadens the pool for Ric Edelman. But it is not all bad; it is a mixed picture. Does the free consult bring about a pitch for business? Yup. Is that by definition bad? Nope.

Personally, I feel that Mr. Edelman does a really good thing for people with the free consult. He deserves credit for this. He preaches financial literacy which is woefully lacking in our society today.

Unlike doctors, at least you know what your fees will be when you use Edelman's service. :oops:
I know a NorthWestern Mutual financial advisor life insurance agent who provides free financial plans. 100% of them contain whole-life insurance. :mrgreen:

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Re: Edelman & Financial Engines merging

Post by davidkw » Tue May 22, 2018 5:12 pm

Bogleheads:

I would like to see an actual portfolio designed by the Ric Edelman group.

Thank you and Best wishes.
Taylor

Ric has a quick robo advisor: Ric GPS
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

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Re: Edelman & Financial Engines merging

Post by davidkw » Tue May 22, 2018 5:21 pm

Taylor Larimore wrote:
Tue May 22, 2018 4:40 pm
Bogleheads:

I would like to see an actual portfolio designed by the Ric Edelman group.

Thank you and Best wishes.
Taylor
Ric has a GPS sample portfolio from his web site:RIC GPS
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

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Re: Edelman & Financial Engines merging

Post by nisiprius » Tue May 22, 2018 6:16 pm

davidkw wrote:
Tue May 22, 2018 5:12 pm
Bogleheads:

I would like to see an actual portfolio designed by the Ric Edelman group.

Thank you and Best wishes.
Taylor

Ric has a quick robo advisor: Ric GPS
I do not think this counts as an "actual portfolio." I can't speak for Taylor but to me an "actual portfolio" would name the actual funds and ETFs used.

Image

What on earth is "Exponential Technologies?" The only one I ever heard of is
Image
which became Intrinsity and was then bought by Apple.
Last edited by nisiprius on Thu May 24, 2018 9:00 am, edited 1 time in total.
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Re: Edelman & Financial Engines merging

Post by lack_ey » Tue May 22, 2018 6:43 pm

nisiprius wrote:
Tue May 22, 2018 6:16 pm
What the fumarole is "Exponential Technologies?" The only one I ever heard of is
https://en.wikichip.org/w/images/thumb/ ... z_X704.jpg
which became Intrinsity and was then bought by Apple.
It's something of an investment theme for Ric Edelman that he pushed, and he has enough AUM and clout to actually make a fund happen.

Check out iShares Exponential Technologies ETF (XT), which uses an index from Morningstar designed to kind of capture this investment theme of mostly technology/biotech/IT/robotics/whatever hot trend companies that for whatever reason might have the potential for some kind of exponential growth if... you know what, maybe it would be better to look for an explanation in his own words, but I don't think I care enough about what he thinks to actually look for it.
https://www.ishares.com/us/products/272 ... logies-etf

Top holdings are Netflix, Swedish Orphan Biovitrum, Infosys, Amazon, Seagate, XPO Logistics, Elekta, Splunk, H. Lundbeck, Adobe, Sky, 3D Systems, Boeing, Red Hat, Micron, Mastercard, Tableau Software, AMD, NVIDIA, and Illumina. Half the names I don't recognize are pharma or biotech.

Article from when it launched:
https://www.etftrends.com/2015/03/edele ... ogies-etf/

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Re: Edelman & Financial Engines merging

Post by pascalwager » Wed May 23, 2018 2:19 pm

nisiprius wrote:
Mon May 21, 2018 12:54 pm
I hope Financial Engines was telling the truth, when they said they would delete all my data when I closed the free account I had with them. Some may recall that they were originally a completely free-as-in-beer website, and I opened an account with them in the year 2000 and gave them all my financial institutions' passwords. (Yes, I've since changed them).

While trying to refresh my memory of Financial Engines, I stumbled on this:

Image

I didn't know that. Sharpe, too? Isn't there any famous financial economist who is free from conflicts of interest?
I don't see any conflict of interest as Sharpe left the company (FE) years ago. In fact, some arm twisting/persuasion was needed to get him to participate in the founding of FE.

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Re: Edelman & Financial Engines merging

Post by JoeRetire » Wed May 23, 2018 2:32 pm

sesq wrote:
Mon May 21, 2018 10:39 pm
The fees they charged here were a bit over $400/mo and north of 2% AUM inclusive of fund fees.
They don't charge "north of 2%". 2% is the max.
For most it would be "south of 2%".
Last edited by JoeRetire on Wed May 23, 2018 3:16 pm, edited 1 time in total.

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Re: Edelman & Financial Engines merging

Post by nisiprius » Wed May 23, 2018 2:40 pm

lack_ey wrote:
Tue May 22, 2018 6:43 pm
nisiprius wrote:
Tue May 22, 2018 6:16 pm
What the fumarole is "Exponential Technologies?" The only one I ever heard of is
It's something of an investment theme for Ric Edelman that he pushed, and he has enough AUM and clout to actually make a fund happen.

Check out iShares Exponential Technologies ETF (XT), which uses an index from Morningstar designed to kind of capture this investment theme of mostly technology/biotech/IT/robotics/whatever hot trend companies that for whatever reason might have the potential for some kind of exponential growth if... you know what, maybe it would be better to look for an explanation in his own words, but I don't think I care enough about what he thinks to actually look for it.
https://www.ishares.com/us/products/272 ... logies-etf

Top holdings are Netflix, Swedish Orphan Biovitrum, Infosys, Amazon, Seagate, XPO Logistics, Elekta, Splunk, H. Lundbeck, Adobe, Sky, 3D Systems, Boeing, Red Hat, Micron, Mastercard, Tableau Software, AMD, NVIDIA, and Illumina. Half the names I don't recognize are pharma or biotech.

Article from when it launched:
https://www.etftrends.com/2015/03/edele ... ogies-etf/
Got it. "Exponential" is definitely a cool way of saying "compound interest." I'll have to remember to use that. My bank account is growing exponentially, y = (1.015)^x.

A Guinness Flight Wired Index Fund for our time. (It tracked the "Wired Index for the New Economy.") (Ticker symbol was GFWIX). (Quick searches don't turn up what happened to it--it was the Invesco Guinness Flight Wired Index Fund for a while, it seems).
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Edelman & Financial Engines merging

Post by JoeRetire » Wed May 23, 2018 2:56 pm

Taylor Larimore wrote:
Tue May 22, 2018 4:40 pm
I would like to see an actual portfolio designed by the Ric Edelman group.
Here's one:

Vanguard Total Stock Market ETF (VTI) - 34%
Vanguard Total Bond Market (BND) - 28%
iShares Russell 1000 Value (IWD) - 14%
DFA World Ex-Us Core Equity I (DFWIX) - 13%
S&P North American Natural Resources (NANR) - 5%
Vanguard REIT Index (VNQ) - 4%
TDAM US Government Port (CMFUZ) - 2%

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Taylor Larimore
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Re: Edelman & Financial Engines merging

Post by Taylor Larimore » Wed May 23, 2018 3:10 pm

Joe Retire:

Thank you for responding to my request to see an actual Edelman portfolio. I"ve seen much worse but the fees would be a concern.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Edelman & Financial Engines merging

Post by JoeRetire » Wed May 23, 2018 3:12 pm

Taylor Larimore wrote:
Wed May 23, 2018 3:10 pm
Thank you for responding to my request to see an actual Edelman portfolio. I"ve seen much worse but the fees would be a concern.
You are welcome.

If by "the fees" you mean the AUM fees, then I understand your concern.

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Re: Edelman & Financial Engines merging

Post by sesq » Wed May 23, 2018 7:13 pm

JoeRetire wrote:
Wed May 23, 2018 2:32 pm
sesq wrote:
Mon May 21, 2018 10:39 pm
The fees they charged here were a bit over $400/mo and north of 2% AUM inclusive of fund fees.
They don't charge "north of 2%". 2% is the max.
For most it would be "south of 2%".
My recollection is that it was 2.24% inclusive of the fund fees but that was 14-15 months ago and I read the paperwork in a single sitting. Given the size of her portfolio this is consistent with my comment of $400/mo in fees. Aside from the expenses the portfolio was logical. It was sliced and diced into narrow allocations. My opinion is this meant to intimidate the client versus a simple 2-3 fund portfolios.

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Re: Edelman & Financial Engines merging

Post by JoeRetire » Thu May 24, 2018 5:42 am

sesq wrote:
Wed May 23, 2018 7:13 pm
My recollection is that it was 2.24% inclusive of the fund fees but that was 14-15 months ago and I read the paperwork in a single sitting. Given the size of her portfolio this is consistent with my comment of $400/mo in fees. Aside from the expenses the portfolio was logical. It was sliced and diced into narrow allocations. My opinion is this meant to intimidate the client versus a simple 2-3 fund portfolios.
Unless she wanted something unique, the fund fees are included in the AUM wrap fees, so it shouldn't ever come to over 2.0%.

Meant to "intimidate the client"? I don't understand that. Why would they want to intimidate the client?
Last edited by JoeRetire on Thu May 24, 2018 5:39 pm, edited 1 time in total.

KSActuary
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Re: Edelman & Financial Engines merging

Post by KSActuary » Thu May 24, 2018 12:16 pm

The Edelman fee structure is tiered like most firms with the first $1 million being charged a weighted 1.4% with the next million get 0.75% for a little north of 1% for 2 million portfolio.

Great work when you can get it!

confusedinvestor
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Re: Edelman & Financial Engines merging

Post by confusedinvestor » Fri May 25, 2018 1:20 am

In this podcast, Prof Sharpe talks about FE inception and why he left - no conflict of interest.

Podcast - https://www.bloomberg.com/news/audio/20 ... ness-audio

FE doesn't incorporate Prof Sharpe latest work - https://web.stanford.edu/~wfsharpe/ws/wi_ret.htm
pascalwager wrote:
Wed May 23, 2018 2:19 pm
nisiprius wrote:
Mon May 21, 2018 12:54 pm
I hope Financial Engines was telling the truth, when they said they would delete all my data when I closed the free account I had with them. Some may recall that they were originally a completely free-as-in-beer website, and I opened an account with them in the year 2000 and gave them all my financial institutions' passwords. (Yes, I've since changed them).

While trying to refresh my memory of Financial Engines, I stumbled on this:

Image

I didn't know that. Sharpe, too? Isn't there any famous financial economist who is free from conflicts of interest?
I don't see any conflict of interest as Sharpe left the company (FE) years ago. In fact, some arm twisting/persuasion was needed to get him to participate in the founding of FE.

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Re: Edelman & Financial Engines merging

Post by Church Lady » Fri May 25, 2018 2:40 am

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He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity. Ecclesiastes 1:8

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nisiprius
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Re: Edelman & Financial Engines merging

Post by nisiprius » Fri May 25, 2018 1:42 pm

JoeRetire wrote:
Thu May 24, 2018 5:42 am
sesq wrote:
Wed May 23, 2018 7:13 pm
My recollection is that it was 2.24% inclusive of the fund fees but that was 14-15 months ago and I read the paperwork in a single sitting. Given the size of her portfolio this is consistent with my comment of $400/mo in fees. Aside from the expenses the portfolio was logical. It was sliced and diced into narrow allocations. My opinion is this meant to intimidate the client versus a simple 2-3 fund portfolios.
Unless she wanted something unique, the fund fees are included in the AUM wrap fees, so it shouldn't ever come to over 2.0%.

Meant to "intimidate the client"? I don't understand that. Why would they want to intimidate the client?
So that the client will feel insecure investing on their own with a simple portfolio, and will feel reliant on the expertise of the advisor. So that the client will believe that each and every one of twenty different funds is in there for a specific, important reason and can't be eliminated without grave danger. And that in order to invest well, you need to keep in your memory and understand the history, return, risk, characteristics, and interactions of twenty different funds. To ensure that there are enough moving parts that the portfolio always needs rebalancing, which you can point to as an important task the advisor is doing for you. Complexity obviously serves the psychological purposes of the advisor. It also creates the impression that the advisor is doing a lot for his money. Who wants to pay $10,000 a year to have someone say "a single target-date fund is a good fit for your needs, so this year, on carefully reviewing your account, I recommend that you continue to keep all your money invested in that same target-date fund?"

Of course, complexity may be necessary and appropriate... sometimes.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Taylor Larimore
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Re: Edelman & Financial Engines merging

Post by Taylor Larimore » Fri May 25, 2018 6:54 pm

JoeRetire wrote: Why would they want to intimidate the client?
nisiprius wrote:So that the client will feel insecure investing on their own with a simple portfolio, and will feel reliant on the expertise of the advisor. So that the client will believe that each and every one of twenty different funds is in there for a specific, important reason and can't be eliminated without grave danger. And that in order to invest well, you need to keep in your memory and understand the history, return, risk, characteristics, and interactions of twenty different funds. To ensure that there are enough moving parts that the portfolio always needs rebalancing, which you can point to as an important task the advisor is doing for you. Complexity obviously serves the psychological purposes of the advisor. It also creates the impression that the advisor is doing a lot for his money. Who wants to pay $10,000 a year to have someone say "a single target-date fund is a good fit for your needs, so this year, on carefully reviewing your account, I recommend that you continue to keep all your money invested in that same target-date fund?"

Of course, complexity may be necessary and appropriate... sometimes.
Bogleheads:

Anytime I see an advisor-recommended portfolio with more than 8-10 funds, I immediately suspect what nisiprius described above.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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