In 2015, a slow, significant melding of wealth management companies began. Financial Engines, a publicly traded RIA to more than nine million 401(k) participants, bought The Mutual Fund Store, an RIA managing nearly $10 billion with financial advisors at 125 offices across the U.S.
The deal married two distinctly different RIAs. One with the technology to help millions of people save for retirement and another more traditional wealth management business, with advisors in offices creating financial plans for investors.
Then another deal in 2018 started the integration process all over again. Private equity firm Hellman & Friedman purchased Financial Engines, took the company private, and merged it with Edelman Financial Services, one of the country’s biggest RIAs managing $21.7 billion for more than 35,000 clients.
“The combined companies, with a shared vision, will create the leading provider of scalable, comprehensive, and unbiased advice for all investors,” a statement about the deal said.
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Fast forward to today: Edelman Financial Engines manages $230 billion, more than 320 advisors, and the process of combining the companies and creating a unified digital experience for all of its financial planners, clients and prospective clients, is finally complete.
“It’s been a journey,” Hamesh Chawla, chief technology officer at Edelman Financial Engines, told RIA Intel.
But as that one ended, many other journeys began.
The “vision” two years ago at the time of the merger wasn’t just marketing speak in a press release. From the start, the development of the company’s platform has been driven by Edelman Financial Engines’ particular philosophy of wealth management that prioritizes relationships. What really matters to an investor should be centric to conversations with their advisor and financial plans and investment management stem from there.
This philosophy is, of course, not drastically different from that of many other RIAs. But most other firms lack what Edelman Financial Engines has built.
Much of the RIA’s platform used by advisors, clients, and prospective clients was built in-house; not a patchwork of third-party software. It customized Salesforce to create its own client relationship management (CRM) system, and built its own financial planning software. The company’s planning “methodology” dictated all the construction, Chawla said.
As a result, the digital experience for prospects, clients, and advisors is connected and fluid. It establishes expectations from the start, like communicating virtually with an advisor. In turn, more prospects become clients and advisors get to know clients better and faster. For example, advisors can prompt prospects to complete online forms and questionnaires before they meet, saving time and helping advisors get to more meaningful conversations more quickly.
The unified system is already an improvement, but its biggest advantage is its adaptability.
“We’re actually very excited for the coming years because now we have a unified ecosystem ready and we can start to use our data,” Chawla said.
Insights from the activity and interactions between hundreds of advisors and thousands of clients — not to mention the millions of 401(k) participants — will help Edelman Financial Engines make decisions going forward and continue to mold its platform. For example, changes to even the smallest details on a website or mobile app might lead more prospects to complete an inquiry to speak to an advisor.
The RIA also believes it will be able to use insights from data to predict possible actions or requests by advisors or clients, then build software to make those suggestions. Those capabilities can save time, be a reminder of more creative solutions, or simply prevent some errors.
A recent survey of 100 wealth management executives by Accenture found that artificial intelligence is "perhaps the most discussed 'new technology' and a full 84% of C-suite executives believe they must leverage AI to achieve their growth objectives.” Edelman Financial Engines is exploring its uses but doesn’t believe it will supplant human advisors.
“Ultimately we don’t think that machine learning or AI will replace or diminish any sort of needs for the planners,” Chawla said. The company’s technology journey is all about getting closer to its clients. “That’s the key element...we really take a client-centric view.”
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.