Neil Gilfedder, CFA, Chief Investment Officer at Edelman Financial Engines, joined Keith Black, Managing Director at RIA Channel, to discuss the motivation for ETF investing.
With $41.7 billion of its $270 billion in assets invested in ETFs as of March 2024, Edelman Financial Engines ranks second on the RIA Channel Top 50 ETF Power Users List.
Edelman Financial Engines has provided ordinary Americans financial planning and investment services for 35 years. The firm combines Edelman Financial Services, one of the pioneers in financial planning in the 1980s, with Financial Engines, which was co-founded by Bill Sharpe, a Nobel Prize winner in economics, in the 1990s. Financial Engines brought modern portfolio theory and optimization to 401(k) plan participants, assuming that markets are generally efficiently priced. The 1,500-person team includes 360 financial planners in 140 offices nationwide.
In the wealth planning business, planners work personally with clients to build and implement financial plans. The workplace business manages 401(k) plans for hundreds of large companies. Participants in the workplace plans can be introduced to advisors in the wealth planning business.
Edelman Financial Engines has been investing in ETFs since 2005. When markets are efficient, investors should diversify widely across asset classes and invest at the lowest cost. In 2024, the firm added a spot bitcoin ETF where clients may opt-in to a small allocation. ETFs are also used in a series of ESG-focused offerings. Private investments, including private equity and private credit, are offered to high-net-worth clients in pursuit of higher returns. Edelman Financial Engines will make direct indexing available to clients in 2025 to enhance tax efficiency. Customization can be added to address client preferences, starting with a suite of portfolios across the risk spectrum.
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