In 1986, Edelman Financial Engines (EFE) was founded on the belief that all investors – not just the wealthy – deserve access to personal, comprehensive financial planning and investment advice. Today, it has been recognized as the top independent financial planning and investment advisory firm six years in a row by Barron's. This year, the firm marks the 20th anniversary of its industry-leading 401(k) managed account program.  EFE has been the largest managed accounts provider to defined contribution plans every year since 2008. 

Back in 2004, EFE, led by its tech-driven Silicon Valley heritage, paved a new way for employees to save, invest, and draw down their assets in retirement. This was at a time when custom portfolios and personalization were unique concepts in the 401(k) market. During the past 20 years, EFE has performed nearly 150 million portfolio reviews through its managed account program, while monitoring and providing personal advice and management to millions of investors on their journey to reach their retirement goals. Today, EFE advises 1.2 million individual workplace plan participants and manages nearly $210 billion in 401(k) assets.

One of the primary benefits of a managed accounts program is the potential for increased savings. During the past decade, the savings rates of EFE managed account users have consistently averaged higher than non-users. According to client data, program members today are contributing an average of 9.1% of their income to their account, compared to 7.8% for non-members and 7.1% specifically for individuals primarily invested in a single target-date fund. This translates to an average of $9,700 each year in an individual member's retirement savings versus $8,400 for a non-member.

Managed account members have an increased likelihood to keep their assets in the plan, protecting them from taking potentially harmful actions like cash distributions, according to a recent analysis of more than 200,000 plan participants from retirement plan recordkeeper Alight. Alight, which offers the EFE managed account program to employers, found that users of managed accounts and related advisory services were 3.1 times more likely (72% vs 23%) than non-users to keep their assets in the plan after leaving their company. At the same time, they were 3.4 times less likely to take a cash distribution upon termination, which can trigger tax penalties and undermine savings goals. 

Twenty years ago, as the 401(k) continued to replace traditional pension plans as the primary employer-sponsored retirement program, "we saw an opportunity to step in and offer sophisticated financial advice to employees who typically didn't have access to independent and personalized investment management," according to Kelly O'Donnell, President of Employer Services at Edelman Financial Engines. "It's incredible to see how the industry has progressed and innovated since then. Today, leading employers, plan providers, and consultants all recognize the important role managed accounts play in improving employee's retirement outcomes."

EFE partners with many of the country's largest employers and leading retirement plan recordkeepers to account for roughly 45% of the industry's more than $430 billion assets under management. The firm is entrusted by more than 1.3 million clients to manage more than $270 billion in assets. EFE became a Hacienda tenant in 2005. It has more than 145 offices across the nation and was recently recognized as one of America's Greatest Workplaces for Women 2024 by Newsweek and Plant-A Insights Group.

For more information about Edelman Financial Engines, please visit www.edelmanfinancialengines.com, www.linkedin.com/company/edelman-financial-engines, or www.facebook.com/edelmanfinancialengines. 

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