Review of AE Wealth Management

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It may not have not been reviewed, commissioned or otherwise endorsed by any of our network partners or the Investment company.

Written By

Updated on Monday, March 9, 2020

AE Wealth Management is a relatively new registered investment advisor. Since 2016, the firm has built a nationwide network of directly-employed advisors and independent contractors to provide financial planning services, with a particular focus on retirement advice. AE Wealth Management advisors charge varying fees, and are often separately licensed to sell annuities and other insurance products.

All information included in this profile is accurate as of March 9, 2020. For more information, please consult AE Wealth Management’s website.

Assets under management: $5,526,239,350
Minimum investment: Typically $10,000, although exceptions exist
Fee structure: Fees vary by advisor, with a maximum of 2.9% of AUM
Headquarters location: 2950 SW McClure Road, Suite B
Topeka, KS 66614
(866) 363-9595
wealth.advisorsexcel.com

financial advisor

Overview of AE Wealth Management

Based in Topeka, Kan., AE Wealth Management is fairly new to the scene — it only registered as an investment advisor in February 2016. The names behind the firm, however, have deep roots in the industry: the prolific personal finance author and commentator David Bach co-founded the firm, and serves as its Director of Education and public spokesperson.

AE Wealth Management is affiliated with an insurance marketing organization called Advisors Excel, which helps financial advisors grow their business. Two Advisors Excel founders — David Callanan and Cody Foster — own the firm.

Today the firm has more than $5.5 billion in assets under management and a team of 373 employees, including 318 who perform investment advisory and research functions. Many of AE Wealth’s advisors focus on retirement planning, and may recommend insurance or annuities in addition to traditional portfolio instruments such as stocks, bonds and mutual funds.

Typically your AE Wealth advisor is an independent contractor — not an employee — who partners with the firm for investment management services and technology.

What types of clients does AE Wealth Management serve?

Individual investors make up more than 97% of AE Wealth Management’s clients. The firm also serves some high net worth individuals, as well as trusts and estates, charitable organizations, pension and profit sharing plans and other businesses.

You’re generally required to have $10,000 minimum per account, but exceptions can be granted for a client’s immediate family member or if the advisor anticipates you will bring additional funds in the near future.

Services offered by AE Wealth Management

Financial advisors working with AE Wealth Management primarily focus on managing an individual’s investment accounts for a set annual fee. They’ll craft a portfolio specifically tailored to your situation, and execute it by buying and selling in that account, without needing to get your approval for each transaction.

Advisors generally administer clients’ investments in one of two ways: they can personally choose certain investments solely for you and serve as your portfolio manager, or they can put your money in specific model portfolios, managed either by AE Wealth Management or an outside party.

AE Wealth Management’s advisor representatives are also available to help you navigate a wide variety of financial issues. They can provide formal written guidance or one-time verbal consultations on topics such as investments, retirement, insurance, taxes and education. Fewer customers paid for that service, however, according to the firm’s most recent regulatory disclosures.

Separate from their roles with AE Wealth Management, most of their employees are also licensed agents of an insurance company and through those relationships can also sell clients annuities and life insurance products to spur on the growth of your retirement income.

Finally, the firm attempts to educate and motivate clients through newsletters, seminars and workshops.

Here is a complete list of services offered by AE Wealth Management:

  • Investment advisory services and portfolio management (both wrap and non-wrap fee accounts; discretionary)
  • Financial planning
    • Retirement planning
    • Education planning
    • Tax planning
    • IRA and 401(k) rollovers
  • Insurance & risk management
  • Workshops and seminars/newsletters and publications

How AE Wealth Management invests your money

To determine how to directly invest your money, or which model portfolio might be best for you, you’ll fill out a questionnaire addressing your financial situation, investment objectives and risk tolerance. Your investment advisor will review that information and craft a plan tailored to your needs.

The investment team uses numerous analytical methods to determine which investments to recommend to clients. They analyze statistical and chart factors, such as price movements, volume and open interest, to try to anticipate future asset price movements, and look at which investments are sensitive to business and economic cycles. They also dig for investments they think are undervalued relative to the fundamentals of the company, such as the strength of the management team, industry conditions and other qualitative factors.

To select which model portfolios they offer clients, the team also consults the investment wisdom of an outside firm.

Fees AE Wealth Management charges for its services

Since many of the firm’s advisor representatives run their own companies and work as independent contractors for AE Wealth Management, there is no set fee schedule. Annual fees vary by advisor representative and are negotiable. Generally speaking, on both model portfolios and accounts managed directly by the advisor, an annual fee of up to 2.9% of your assets under management is permitted. AE Wealth Management takes part of that fee, and gives a cut, say 0.15%, for example, to their technology platform provider, and another, say, 0.25% to the model portfolio manager, when applicable. On smaller accounts, be aware that the platform provider may charge a minimum fee of at least $100.

Clients can choose to pay that percentage annual fee bundled with transaction commissions, ticket charges and custodian fees, known as a wrap fee. You can also choose a separate management fee payment to AE Wealth Management and, in addition, pay separately for custody and transaction fees. Your fees are automatically deducted from your account each month. The wrap fee option is typically less expensive when there is heavy trading in your account, but pricier when you buy and hold.

In addition to the fees above, you could still owe additional fees to third parties, including mutual fund and exchange traded fund (ETF) sales loads and surrender charges, and variable annuity fees and surrender charges. Variable annuity fees in particular can be significant if you need the money before your surrender period. If you choose AE Wealth Management, be sure to ask your advisor for a complete account of all costs before making any commitments.

Beyond your investment management fee, clients may pay additional fees for financial planning and consulting, either hourly or per project. Again the fees will vary, ranging from $0 all the way up to a maximum of $500 per hour or $10,000 per project. Before starting any work, advisors provide an estimate of the number of hours to complete the project, and will contact you to receive approval before billing more than the initial estimate if more time is required to complete the necessary work.

Bear in mind that within that financial plan, the advisor may recommend you sell securities in order to buy annuities, life or disability insurance. In that situation, always ask the advisor your specific costs for commissions, deferred sales charges and other fees and expenses.

AE Wealth Management’s highlights

  • Low minimum investment: While many investment advisors demand a six or even seven figure minimum investment, AE Wealth Management works with middle income investors and requires only a $10,000 account minimum. Advisors may even work with smaller accounts at their discretion, perhaps if, say, they expect more money from you in the near term.
  • Robust technology to view your accounts: The firm provides an online platform that provides a holistic view of your accounts, investments, insurance products, 401(k), pension and IRAs.
  • National recognition: According to Financial Advisor magazine’s 2019 rankings, AE Wealth Management doubled its assets under management from 2017 to 2018. The firm already works with hundreds of advisors across the country, and is aiming to expand its network further.

AE Wealth Management’s downsides

  • Pays for referrals: The firm pays certain people cash for referring clients their way, as well as an ongoing percentage of assets under management if an account is established. You should ask anyone who recommends AE Wealth specifically why it’s a good fit for you over other firms, and what they may stand to gain from making the referral.
  • Fees vary by advisor: Representatives can negotiate whatever fees they prefer within the ranges set forth by AE Wealth, thus you won’t know in advance what you’ll pay without shopping each individual advisor.
  • Potentially high fees: Nationwide, the average fee is about 1.2% of assets under management, including transaction costs, but the firm’s advisors are allowed to charge up to a maximum of 2.9% a year. If an advisor charges close to the maximum, you can probably find lower fees elsewhere.
  • Financial incentives to sell certain products. Many of AE Wealth’s advisors are also separately registered to sell annuities, life insurance and disability insurance, which are perhaps marketed, wholesaled or designed by affiliate firms of AE Wealth Management. Advisors are also registered representatives of a broker-dealer and can sell you investments, such as stocks and mutual funds, through a brokerage account and earn a commission, in addition to or instead of managing your money for a fixed fee through AE Wealth. Thus, it may be in their best interest to recommend the product to you which pays the highest commission, creating a conflict of interest.

AE Wealth Management disciplinary disclosures

The SEC requires investment advisors to disclose in their Form ADV any legal or disciplinary event that is material to a client’s evaluation of the advisory business or the integrity of the management personnel. AE Wealth discloses a few events related to specific individual advisory affiliates. Additionally, the firm discloses a settlement with a private individual and a $12,600 fine related to investments in a real estate mortgage fund.

AE Wealth Management onboarding process

To learn if AE Wealth Management has an advisor representative near you, look at the Find an Advisor tab on its homepage. If you decide to work with one of their affiliated advisors, you’re required to have a brokerage account with TD Ameritrade or Fidelity. Both firms give AE Wealth Management access to their institutional trading and custody services.

You will receive quarterly reports from the custodian and, in addition, periodic performance reports from AE Wealth Management. At the least, your advisor will review your asset management accounts annually, or at your request. Financial planning services are one-time projects, and do not include ongoing monitoring of your accounts.

Is AE Wealth Management right for you?

Middle income investors who live in an area with an AE Wealth Management affiliated advisor may appreciate the availability of a $10,000 account minimum. Still, you would need to meet with the advisor to find out what they charge, and if any financial planning services are included, since prices vary by advisor and are negotiable.

Remember that advisor representatives wear multiple hats and often also work as insurance agents and for broker-dealers. Be aware the advisor may try to sell you annuities or life insurance products, or securities, mutual funds or other investments through a brokerage account where they earn a commission. Always ask why advisors are recommending a particular product, and what they stand to earn if you go with their recommendations.

When shopping for a financial advisor, it’s your job to untangle the web of who gets paid what for what particular services, and make sure you’re comfortable with what you uncover.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Do you have a question?