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Updated on Friday, June 12, 2020
Allworth Financial is a private-equity backed financial services firm with 16 offices located throughout the country, primarily in California. The firm has more than 200 employees and offers a variety of services, including financial planning, investment mangement, tax services and estate planning, mainly to individual investors. Allworth Financial currently has more than $8 billion in assets under management (AUM).
All information included in this profile is accurate as of June 12, 2020. For more information, please consult Allworth Financial’s website.
|Assets under management: $8,095,778,922|
|Minimum investment: $100,000|
|Fee structure: percentage of AUM; fixed fees; hourly fees; performance-based fees|
|Headquarters:||8775 Folsom Blvd., Suite 100|
Sacramento, CA 95826
- Overview of Allworth Financial
- What types of clients does Allworth Financial serve?
- Services offered by Allworth Financial
- How Allworth Financial invests your money
- Fees Allworth Financial charges for its services
- Allworth Financial’s highlights
- Allworth Financial’s downsides
- Allworth Financial disciplinary disclosures
- Allworth Financial onboarding process
- Is Allworth Financial right for you?
Overview of Allworth Financial
Founded in 1996, Allworth Financial is 70% owned by the private equity firm Parthenon Capital Partners firm, and 30% by co-chief executive officers Scott T. Hanson and Patrick C. McClain. Hanson and McClain are also the firm’s co-founders and co-hosts of the long-running Money Matters radio show.
The firm, previously known as Hanson McClain Advisors, changed its name in 2019 following a spate of acquisitions of other RIA firms in a quest to build a national brand. Hanson and McClain sold a majority stake in the business to Parthenon Capital in 2017. In the 1990s, Hanson and McClain also ran Liberty Reverse Mortgage, which they sold to Genworth Financial, and which is now one of the largest reverse mortgage companies in the country.
Allworth Financial has just over 200 employees, 145 of whom perform investment advisory functions. The majority of the firm’s advisors are certified financial planners (CFPs). Allworth Financial has 16 offices, half of which are in California; the remaining offices are located throughout the Midwest and the South.
What types of clients does Allworth Financial serve?
Allworth Financial works primarily with individuals, including a couple thousand high net worth individuals. (For reference, the SEC defines high net worth individuals as those with at least $750,000 in assets under management or a net worth of at least $1.5 million.) The firm also works with pension and profit-sharing plans, charitable organizations and businesses.
Allworth Financial requires a minimum household investment of $100,000 to open an account. However, it will occasionally make exceptions for existing clients or those with the potential for larger future investments.
Services offered by Allworth Financial
Investment advisory services: Allworth Financial provides advisory services to clients, mostly on a discretionary basis (meaning the advisor buys and sells investments on behalf of the client without getting authorization for each transaction), with a focus on preparing for retirement. Additional services include tax planning, estate planning and consultation services for 401(k) providers.
Financial planning services: The firm also offers several levels of financial planning for interested clients at an additional fee. Comprehensive Planning – Advanced provides the most extensive level of service, which includes coordination with your other advisors, such as lawyers or accountants, to develop a personal financial plan that may address issues such as business succession and financial legacy planning.
The next level, Comprehensive Planning – Financial Independence, focuses on helping clients achieve financial independence by making sure their portfolio can support them through retirement if they stop working. The two more basic levels of financial planning are Comprehensive Planning and Comprehensive Financial Review. Financial planning clients can choose whether they want to use Allworth Financial for asset management services as well.
Weekly newsletter and workshops: Allworth Financial also produces a weekly newsletter and highly attended workshops, which drew nearly 10,000 people last in 2019.
Here is a full list at the firm’s services:
- Investment management (discretionary/non-discretionary)
- Financial planning
- Retirement planning
- Trust and estate planning
- Tax planning and management
- Cash flow forecasting
- Divorce planning
- Insurance/risk management
- Qualified retirement plan consulting services
- Workshops and seminars
- Newsletters and publications
- Collaboration with clients’ lawyers, accountants, etc.
- Tax preparation, planning and bookkeeping
How Allworth Financial invests your money
Allworth Financial has more than 15 model portfolios that it uses for clients. It selects a portfolio for clients based on their financial situation, goals and risk profile. The model portfolios are made up of a variety of low-fee and no-load mutual funds and exchange-traded funds (ETFs), and range from all equity to all fixed income.
Here’s how they break down:
|Allworth Financial Model Portfolios|
|Active Plus||Blend of mutual funds and ETFs, including active mutual funds and liquid alternatives|
|Active Plus Conservative Income||Focuses on income first and capital preservation second, includes actively managed bond mutual funds, ETFs and liquid alternative strategies|
|Core-Satellite||Blend of mutual funds and ETFs, with a focus on low-cost ETFs; does not have direct exposure to liquid alternative strategies|
|Core-Satellite Plus||Blend of mutual funds and ETFs, with a focus on low-cost ETFs; does use liquid alternative strategies|
|Dynamic||Blend of mutual funds and ETFs with a focus on low-cost ETFs; the non-core portion of the portfolio may make tactical moves|
|Dynamic Balanced Income||Blend of mutual funds and ETFs meant to generate income and protect against market downturns|
|Dynamic Diversified Income||Blend of mostly equity mutual funds and ETFs meant to generate income|
|Dynamic US||Blend of mutual funds and ETFs focused on low-cost ETFs, excluding international stocks|
|Efficient Market Discipline||Blend of passively managed equity-based mutual funds and actively managed fixed-income mutual funds|
|Efficient Market Discipline Core||Blend of a limited number of actively managed fixed income-based mutual funds and passively managed equity-based mutual funds|
|Efficient Market Discipline Core I||Blend of a limited number of passive mutual funds|
|Efficient Market Discipline ESG||Blend of passively managed equity-based mutual funds that use environmental, social and governance factors and actively managed fixed-income-based mutual funds|
|Efficient Market Discipline ESG Core||Blend of a limited number of passively managed equity-based mutual funds that use environmental, social and governance factors, and actively managed fixed-income based mutual funds|
|Efficient Market Discipline Non-U.S.||Blend of passive mutual funds|
|Market Data Discipline||Long/short strategy using ETFs that may use leverage through margin and hold short positions|
|Pure Index||Primarily low-cost, market cap-weighted ETFs|
The firm does not attempt to time the market, but it may adjust cash holdings based on client situations and market behavior. The firm’s in-house investment management team screens thousands of potential investments each year, choosing those that it believes will best create diversification, reduce risk and provide growth potential.
For clients who have also engaged the firm for financial planning services, AllWorth Financial works with them to determine their “7 Personal Decision Points” to create the right strategy. Those points are:
- Retirement income needs: To find these, an advisor looks at a client’s current income sources and estimates taxes, savings and expenses that you’ll have in retirement.
- Expense and debt management: For clients who are bringing debt to retirement, advisors create a plan to help them reduce or manage it.
- Tax planning: This involves figuring out decisions, such as when to start taking distributions from retirement accounts, which state you’ll live in in retirement and what your tax bracket will be.
- Investment management: An advisor will work with you to make sure you have sufficiently diverse investments that make sense for your risk tolerance and time horizon.
- Risk management: This includes not only protecting your portfolio from stock market downturns, but also making sure that you’re appropriately insured.
- Estate and legacy planning: Advisors will help you through the estate planning process and work with other advisors, such as an attorney or insurance agent, to implement the plan.
- Distribution and income sources: This decision point requires figuring out which retirement accounts to tap, when to take Social Security and how to make your money last.
Fees Allworth Financial charges for its services
Allworth Financial charges separate fees for its financial planning and asset management services.
Asset management fees: The fee for asset management management services varies and is negotiated on a case-by-case basis, though it typically does not exceed 1.85% of assets under management. Most of Allworth Financial’s asset management services are offered as part of a wrap fee program, which means that you won’t have to pay additional transaction costs when the firm buys or sells a security on your behalf.
Clients who previously worked with Siena Wealth Management, which Allworth acquired in August 2019, may be subject to a different fee schedule and are not part of a wrap fee program.
In some cases, Allworth Financial will charge a fee of 1% of assets under management, along with a performance-based fee of 20% of the capital gains above a hurdle rate of 5% above S&P 500 price index return on a net return basis.
If Allworth Financial opts to use unaffiliated strategists for client accounts and ends up implementing these recommendations, the client may pay an advisory fee that’s 0.01% to 0.60% higher than it would be without the use of that unaffiliated strategist.
Financial planning fees: For the firm’s four levels of financial planning offered, clients pay either a flat rate (detailed below) that they negotiate with their advisor, or an hourly rate ranging from $325 to $650 an hour, plus a $125 per hour fee for administrative work related to the account. You can have your plan reviewed and updated at any time without incurring additional fees, and clients who use Allworth Financial’s asset management services get ongoing financial planning.
If billed on a fixed fee basis, the fees for such services generally fall as follows:
|Financial Planning Fee Schedule|
|Service||Fixed fee range|
|Comprehensive Planning – Advanced||$15,000 to $30,000|
|Comprehensive Planning – Financial Independence||$3,850 to $5,000|
|Comprehensive Planning||$3,450 to $5,000|
|Comprehensive Financial Review||$2,500 to $4,000|
Allworth Financial’s highlights
- Range of financial planning services: Allworth Financial offers four levels of financial planning services — at four different price points — so clients can select the level that makes sense for their financial situation.
- Industry accolades: The firm has received multiple awards industry awards, including appearing on Barron’s list of the 50 Best RIA firms, the Financial Times’ list of the Top Registered Investment Advisors and Investment News’ list of the Best Places to work for investment advisors.
- Clean disciplinary record: Allworth Financial does not have any disciplinary disclosures (see more below).
Allworth Financial’s downsides
- Limited geographic footprint: While Allworth Financial is quickly expanding through acquisitions and is registered to provide services in all 50 states, it still only has offices in seven states: California, Colorado, Georgia, Kentucky, Michigan, Ohio and Texas.
- Unclear fees: Since the firm does not publish a set fee schedule, it’s difficult for potential clients to determine how much it would actually cost for investment management services without first meeting with an advisor. In addition, the maximum fee of 1.85% of assets under management is higher than the industry average of 1.17%, according to a study by RIA in a Box.
- Potential conflicts of interest: Since some of the firm’s advisors are also registered security or insurance agents, they may receive commission on products that they recommend to you. In addition, the firm sometimes uses performance-based fees, which can drive up the cost of investing or encourage managers to take unnecessary risk.
- Incentives to sell annuities: Allworth’s parent company also owns AW Securities, an annuity company. Some advisors who work for Allworth also work for AW Securities and may get commissions for the sale of annuities, creating a conflict of interest.
Allworth Financial disciplinary disclosures
All registered investment advisors must disclose in their Form ADV filed with the SEC whether they’ve faced any legal, regulatory or civil disciplinary actions material to their role. Allworth Financial does not have any disciplinary disclosures.
Allworth Financial onboarding process
There are several ways to get started with Allworth Financial: You can call (888) 242-6766, fill out this online form or reach out directly to your closest office (find it here). Once you get connected with an advisor, they’ll chat with you about your overall financial picture and put together a “7 Personal Decision Points” report with recommendations for each step toward retirement.
Clients can request monthly, quarterly or on-demand reports, and Allworth suggests having a financial review at least once a year.
Is Allworth Financial right for you?
Allworth Financial might be a good option for you if you live near one of its locations, have $100,000 to invest and are looking for a straightforward, easy-to-understand investment strategy. Clients with fewer assets, or those who aren’t located near an Allworth office but want face-to-face finanical planning, might find another firm that’s a better fit.
As with all financial institutions, be sure to research any firm and interview its representatives to make sure that the services offered make sense for your life and that you fully understand the costs involved.