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Updated on Friday, October 29, 2021
Hefren-Tillotson is a registered investment advisor and broker-dealer based in western Pennsylvania. The firm’s headquarters is in Pittsburgh, and it has six other offices in the surrounding area, all within the state. Its team of just over 100 advisors serves over 12,000 clients — most of these clients are individuals, including high net worth individuals. A minimum investment of at least $25,000 is generally required for the firm’s programs, though some may require a $100,000 minimum.
The bottom line: Hefren-Tillotson is a western Pennsylvania-based investment advisor that offers a wide range of investment options, primarily to individual investors.
- Uses its MASTERPLAN approach in all services to focus on clients’ goals
- Has a wide range of asset allocation models and financial planning options
- Offers impact investing for those who want to align their investments with their values
|Assets under management (AUM): $10,913,809,060|
|Minimum investment: Varies by program, starting at $25,000|
|Individual investor to advisor ratio: 121:1|
|Fee structure: A percentage of AUM, hourly charges, commissions|
|Headquarters: 308 Seventh Ave., Pittsburgh, PA 15222
All information included in this profile is accurate as of October 21, 2021. For more information, please consult Hefren-Tillotson’s website.
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Overview of Hefren-Tillotson
Hefren-Tillotson was founded in 1948 by Willard J. “Bill” Tillotson, who developed the firm’s proprietary MASTERPLAN approach, which helps clients of the firm lay out their path toward their financial goals. The firm is privately held; principal owners include Kim Tillotson Fleming (chairman and CEO), Craig A. Tillotson (vice chairman), James G. Meredith (executive vice president) and R. Drew Kistler (who formerly served as vice chairman).
The firm has just over 270 employees, roughly 100 of whom perform investment advisory and research services. Over 170 employees also serve as broker-dealer representatives and nearly 130 are licensed insurance agents.
- Educational resources available: The firm offers a variety of educational seminars and webinars on financial topics like “How to be a Client” and “How to Retire in the Next 12 Months.” The firm also hosts the weekly radio show “Your Money and You” and produces a variety of blog posts, videos and other resources to help educate investors.
- Impact portfolios offered: Socially conscious investors may welcome the option of the impact portfolios that Hefren-Tillotson makes available. These portfolios are made up of companies who make a positive impact on the world based on environmental, social and governance (ESG) factors.
- Industry recognition: Over the years, Hefren-Tillotson and its employees have earned numerous awards. The firm has regularly been named the Best Place to Work in Pittsburgh by the Pittsburgh Business Times, most recently in 2019. In that same year, James Meredith, Hefren-Tillotson’s executive vice president, was named one of Barron’s Top 100 Independent Wealth Advisors.
- Potential conflicts of interest: There are numerous potential conflicts of interest in the way Hefren-Tillotson does business. For example, there’s a markup on some services, and because there are differing compensation amounts for various products and services, its advisors may be incentivized to promote some over others.
- Can earn commissions as insurance agents or broker-dealers: Many of Hefren-Tillotson’s employees are also licensed as registered representatives of broker-dealers and as insurance agents. They can earn commissions in these roles, which could financially incentivize them to recommend these products to clients.
- Disciplinary disclosures: Hefren-Tillotson has recorded two disciplinary disclosures (detailed below) in the past 10 years. This may affect the trust some investors are willing to place in the firm.
What types of clients does Hefren-Tillotson firm serve?
The majority of Hefren-Tillotson’s clients are individual investors, both high net worth and otherwise. For reference, the U.S. Securities and Exchange Commission (SEC) defines high net worth individuals as those with at least $750,000 under the advisor’s management or a net worth of at least $1.5 million. That being said, Hefren-Tillotson serves almost twice as many individuals as high net worth individuals. Aside from individuals, the firm also works with a relatively small number of institutional investors, such as pension and profit-sharing plans, charitable organizations, government entities and businesses.
The minimum investment required for Hefren Tillotson’s services will depend on the program selected. For both its MASTERPLAN Pathway and asset management programs, a minimum of $25,000 is required. A $100,000 minimum is required for its portfolio review, advisory, Pathway Pro and managed account programs.
Services offered by Hefren-Tillotson
Hefren-Tillotson breaks its services into three categories: brokerage, investment advisory and hybrid accounts. The firm’s hybrid account is a non-discretionary, traditional brokerage account (meaning it’s ultimately up to the client to make the final call on all investment decisions), which the firm then supplements with its financial planning and reporting services. In contrast, the firm provides its investment advisory clients with comprehensive financial planning and objective oversight and management and connects with them regularly. Investment advisory services can be offered on a discretionary or non-discretionary basis.
The program category to which a client is assigned will depend on their initial discussions with their advisor — this is the first step in the firm’s MASTERPLAN process.
In the firm’s early days, founder Willard J. Tillotson developed the MASTERPLAN with an objective of helping clients reach their financial goals by coordinating their entire financial landscape. Still used today, it consists of the following four steps:
- Meet to determine a client’s values and get to know them
- Determine factors like risk tolerance, goals and objectives
- Develop a written plan
- Implement that plan and adjust it as necessary
Within its programs, Hefren-Tillotson offers the following services:
- Portfolio management
- Impact portfolios
- Financial planning (also offered on a standalone basis through the MASTERPLAN Financial Review)
- Retirement planning
- Divorce planning
- Education planning
- Business planning
- Charitable giving
- Estate planning
- Inheritance planning
- Long-term care planning
- Oil and gas revenue planning
Additionally, through its division HT Corporate Services, Hefren-Tillotson offers a variety of corporate services including:
- Fiduciary review of 401(k) and profit-sharing plans
- Management of 401(k) and profit-sharing plans
- MASTERPLAN services for executives
- Employee education services
- Corporate 529 college savings plans
- Insurance consulting services
- Personal retirement plan review
How Hefren-Tillotson invests your money
In general, Hefren-Tillotson believes in a conservative, long-term approach to investing based on the needs and goals of each client. The firm’s portfolios are based on six asset allocation models, each with varying risk profiles, time horizons and primary objectives.
|Hefren-Tillotson Asset Allocation Models|
|Model||Primary objective||Risk tolerance||Time horizon|
|Diversified Bond||Capital preservation||Aversion to losses||Shorter term|
|Conservative Income||Capital preservation||Aversion to losses||Shorter term|
|Income||Current income||Able to endure some volatility||Short to intermediate term|
|Balanced||Moderate current income||Able to endure moderate volatility||Intermediate term|
|Growth & Income||Long-term growth of capital||Able to tolerate losses and volatility||Long term|
|Capital Growth||Long-term growth of capital||Able to tolerate high volatility||Long term|
Within four of the above objectives (Income, Balanced, Growth & Income and Capital Growth) Hefren-Tillotson offers impact model portfolios, which are designed for investors who want to include ESG factors in their portfolio to invest based on their values.
The firm’s investment committee, comprised of nine financial professionals (all of whom are firm employees), is responsible for helping to oversee asset allocation and choose the managers within the firm’s model portfolios.
Beyond a client’s asset allocation model and the input of the investment committee, the investments used in a client’s portfolio will also depend on which program they use — brokerage, hybrid or investment advisory.
The firm’s investment advisory program includes five account options, each with different approaches and investment types. For instance, in the asset management account, funds are invested on a non-discretionary basis, typically in stocks, bonds, exchange-traded funds (ETFs) and institutional and no-load mutual funds. Meanwhile, in the managed account program, funds are invested on a discretionary basis, primarily in stocks and bonds.
Fees Hefren-Tillotson charges for its services
Hefren-Tillotson is compensated through commissions and/or advisory fees, depending on the services it’s providing.
For brokerage and portfolio review accounts, client costs include commissions and trade processing charges, as well as expenses for certain products like mutual funds, ETFs and annuities. For investment advisory accounts, clients pay a management fee based on a percentage of their assets under management, as well as product-specific expenses. Clients may also be charged for various account services and custodial fees.
The following chart outlines the various fees for the three types of services Hefren-Tillotson provides:
|Fees and Costs for Hefren-Tillotson’s Services|
|Investment advisory services||
|Traditional brokerage services||
Hefren-Tillotson disciplinary disclosures
Hefren-Tillotson reports two disciplinary disclosures from within the last 10 years on its Form ADV. As a registered investment advisor, the firm is required by the SEC to disclose any disciplinary incidents — which include civil, regulatory or criminal actions against the firm, its employees or its affiliates over the last decade — that may be material to a client evaluating the firm or the integrity of its management team.
Hefren-Tillotson’s most recent disciplinary events include the following, ordered based on the date they were resolved:
- 2018: The SEC found that Hefren-Tillotson breached fiduciary duty and did not accurately disclose information in connection with its mutual fund share class selections, practices and the fees it received. Hefren-Tillotson was ordered to pay a disgorgement of $338,849.52, plus prejudgment interest of $32,847.63.
- 2019: The SEC found that from February 2012 to August 2016, Hefren-Tillotson did not adequately disclose that it received a portion of the $7.95 transaction fee for equity and ETF transactions with its unaffiliated clearing firm. Hefren-Tillotson paid a disgorgement of $254,060, plus interest of $45,905.29, as well as a civil penalty of $80,000.
For more information on the firm and to view its disciplinary disclosures, visit Hefren-Tillotson’s Investment Adviser Public Disclosure (IAPD) page.
Hefren-Tillotson onboarding process
In line with its MASTERPLAN approach, Hefren-Tillotson’s onboarding process consists of the following steps:
- Have introductory meetings: Hefren-Tillotson advisors typically meet with clients at least twice (or more times, if necessary) to discuss their goals and objectives, including factors like risk tolerance, liquidity needs and current assets.
- Get a written report: Clients are presented with a written report that includes an analysis of their current situation and long-term plan.
- Decide whether to move forward with the firm: The client can then review the proposed plan and decide whether to accept it and work with the firm.
- Stay in touch: Clients can expect regular meetings and updates if they work with Hefren-Tillotson. The firm stays in touch through periodic meetings as well as quarterly investment reviews and market reports. Clients also can access their accounts online.
Where Hefren-Tillotson is located
Hefren-Tillotson has seven office locations in the Pittsburgh metro area:
- Pittsburgh (3)
But while the firm only has offices in the Keystone State, it is registered to serve investors in numerous other states throughout the U.S. for those who are comfortable working with a firm remotely.
Is Hefren-Tillotson right for you?
If you live in western Pennsylvania and are looking for an investment advisor and/or a broker-dealer, Hefren-Tillotson may be worth considering. The firm offers a variety of programs, and the availability of impact portfolios is a nice option for those who want to invest in companies aligned with their values and beliefs.
However, clients should be aware of the firm’s potential conflicts of interest, as well as its disciplinary history, though brief. Before choosing an advisor, make sure you do thorough research to help make sure you find an advisor who is right for you.
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.