AE Wealth Management Review - MagnifyMoney
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AE Wealth Management Review

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AE Wealth Management is a registered investment advisory firm that operates through a network of advisors throughout the country that provide wealth management and financial planning services. The firm provides both personalized investment advice and model portfolios, both of which require a comparatively modest minimum of $10,000. AE Wealth Management advisors charge varying fees, and are often separately licensed to sell annuities and other insurance products.

The bottom line: AE Wealth Management offers portfolio management and financial planning services and works largely with non-high net worth individuals.

  • Relatively low minimum investment required
  • Custom and model portfolio options offered
  • Many wealth advisors also sell annuities

All information included in this profile is accurate as of September 8, 2021. For more information, please consult AE Wealth Management’s website.

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Overview of AE Wealth Management

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

Typically, your AE Wealth advisor is an independent contractor — not an employee — who partners with the firm for investment management services and technology. The firm currently has a team of over 500 employees, including more than 430 who perform investment advisory and research functions. Many of AE Wealth Management’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.

A look at the founders of AE Wealth Management

The prolific personal finance author and commentator David Bach co-founded the firm, which became a registered investment advisor in 2016, along with Callanan, Foster and Derek Thompson, college friends who also founded Advisors Excel.

Bach is a bestselling financial author whose books include “The Automatic Millionaire,” “The Latte Factor” and “Smart Couples Finish Rich.” He has been a regular contributor to NBC’sToday Show” and appeared on shows and networks including “The Oprah Winfrey Show,” “The View,” ABC, CBS, Fox, CNBC, CNN and PBS.

Today, Bach is an LLC member of the firm, which Callanan and Foster primarily own.

AE Wealth Management’s pros

  • 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.
  • Wide range of portfolio options: The firm offers direct asset management, where it creates and manages customized portfolios for its clients based on their goals, risk tolerance and financial situation. However, it also provides clients the option of model portfolios, which clients will be matched to according to their risk tolerance and objectives.
  • National recognition: AE Wealth Management was recognized by Financial Advisor magazine in 2020 as one of the top 50 fastest growing firms. According to the magazine’s rankings, the firm grew its assets by over 80% from 2018 to 2019. AE Wealth Management also appeared as No. 7 on RIA Channel’s “Top 100 Wealth Managers” list and as No. 37 in Financial Advisor magazine’s “2020 RIA Ranking.”

AE Wealth Management’s cons

  • Potentially high fees: AE Wealth Management’s advisors can charge up to a maximum of 2.50% a year, which is higher than average for the industry. MagnifyMoney reported in 2020 that the standard annual fee among investment advisory firms ranges from 0.50% to 1.25% of assets under management. Additionally, because representatives can each negotiate their own rates, you won’t know in advance exactly how much you’ll pay without shopping each advisor.
  • Financial incentives to sell certain products: Many of AE Wealth Management’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. Some advisors are also registered representatives of a broker-dealer and can sell investments through a brokerage account and earn a commission. Thus, it may be in their best interest to recommend the product that pays the highest commission, creating a conflict of interest. That said, if your advisor representative will receive a commission due to a recommended product, this will be disclosed.
  • Pays for referrals: AE Wealth Management pays certain people for referring clients its way, as well as an ongoing percentage of assets under management if an account is established. You should ask anyone who recommends AE Wealth Management specifically why it’s a good fit for you over other firms, and what they may stand to gain from making the referral.
  • Disciplinary history: AE Wealth Management does report disciplinary disclosures, mainly stemming from specific advisory affiliates of the firm. See section below for more information.

What types of clients does AE Wealth Management serve?

Non-high net worth individuals make up the bulk of AE Wealth Management’s clients. However, it also serves a number of high net worth individuals, defined by the SEC as those with at least $750,000 under an advisor’s management or a net worth of at least $1.5 million. Rounding out the firm’s current client base are various institutional investors as well as retirement plans.

AE Wealth Management generally requires clients to maintain a $10,000 minimum per account, which is a relatively low requirement in comparison to many other firms. Additionally, the firm may grant exceptions 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 through financial planning or consulting services. They can provide formal written guidance or one-time verbal consultations on topics such as investments, retirement, insurance, taxes and education.

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

  • Investment advisory services and portfolio management
  • Financial planning
    • Retirement planning
    • Education planning
    • Insurance planning
    • Tax planning
    • Asset allocation
    • Portfolio review
  • Selection of other advisors
  • Pension consulting services
  • Workshops and seminars
  • Newsletters and publications

How AE Wealth Management invests your money

As mentioned previously, AE Wealth Management can manage client funds in one of two ways:

  • Direct asset management: The firm will create a customized portfolio for the client based on their unique financial situation, goals and risk tolerance, which the team will then manage on a discretionary basis, meaning the firm makes decisions regarding which securities to buy and sell without first seeking client approval.
  • Model portfolio solutions: AE Wealth Management will select a prebuilt portfolio managed either by the firm or a third-party that aligns with a client’s risk tolerance and investment objectives.

To determine how to directly invest your money, or which model portfolio might be best for you, clients of AE Wealth Management will fill out a questionnaire addressing their financial situation, investment objectives and risk tolerance. Your investment advisor will then 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

Asset management fees: Generally speaking, on both model portfolios and accounts managed directly by the advisor, an annual fee of up to 2.50% of your assets under management is permitted.

Clients can choose to pay that percentage annual fee bundled with transaction commissions, ticket charges and custodian fees, known as a wrap fee. There’s also the option to pay a separate management fee to AE Wealth Management and, in addition, pay separately for custody and transaction fees. Your fees are automatically deducted from your account each month.

In addition to the fees above, you could owe fees to third parties, including mutual fund and exchange-traded fund (ETF) sales loads and surrender charges, as well as variable annuity fees and surrender charges.

Financial planning and consulting fees: Beyond your investment management fee, clients may pay additional fees for financial planning and consulting, either based on an hourly rate 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 as well as any other fees and expenses.

AE Wealth Management disciplinary disclosures

AE Wealth Management does report disciplinary disclosures. As a registered investment advisor, the firm is required by the SEC to disclose in its 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 that occurred within the last 10 years.

Specifically, 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.

For more information on AE Wealth Management and its disciplinary history, visit its IAPD page.

AE Wealth Management onboarding process

  1. Get matched with an advisor: If you are interested in working with AE Wealth Management, you can fill out this form to get matched with a financial advisor.
  2. Open a brokerage account: If you decide to work with one of the firm’s 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.
  3. Receive regular reports and reviews for asset management accounts: 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 include only the original plan contracted for and not ongoing monitoring of your accounts.

Where AE Wealth Management is located

AE Wealth Management has over 360 offices throughout the U.S. Specifically, it lists office locations in the following states in its Form ADV:

  • Alabama
  • California
  • Florida
  • Hawaii
  • Illinois
  • Indiana
  • Kansas
  • Kentucky
  • Louisiana
  • Michigan
  • Missouri
  • Nebraska
  • North Carolina
  • Ohio
  • Pennsylvania
  • Virginia
  • Wisconsin

Additionally, AE Wealth Management is registered to serve clients in all 50 states, plus the District of Columbia and the Virgin Islands, though it does not necessarily have physical locations in all of those states.

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 how much they charge and if any financial planning services are included, as 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. Be sure to research multiple firms to ensure you find the right advisor 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.