D.A. Davidson & Co. Review 2023 - MagnifyMoney
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D.A. Davidson & Co. Review

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D.A. Davidson & Co. manages the portfolios of, and provides financial plans for, individuals and institutions around the country. Based in Great Falls, Mont., the firm has 82 additional offices nationwide, with a heavy presence in the Northwest. In particular, D.A. Davidson & Co. focuses on helping middle-income and wealthy individuals and families reach their goals for long-term investing and other financial matters.

The bottom line: D.A. Davidson & Co. is a large investment management and financial planning firm with offices nationwide, particularly in the Northwest.

  • Employee-owned
  • Creates financial plans to help clients achieve long-term goals
  • Earns revenue by recommending certain products, creating potential conflicts of interest

All information included in this profile is accurate as of November 5, 2021. For more information, please consult D.A. Davidson & Co.’s website.

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Overview of D.A. Davidson & Co.

In 1935, the eponymous founder David Adams Davidson opened a branch of a firm by the name of E.J. Gibson in Great Falls, Mont. Six years later, Davidson bought the majority of E.J. Gibson’s stock and moved its headquarters to Great Falls. Roughly two decades later, Davidson’s son joined the team as its third employee, and the business was renamed to D.A. Davidson & Co. Since then, the firm has undergone many acquisitions and mergers, creating the national presence it has today.

The firm is employee-owned, and a subsidiary of financial services holding company D.A. Davidson Companies. The firm has nearly 630 employees, all of whom are separately licensed to serve as brokers. Over 500 of those employees conduct investment advisory and research. Thus, clients can buy and sell securities through the firm’s brokerage services and pay per transaction, or work through its registered investment advisory designation and pay a set fee for ongoing advice. Nearly half of the firm’s team also sells insurance.

D.A. Davidson & Co.’s pros

  • Nationwide presence: D.A. Davidson & Co. has grown to include over 80 offices coast to coast, many of which are located in areas outside of the nation’s typical financial hubs. Thus, if you’re looking for an in-person relationship, you may be able to find a local advisor near you.
  • Accessible for all levels of investors: While many firms require six- or seven-figure investment accounts to get your foot in the door, D.A. Davidson & Co. advisors accept clients with as little as $10,000 for certain model portfolio programs.
  • Focus on financial planning: The team helped more than 500 clients create long-term financial plans in the prior year. Unlike some advisors, which focus only on portfolio management, this team places emphasis on creating a plan to achieve long-term goals, such as saving for retirement, being adequately insured and preparing an estate plan.

D.A. Davidson & Co.’s cons

  • Potential conflict of interest: Advisors at D.A. Davidson & Co. earn compensation for recommending certain products and funds, potentially incentivizing them to recommend a product that generates the biggest check for them or the firm.
  • Not all advisors offer all services: For advisors to manage clients’ portfolios directly in what’s dubbed the Paragon Program, they must meet certain requirements, including working for the firm for a minimum number of years, attaining certain educational marks and meeting certain annual continuing education criteria. Thus, clients looking for an advisor to create a custom portfolio for them should be sure to ask all potential advisors whether they meet the requirements to directly manage client accounts.
  • Pays for new clients: The group compensates a few other parties for referring clients to D.A. Davidson & Co. Thus, anytime the group is recommended to you, be sure to specifically find out why it’s a good fit for you and what or how much the recommender stands to gain for making the suggestion.
  • Gives referrals to affiliates: Advisors at the firm can earn compensation by referring clients to the affiliated D.A. Davidson Trust Company for trust services. Thus, make sure to ask for specific details about why the group is a good fit for you.

What types of clients does D.A. Davidson & Co. serve?

D.A. Davidson & Co. has a long and broad list of clients, including both individuals and institutions. The firm has over 35,000 accounts serving individuals and families, and another nearly 10,000 for individuals and families deemed high net worth. For reference, the U.S. Securities and Exchange Commission (SEC) defines high net worth as having at least $750,000 to invest or a net worth of at least $1.5 million. On the institutional side, clients include businesses and corporations, charitable organizations, trusts, estates, endowments, foundations, government entities and others.

The minimum investment needed for portfolio management varies by program. It starts at as little as $10,000 for certain model portfolios and goes up to $250,000 for the Unified Managed Account Program. There is no minimum amount of money needed for financial planning services.

Services offered by D.A. Davidson & Co.

The group offers two main services: portfolio management and financial planning.

For the latter, D.A. Davidson focuses on creating financial plans for its clients to help them meet long-term financial needs. Topics addressed will depend on the specific clients, but can include retirement, savings, cash flow, insurance needs and estate plan needs.

During the planning process, advisors will dig into a client’s investment objectives and create an investment asset allocation recommendation but not name any specific investment products.

These financial plans are a one-time document. Clients can have their advisors implement the investment recommendations in the plan either through the advisor’s broker capabilities, or by signing an advisory agreement for the advisor to provide ongoing investment management.

Keep in mind that separately many of the advisors can also sell insurance and annuities.

Finally, the firm also manages a private fund for certain wealthy and sophisticated investors who invest a minimum of $250,000.

Here’s a complete rundown of services offered by D.A. Davidson & Co.:

  • Portfolio management
  • Financial planning
    • Retirement planning
    • Savings analysis
    • Cash flow needs
    • Insurance needs
    • Estate planning
    • Investment planning
    • Asset allocation recommendation
  • Pension consulting services
  • Selection of other advisers
  • Publication of periodicals and newsletters
  • Educational seminars and workshops
  • Life insurance and fixed and variable annuities
  • Separately licensed as broker-dealers

How D.A. Davidson & Co. invests your money

The investment process at D.A. Davidson & Co. begins with clients filling out a questionnaire about their risk tolerance and other information. Advisors use this insight to help determine the client’s investment needs, goals, appetite for risk and time horizon. Then advisors generally give clients an investment proposal that details the specific portfolio models being recommended, the asset allocation and even the specific investments held in the account.

As for the investment programs offered, the firm’s lineup is varied. It includes model portfolios typically managed by D.A. Davidson or outside firms, including Russell Investments. These model portfolios typically consist of exchange-traded funds (ETFs) and mutual funds. Separately managed accounts are also available, using both affiliated and unaffiliated third-party managers. Certain financial advisors can also directly manage client accounts, either through their own model portfolios or by creating custom accounts unique to the clients.

To choose the investment products included in the various programs, the team uses a combination of qualitative and quantitative research, among other methods. Thus, they look at a blend of factors including the management team, firm structure and investment process as well as the fund profile and performance factors. In the end client, money is typically invested in traditional products as well as alternatives, including:

  • Stocks
  • Bonds
  • Mutual funds
  • ETFs
  • Hedge fund of funds
  • Managed futures funds
  • Private market or real estate funds

Clients can choose how involved they’d like to be in the day-to-day trading of the accounts. Most clients establish a discretionary relationship with D.A. Davidson & Co., meaning they give their advisors the power to place trades in their accounts without first needing to get preapproval for each transaction.

Fees D.A. Davidson & Co. charges for its services

For portfolio management, the firm uses wrap fee accounts where clients pay one set fee (typically based on a percentage of assets under management) that covers the advisory fee as well as transaction costs and custodian fees. The maximum fee paid to D.A. Davidson & Co is typically 1.85%.

Here is the firm’s set fee schedule for its portfolio management services:

D.A. Davidson & Co. Portfolio Management Fee Schedule
Investment value Maximum fee
$10,000 to $249,999 1.85%
$250,000 to $499,999 1.60%
$500,000 to $999,999 1.55%
$1 million to $1,999,999 1.45%
$2 million to $4,999,999 1.35%
$5 million to $9,999,999 1.15%
$10 million and up Negotiable

Certain clients in specific programs, including with separately managed accounts, the Russell Investments and others, will owe an additional fee ranging from 0.02% to 0.60% annually. This extra cost covers fees paid to the portfolio managers, as well as the platform provider and an administrative fee of up to 0.15% paid to D.A. Davidson.

Despite this published fee schedule, fees are negotiable to a limited extent. Keep in mind that clients may still owe additional fees, such as mutual fund or ETF internal fees, custodian fees or other expenses.

As for financial planning, the fees are negotiable depending on the type of plan needed, as well as who’s preparing the plan. (For example, a certified financial planner (CFP) may charge more for the service than someone without that formal designation.) In general, though, plan costs can range from $500 to $10,000, depending on factors like the complexity of the plan and the client’s relationship with their advisor. In some cases, the plans may be done at no cost or based on an hourly rate.

D.A. Davidson & Co.’s disciplinary disclosures

D.A. Davidson & Co. discloses just over a dozen regulatory actions against the firm. For reference, the SEC requires all registered investment advisory firms to disclose to the public on its Form ADV and brochure all disciplinary and legal actions, including criminal, civil and regulatory, against the firm or its affiliates and employees in the previous 10 years that a potential client would find material when evaluating the firm or the integrity of its leaders.

Among D.A. Davidson & Co.’s disciplinary disclosures are the following incidents, ordered according to the date they were settled:

  • In 2019, D.A. Davidson settled with the SEC on issues it self-reported; the firm stated that it had purchased, recommended or held certain mutual funds for clients that charged 12b-1 fees when other less expensive share classes were available to the client, but the firm did not disclose this information. The firm paid over $600,000 in disgorgement plus more than $40,000 in interest.
  • In 2018, without admitting or denying allegations from FINRA, the firm paid $447,000 in restitution for overcharging certain retirement plan and charitable organization customers who bought mutual funds with higher fees than they were eligible for. The allegations also stated that the firm did not adequately supervise its financial advisors who were responsible for determining the fees.
  • In 2016, the firm paid a $500,000 fine after the SEC alleged that it underwrote and sold certain municipal securities offerings without conducting proper due diligence to discover that the disclosures were materially misleading. The firm did not admit or deny the findings.
  • In 2015, the firm was censured and paid a fine of $22,500 after a FINRA department alleged that the firm failed to do its diligence and get certain customers the best prices in specific transactions. The group paid about $13,600 in restitution.
  • In 2012, the firm paid a $30,000 fine, without admitting or denying the findings, after FINRA alleged that it bought or sold corporate bonds in 2008 and 2009 for its customers without doing proper due diligence to make sure they received the best price.
  • In 2012, FINRA alleged that certain employees did not have the appropriate licenses for the work they were doing. The firm was censured and paid a $40,000 fine, but did not admit or deny the findings.

For more information on the firm and its disciplinary history, visit its Investment Adviser Public Disclosure (IAPD) page.

D.A. Davidson & Co. onboarding process

If you’re interested in working with D.A. Davidson & Co., this is the general process you might expect to go through:

  1. Reach out to the firm: Search for a local advisor or wealth management group in your area on the firm’s location tool. You can also call the firm at 406-727-4200.
  2. Sign an agreement: Before a financial services or portfolio management relationship begins, clients must sign an agreement with their advisor that outlines the specific services being provided and what fees they’ll pay, as well as other pertinent information. The firm generally serves as custodian for client accounts.
  3. Share your needs and goals: Clients must share their financial needs and goals through an interview with their advisor or through a questionnaire.
  4. Receive planning assistance or ongoing investment guidance: Financial planning relationships end once the plan is delivered, or after 90 days, whichever is earlier. Investment management clients meet with their financial advisor at least once a year to review their portfolio and personal profile to make sure no changes have occurred that would impact their investment profile.

Where D.A. Davidson & Co. is located

D.A. Davidson & Co. is headquartered in Great Falls, Mont., and has more than 80 additional offices spread around the country, with a heavy presence in the Northwest. The firm provides the location of its 25 largest offices as well as its headquarters on its Form ADV, which are listed below.

Here are the firm’s largest offices:

  • Grand Falls, Mont. (headquarters)
  • Carlsbad, Calif.
  • Claremont, Calif.
  • Long Beach, Calif.
  • Los Angeles
  • Newport Beach, Calif.
  • Pasadena, Calif.
  • Colorado Springs, Colo.
  • Boise, Idaho
  • Coeur D’Alene, Idaho
  • Billings, Mont.
  • Bozeman, Mont.
  • Helena, Mont.
  • Kalispell, Mont.
  • Missoula, Mont.
  • Omaha, Neb.
  • Lincoln, Neb.
  • Lake Oswego, Ore.
  • Medford, Ore.
  • Portland, Ore.
  • Salt Lake City
  • Bellevue, Wash.
  • Everett, Wash.
  • Seattle
  • Spokane, Wash.
  • Wenatchee, Wash.

For the firm’s additional locations, see the map provided on the firm’s website.

In addition to having a wide base of offices, D.A. Davidson & Co. is also registered to serve clients in nearly all 50 states for those who are comfortable working with an advisor remotely. The only state in which the firm is not registered is Rhode Island.

Is D.A. Davidson & Co. right for you?

D.A. Davidson & Co. could be a good fit for clients looking for an in-person advisor who can help them achieve their long-term financial goals, such as funding their retirement or passing their wealth on to their children. The firm’s low minimum investment makes it accessible to middle-income clients as well as the wealthy.

However, clients who want a fee-only advisor who receives compensation strictly from the client and not from sales of insurance or commissions may want to consider other firms.

To look for financial advisors, you can start with MagnifyMoney’s advisor search tool.

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.