Valic Financial Advisors Review

Valic Financial Advisors, Inc. (VFA) is a large, national retirement plan provider headquartered in Houston that also does business under the name AIG Retirement Services. The company has over $23 billion in assets under management (AUM) and more than 2,000 employees.

The firm provides both investment advisory and broker-dealer services. It serves clients in employee-sponsored retirement plans as well as individual clients (including high net worth individuals), offering several investment plans from which to choose.

Assets under management: $23,332,836,027

Minimum investment: Varies by program, some with no minimum

Individual investor to advisor ratio: 223:1

Fee structure: A percentage of AUM, fixed fees

Headquarters: 2929 Allen Parkway, L7-20 Houston, TX 77019 Website: www.aigrs.com Phone: 866-544-4968

All information included in this profile is accurate as of January 24, 2022. For more information, please consult Valic Financial Advisors’ website.

Overview of Valic Financial Advisors

Valic Financial Advisors, also known as AIG Retirement Services, was founded in 1996. Its name, Valic, is an acronym of the Variable Annuity Life Insurance Company, which is the company that owns it. Both the firm and the company that owns it are members of American International Group, Inc. (AIG), a large finance and insurance corporation.

VFA currently has over 1,400 employees who serve in investment advisory roles. Its team also includes licensed agents of an insurance company or agency and representatives of broker-dealers.

What types of clients does Valic Financial Advisors serve?

However, Valic Financial Advisors primarily provides its services to individual investors. This includes high net worth individuals, who the Securities and Exchange Commission (SEC) defines as those with at least $750,000 under management or a net worth of at least $1.5 million, and those in employer-sponsored retirement plans. In some cases, the firm may also work with trusts, charitable organizations and businesses.

Valic Financial Advisors offers four primary programs, each of which has a different minimum account balance requirement. The programs offered are as follows:

• Managed Investment Program (MIP): Available to individuals, trusts, corporations and other business entities. The minimum initial account balance required ranges from $5,000 to $250,000, depending on the portfolio.
• Guided Portfolio Services (GPS) Program: Available to individual participants in a retirement plan account with VALIC or VALIC Retirement Services Company (VRSCO), both of which are affiliates of the firm. No minimum account balance is required.
• Guided Portfolio Advantage (GPA) Program: Available to individuals, trusts, corporations and other business entities. No minimum account balance is required, but you must purchase a PD Freedom Advisor contract, which has a minimum initial premium payment of $25,000.
• Financial planning: The firm’s financial planning services are limited to individuals. It does not specify a minimum requirement for this service.

Services offered by Valic Financial Advisors

Valic Financial Advisors provides services for participants of retirement plans and health reimbursement arrangements, including enrollment, education, plan-related services and customer service. The firm also provides brokerage services, such as recommending mutual funds, variable annuity and life insurance products, as well as investment advisory services to retirement plan participants and others. Additionally, VFA provides certain retirement or financial planning services to clients or prospective clients as a one-time investment advisory service.

More specifically, the firm’s services include the following:

• Investment advisory services
• Financial planning
  • Retirement planning
  • Charitable planning
  • Education planning
  • Tax analysis
  • Cash flow forecasting
  • Spending analysis and budgeting
  • Debt management
  • Determination of pension and distribution options
• Insurance/risk management
• Employee benefit plan services and 401(k) consulting
• Webinars, educational materials and tools
• Brokerage services

How Valic Financial Advisors invests your money

Valic Financial Advisors offers three managed account advisory programs to its clients, each of which takes a different approach to investing. Which program a client uses will depend on whether they are a retirement plan participant or have purchased an annuity contract through VALIC, or if they are simply interested in having Valic Financial Advisors manage their investments.

Guided Portfolio Services (GPS) Program: This is a plan offered to those who are participating in employer-sponsored retirement plans provided by VALIC or VALIC Retirement Services Company. It includes both an online, automated service that provides non-discretionary investment advice (GPS Portfolio Advisor), as well as a program that provides discretionary investment advice, meaning advisors can make the final decisions about whether to buy or sell investments (GPS Portfolio Manager).

Guided Portfolio Advantage (GPA) Program: This asset management program is available to clients who purchased fixed and variable annuity contracts, whether through the VALIC Portfolio Director Advantage fixed and variable annuity contract (PD Advantage), which is no longer available, or the VALIC Portfolio Director Freedom Advisor fixed and variable annuity contracts (PD Freedom Advisor).

Managed Investment Program (MIP): This is Valic Financial Advisors’ asset management program, which is based on 19 portfolio models that are designed and managed by various investment managers from five companies: BlackRock Investment Management, Envestnet Portfolio Solutions, Inc., Russell Investment Management, LLC, CLS Investments, LLC, and the Vanguard Group.

Portfolios are selected for clients based on a profile questionnaire that evaluates their risk tolerance, goals, objectives and time horizon. Portfolios are also categorized based on how aggressive they are, ranging from one focused on low-cost investing using passively managed index mutual funds to one that invests in mutual funds, ETFs and separately managed accounts.

Fees Valic Financial Services charges for its services

The fees that Valic Financial Advisors charges vary by program and by portfolio type. The firm typically charges clients based on a percentage of assets under management. Rates are tiered for each program, with percentage charged decreasing the higher the account balance. For example, for the firm’s Managed Investor Account Portfolios, one of its 19 available model portfolios, you’ll pay a rate of 1.25% for the first $250,00, which decreases to 1.03% for the next $250,000, and so on as the amount of assets under management goes up.

Depending on the program in which they are enrolled, clients may also owe additional investment-related costs. This may include costs such as fund fees or separate account charges, among other expenses.

The firm does not charge for the creation of a financial plan. However, once the plan is presented, the firm has no obligation to provide further guidance on its recommendations.

Valic Financial Advisors disciplinary disclosures

Valic Financial Services has a number of disciplinary disclosures on its record. As a registered investment advisor, the firm is required by the SEC to disclose any disciplinary incidents, which includes civil, regulatory or criminal actions against the firm, its employees or its affiliates over the last 10 years, that may be material to a client evaluating the firm or the integrity of its management team.

Some of the most significant events listed on the firm’s most recent Form ADV filings are listed below, ordered according to the date on which the matter was settled:

• Nov. 28, 2016: VFA was censured and fined $1.75 million for alleged rule violations regarding its systems, processes and procedures, including allegedly failing to “have a reasonable system or process/procedures designed to address, analyze or review the conflicts of interest in its compensation program.”
• June 3, 2019: VFA paid a $10,000 fine after the Securities Enforcement Branch of the Hawaii Department of Commerce and Consumer Affairs alleged that the firm “failed to supervise a registered representative who had submitted a transaction without proper customer authorization.”
• July 28, 2020: In response to SEC findings that VFA didn’t properly disclose some conflicts of interest and didn’t have proper written compliance policies and procedures in place, the firm consented to a cease-and-desist order and a censure. It was ordered to pay affected investors disgorgement of $13.2 million and prejudgment interest of $2.2 million, as well as a $4.5 million civil monetary penalty. Additionally, VFA agreed to review and correct as necessary all relevant disclosure documents.
• July 28, 2020: VFA consented to a cease-and-desist order and a censure, and agreed to pay a civil monetary penalty of $20 million in response to SEC Findings that the firm didn’t inform Florida teachers that its parent company, VALIC, paid a for-profit company to refer teachers to its products and services. The firm was also found to have insufficient written compliance policies and procedures in place. As part of the settlement, VFA enacted rate caps for the program management fees for plans offered by Florida K-12 schools.
• Jan. 8, 2021: VFA was censured and fined $350,000 in response to alleged FINRA rule violations regarding the firm’s failure to have processes and procedures in place to monitor rates of variable annuity exchanges and correct any that were inappropriate.

For more information on these and other disclosures, visit the firm’s Investment Adviser Public Disclosure (IAPD) page.

Valic Financial Advisors onboarding process

1. Contact the firm: To enroll in one of AIG’s employer-sponsored retirement plans or to access your account online, you will need to get a code from your employer that you can use to complete the enrollment process. To inquire about other services, representatives can be reached Monday through Friday from 7 a.m. to 8 p.m. Central Time at 1-800-448-2542.
2. Complete a client questionnaire if interested in financial planning: For those interested in receiving the firm’s financial planning assistance, they will work with their financial professional to complete a questionnaire that gathers information about the client’s current financial situation, tax information, estate plans, risk tolerance and financial goals, among other areas.
3. Receive regular reports once onboarded: Clients in all programs receive quarterly reports, though those in the GPS Program don’t receive written reports like those in the MIP and GPA programs. Instead, GPS offers online advice and reports to clients.

Where Valic Financial Advisors is located

In addition to Valic Financial Advisors’ headquarters in Houston, the firm has 161 other offices across the country. In its Form ADV, the firm lists that its largest offices are in the following states, though note that this is not necessarily a comprehensive list of its locations. You can confirm whether or not there is a location near you by contacting the firm.

• California
• Colorado
• Florida
• Georgia
• Illinois
• Indiana
• Kansas
• Maryland
• Michigan
• New Hampshire
• New Jersey
• North Carolina
• Oregon
• Pennsylvania
• Tennessee
• Texas
• Virginia

Additionally, Valic Financial Advisors is registered across all 50 states as well as the District of Columbia.

Is Valic Financial Advisors right for you?

If you’re looking for a large, national firm to help with your retirement needs, Valic Financial Advisors may be worth considering, particularly for those in employee-sponsored plans that work with the firm. The firm’s numerous disciplinary disclosures, however, may raise red flags for some. There is also the potential for conflicts of interest, as VFA acts as a broker-dealer and is owned by an insurance company.

Still, the firm is widely accessible to investors with a wide range of investable asset levels, as well as those in a number of locations, as VFA has numerous offices throughout the country. As you search for a financial advisor, it’s always important to consider and compare a few options to help find the right financial advisor for your unique situation.