Edelman Financial Engines acquires $680 million Smart Investor

Edelman Financial Engines is officially planting its flag in the consolidation camp with the acquisition of Smart Investor, a $680 million Roseville, California-based RIA.

“We want to make M&A a bigger part of our growth moving forward,” said Jason Van de Loo, Edelman’s executive vice president and head of wealth planning and marketing. “We see selective M&A like this as a big part of our growth strategy.”

The deal, which closed Monday, comes more than a year after Edelman’s most recent acquisition of Viridian Advisors, a Bothell, Washington-based firm managing $846 million.

Rarity of deals aside, all indications are that Boston-based Edelman is ramping up for an expansive push beyond its current $275 billion wealth management footprint.

Edelman’s current business is divided between approximately $220 billion in the workplace business, which involves taking discretionary management of retirement assets, and $55 billion in business of wealth planning for mass affluent consumers.

The workplace side of the business got a boost last month with the launch of Momentum, a holistic financial wellness platform that includes coaching and planning resources for retirement plan participants.

But while the bulk of Edelman’s asset base is on the retirement plan side, Van de Loo said the primary acquisition targets going forward will build up the retail advice side.

“We’ll see growth across all of Edelman, but M&A will be focused on the wealth planning business,” he said.

Van de Loo described Smart Investor as an ideal fit for the Edelman model.

“Smart Investor is a planning-centric RIA that has similar clients to the clients we serve at Edelman,” he said. “We’ve always served the mass affluent, and now we’re seeing clients coming to us with a little more wealth and more complex situations.”

Van de Loo estimates that “60% of our clients have a million dollars or more.”

“In our current backdrop of historic inflation, rapidly rising interest rates and market volatility, the need for high-quality, independent financial planning that is centered on the client’s best interests has never been greater,” he added. “Together with the Smart Investor team, we can help more individuals and families navigate through these uncertain times and build a strong financial future.”