Edelman Financial Continues Wealth Management Push with First Deal of 2024

Edelman Financial Engines started what looks like a trend of more wealth management acquisitions in 2024 by announcing Monday that it is bringing on Kirkland, Washington-based Soundmark Wealth Management.

EFE is acquiring the investment advisory firm founded by Bill Schultheis in 2008, adding more than $453 million in assets for over 250 households to expand individual and small business financial planner services in the Pacific Northwest. The deal comes after EFE made its largest acquisition in December in terms of assets under management with New England Pension Plan Systems, a wealth and retirement planning firm overseeing $1.5 billion.

EFE, which is the leading provider of managed accounts in retirement plans, is executing on a strategy to expand its financial planner capacity nationally, noting in Monday’s announcement it will “continue conversations with more potential partners throughout the remainder of the year.” The Santa Clara, California-based company noted its acquisition strategy is partly to meet growing plan sponsor demand for individual planning services for participants.

“The interesting trend that we are seeing is that more employers are wanting to offer help beyond the 401(k) creating a convergence of our two business areas,” says Suzanne van Staveren, EFE’s executive vice president chief financial officer and chief operating officer. “This trend is increasing access to comprehensive financial planning and a relationship with a dedicated adviser for employees who have more advanced needs or might want a higher-touch service.”

Adding Capabilities

Van Staveren says Soundmark hit the marks for EFE by offering additional benefits to clients via their planners along with expanded capabilities and expertise for EFE, including a skillset of providing financial services to the medical and technology industries. Other acquisitions, van Staveren notes, have expanded capabilities in areas including retirement plan advisement and tax planning.

“As we pursue more inorganic growth through acquisitions, we are looking at all regions and focus specifically on how well the firm fits our values and philosophy,” she says. “With Soundmark, we achieved both with a firm that is a great fit and likeminded in how we serve clients as well as being in a desirable area where we have a strong market opportunity.”

In a statement, Soundmark’s Schultheis noted the benefits of partnering with EFE including clients gaining from “more resources and planning expertise while our planners will have more support and less administrative duties, allowing them to focus even more on our clients.”

Baker & McKenzie LLP was EFE’s counsel for the transaction; Montgomery Purdue LLC was Soundmark’s counsel.

EFE currently manages more than $270 billion in assets with over 145 offices.

In Or Out of Plan

The CFO touts EFE’s position in the market of providing both in-401(k) plan investment services through managed accounts and out-of-plan wealth management services.

“Unlike most RIAs, we are also not reliant on the rollover to grow our business,” Van Staveren says. “Some employees might want to keep their 401(k) assets with a former employer, and we can continue to provide our services in the plan. Other employees may choose to leave the plan and keep all their assets in one place, and we can help with that as well. Since our planners are free of product conflicts, there is peace of mind that they are acting in your best interest too.”

She notes the brand awareness that the managed account services create among participants for when they start considering options in retirement. In February, EFE noted its managed account assets hit $210 billion, accounting for what it tracked as 45% of the market.

While those assets are relatively small amid the trillions invested in defined contribution plans, managed accounts have been growing over the past 10 years, jumping to about $434.57 billion in 2023 from about $170 billion 10 years ago.

“Managed accounts in the workplace help employees with their 401(k) saving, investing and planning for retirement,” Van Staveren says. “But for individuals who might have more complex planning needs, the next step is working with a dedicated planner who can help with the entire household needs, all their financial goals (short- and long-term), tax guidance, estate planning and much more.”