15 transformational advisers: Ric Edelman

A rarity in the business — an RIA with a national franchise

Jun 7, 2013 @ 11:50 am

By Andrew Osterland

In his previous life, Ric Edelman was a journalist who wrote stories for finance and health care magazines.

It wasn't very lucrative, but it did lead him to the field of financial advice.

“I was writing about dealmakers making money and their clients getting crushed,” said Mr. Edelman, 55, who now leads one of the largest registered investment adviser firms in the country. “I started to think, why can't I help people with this stuff?”

So he did.

In the 25 years since Mr. Edelman and his wife, Jean, started their investment advisory firm in the suburbs of Washington, D.C., he has emerged as one of the most recognizable leaders in the RIA industry.

PHOTO GALLERY 15 transformational advisers

With 33 offices across the country and about 100 financial advisers doing fee-based financial planning for Edelman Financial Services LLC, he is one of the few RIAs — other than aggregating firms that buy advisory practices — who can claim to have a national franchise. His willingness to spend money to market his name, his firm and the profession of financial planning has allowed Mr. Edelman to raise assets under management fourfold since 2005, to more than $10 billion.

And with a deep-pocketed financial backer — private-equity company Thomas H. Lee Partners L.P., which took the firm private last fall — he plans to continue to rapidly build his business.

“Few people in the advisory world have achieved the size and sophistication that Ric Edelman has,” said Stephen Winks, a principal with consulting firm SRConsultant.com.

“It's not just the size but the quality of what he does,” he said. “When you leverage your practice, it's difficult to assure a consistent level of service to clients, and he's done that.”

Mr. Edelman started from humble beginnings. He and his wife, a former Paine Webber adviser, started by organizing college-planning seminars for elementary school PTA groups in the Washington metro area, and then moved to high schools.

In 1990, Mr. Edelman got invited onto WMAL, a news and talk radio station in the Washington metro area, to talk about mutual funds and to field personal-finance questions. It went over well and he ultimately was given his own show in 1992.

Mr. Edelman's Sunday program now is syndicated to 69 radio stations around the country.

“I talk to the people who find money boring or intimidating and who feel they're not customers but hostages of Wall Street,” he said.

Like most advisers, Mr. Edelman makes the bulk of his money serving wealthy investors, but his instinct is to look down-market when it comes to serving customers. With a client minimum of $50,000 as of the end of last year, he has been advising thousands of investors who probably couldn't get the time of day from most other RIAs.

“We have more high-net-worth clients than just about any other [RIA] firm and we know how to serve them, but we don't target that segment,” he said.

Edelman Financial Services has more than 20,000 clients.

“I got into this business to work with people not being served by the industry. I want to help the 99% of people not being helped elsewhere,” Mr. Edelman said.

This year, he has truly opened his doors to all comers, knocking his client minimum down to just $5,000 in January, coinciding with the launch of his retail investor website Edelman Online. Mr. Edelman's plan is to serve small clients through the platform that he spent several million dollars to build, though investors will still have the opportunity to call and speak to someone about their finances.

It remains to be seen how many of these small investors will accept paying his 2% fee, which he isn't yet willing to lower.

Mr. Edelman estimated that the firm has added about 800 smaller clients with just more than $10 million in assets since he lowered the minimum.

“He holds the consumer in high regard,” Mr. Winks said. “He's successful because his heart is in the right place and because he has extraordinary skill in managing what he's doing.”

Mr. Edelman's most impressive feat may be that the firm's rapid rise has been achieved not by acquiring other practices but by hiring and developing new advisers.

“I can grow faster and cheaper and with better results organically,” said Mr. Edelman, who now owns about one-third of his firm.

He intends to hire as many as 30 advisers during the next two years.

“We expect to be substantially bigger than we are today. I don't have a growth plan,” Mr. Edelman said.

“My goal is just to meet the demand for our services,” he said. “If people ask for help, we'll help them.”


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