Edelman Financial brand could vanish by year-end

By the end of the year, one of the most prominent brand names among the country's RIAs — Edelman Financial Services — could go away.

That's according to Ric Edelman, who co-founded his firm more than 30 years ago with his wife Jean Edelman. Right now Ric Edelman is facing a question familiar to many planners: Does he want to keep his own name or pick an entirely new one for his firm?

However, in his case the stakes are vastly higher than for most RIAs — and the decision isn't his alone to make.

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In a $3 billion deal this spring, private equity firm Hellman & Friedman, a majority shareholder in Edelman, acquired Financial Engines, which serves the 401(k) market and has $176 billion in assets under management. Hellman bought the larger firm to merge it with Edelman, which manages $21.7 billion for clients. With nearly $200 billion in AUM, the new firm is now, by a wide margin, the largest independent RIA in the nation.

Edelman, who has long discussed his ambition to build the country's first $1 trillion AUM RIA, points out that "With this merger, we're now a fifth of the way there."

So, which brand name is the best one to take the newly formed company further up the scale?

The question of what to call their firms has tortured plenty of advisory firm founders, keeping some of them up until the wee hours of the night debating options and irritating their succession partners. In Edelman's case, there are three obvious ways to go, aside from picking a new name entirely.

There's the Financial Engines name. The company serves a whopping 1.1 million investors through their employers' 401(k) programs, but has all-but-zero retail brand recognition. There's the Mutual Fund store, which Financial Engines acquired three years ago for its 129 storefronts nationwide. Then there's Edelman's own name, which he has promoted with a string of bestselling books, radio shows and other media appearances, along with educational seminars.

Of the three, his is the only brand that delivers the kind of personal touch associated with an individual, much as Charles Schwab the man still offers to his eponymous custodial firm and brokerage.

However, at this point, none of the three merger partners should insist too much on their own legacies, Edelman says.

"We cannot be subjective or take a parochial or home-team perspective that could interfere with making the decisions that are best for the business," Edelman said on the branding issue in an interview earlier this month. "It is very important that neither those on the Edelman side nor those on the Engines side are intractable about any important business issue [because] we need to make decisions that are in the best interests of our clients and enable the business to grow."

A decision in the matter is likely before the end of the year, he noted.

Choosing from among some so-called brand archetypes that consultants use with clients, wealth management strategy consultant Zohar Swaine thinks Edelman's brand is a "sage" archetype defined by "the unique wisdom and character" of the firm founder. By contrast, Financial Engines' archetype is "caregiver" known for "stability, control and bringing order to financial lives," says Swaine, president of Mink Hollow Advisors in New York City.

Because of Financial Engines' size and future potential for growth, Swaine thinks it makes sense to stick with that brand.

"The brand-naming decision should be a function of the unrealized opportunity to build strong, new consumer relationships," Swaine says. "Although the Edelman Financial brand awareness is stronger than Financial Engines’ among retail clients, Financial Engines' brand awareness in the corporate workplace segment exceeds [that of] Edelman."

However, without Edelman's recognizable name and face, industry consultant Marie Swift thinks the new company could lose traction with customers.

"When people are seeking personal financial planning advice and a person to work with, they really want that personal relation and Ric Edelman has done a really good job of being the face of that organization," says Swift, president of Impact Communications in Leawood, Kansas. "So whenever you have brand equity built up and a great reputation as Edelman, the man, and Edelman, the brand, have today, there's a risk that when you move to a more corporate brand identity that some people may be put off by that."

Be that as it may, over time, founders' names lose meaning, says strategy consultant Craig Iskowitz, founder of Ezra Group Consulting in New York City.

"He's the exception," Iskowitz says of Edelman. "His personality helped build the firm. They bring in 40,000 leads a year purely through his marketing ability."

If push came to shove, Iskowitz, says "I would go with Edelman Financial because he's still there and he built it. He's still writing books and on the radio."

Swift cautions that large firms will be competing with evermore technologically empowered small and midsized firms. Does a big firm really want to emphasize their institutional nature?

"The question in my mind is, 'Is bigger always better?'" she asks.

"At the end of the day," Swift thinks there's value in retaining a brand that has built up goodwill and recognition. "I would be sad to see the Edelman brand go away if it does. I think they've done really good work and should be applauded."