EMAP is one of America's largest and fastest-growing investment management programs. Why? It brings you customized solutions based on academic research, emphasizing extensive diversification, dynamic security selection and strategic rebalancing.
Any questions? We've got your answers -- read on.
How long has Edelman been in business?
Edelman Financial Services has been serving consumers for more than 20 years. In 2005, we introduced the Edelman Managed Asset Program® to make our investment management services more broadly available to investors. Edelman Financial Advisors was established to provide investment management services nationwide. Already, consumers from around the country have opened more than 10,000 accounts, entrusting more than $2 billion to EMAP, quickly establishing EMAP as one of the largest and most popular asset management solutions in the nation.
* Edelman Financial is a marketing name under which two affiliated Registered Investment Advisory firms operate. Edelman Financial Services LLC (“EFS”), a full service financial planning firm primarily servicing the metropolitan Washington D.C. area, and Edelman Financial Advisors LLC (“EFA”), which provides nationwide investment management services utilizing internal advisory professionals and external unaffiliated Registered Investment Advisers. Sanders Morris Harris Group (“SMHG”), a financial services holding company headquartered in Houston, Texas, is the majority owner of EFS, and a minority owner in EFA. EFA is majority owned by Ric Edelman, Chairman.
What is EMAP?
The Edelman Managed Asset Program® is a revolutionary, state-of-the-art investment solution for today's investors. EMAP's dynamic, versatile framework provides each client with a carefully constructed and individually selected portfolio that is both highly diversified and tailored to meet your individual investment needs.
Your EMAP portfolio will feature as many as 19 separate asset classes and market sectors, with an asset allocation based on your individual circumstances. Each EMAP portfolio consists predominantly of Exchange-Traded Funds and institutional-class mutual funds not available to ordinary retail investors. EMAP's dynamic security selection and strategic rebalancing helps you minimize expenses and control risk while giving you the opportunity to obtain the long-term returns you seek.
Why was EMAP developed?
The true behavior of the retail mutual fund industry was uncovered in 2003. Since then, instances of wrong-doing have been found at virtually every big-name mutual fund company. It has become quite clear that retail mutual fund companies and the managers who run them have embraced business practices that are good for them but harmful to investors. As a result, investors are suffering lower returns, incurring higher risks, and paying more in fees and taxes than they should. We find all this very disturbing, and we believe that you deserve better.
For detailed information about the mutual fund scandal and what it means for you, read Ric Edelman's book The Lies About Money.
How is EMAP different?
Unlike stockbrokers who pitch "hot stocks" and the latest fads in the hopes of "getting rich quick", EMAP is based on solid academic research, backed by decades of time-tested, proven investment strategies. Each EMAP portfolio encompasses as many as 19 distinct asset classes and market sectors, carefully balanced to help you reduce the risk of loss should any given segment of the financial markets perform poorly while providing you with the opportunity to enjoy the profits offered by the overall investment world.
Our asset allocation approach is based on advanced academic research, which has been proven for decades, and includes a substantial amount of Nobel-prize-winning studies -- from Modern Portfolio Theory and the Efficient Frontier to the Fama-French Three Factor Model and the latest discoveries in Behavioral Finance.
Note: Diversification is used to control degree of risk and does not ensure positive portfolio returns.
How would you describe your investment philosophy?
Investment success is achieved by building a highly diversified portfolio, owning that portfolio for many years, and managing it through strategic rebalancing. That's why your EMAP portfolio will feature as many as 19 asset classes and market sectors, using market-based (not manager-based) investments. Finally, to manage the risk that varying market performance might accidentally alter your portfolio, we review each account on a daily basis and automatically execute a rebalance whenever the opportunity or need arises. This helps maintain your portfolio's continuity while managing risk.
We apply this approach because investing is not merely about trying to generate returns; controlling risk is equally important.
For example, say you want to drive to a city that's 300 miles away. Under normal circumstances, it might take five hours to get there. But if you hired a driver who got you there in two hours, would you congratulate him on his great performance or chastise him for the risks he forced you to take on the highway?
We believe that controlling risk is as important as seeking returns, and we build portfolios for our clients with this in mind. We'll do the same for you.
What does my portfolio consist of?
Each client's EMAP account consists of as many as 19 asset classes and market sectors, including:
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Each client’s portfolio features a unique combination of institutional mutual funds typically only available to pension funds, endowments and other institutional clients -- and Exchange-Traded Funds, the fastest-growing segment of the investment world.
The total cost of the investments used by EMAP varies based on the specific portfolio we recommend for you; typically it is less than 0.40% per year. This is extremely low by industry standards.
Learn about the costs of investing by reading "Do You Really Know the True Cost of Your Advisor?"
Who manages EMAP?
After evaluating your situation, we will recommend a specific EMAP portfolio for you. With your approval, we will open your accounts for you, transfer assets in and establish your investments.
The investments themselves are a combination of unaffiliated institutional-class shares and Exchange-Traded Funds, managed by some of the largest and most respected names in the financial world. We continually evaluate the universe of fund managers to ensure that our clients are enjoying some of the best investment opportunities available.
How is my portfolio selected?
We want to make sure your EMAP portfolio is appropriate for your situation and risk tolerance. So whether you choose to talk to one of our advisors or do it yourself online, you'll receive a comprehensive asset allocation model plus specific investment recommendations in a portfolio that is custom-selected for you.
Can I hold outside assets in my EMAP account?
You can transfer cash and most investments into your EMAP account. However, your holdings will be sold to purchase the investments comprising your new EMAP portfolio. EMAP is a highly specific asset management program, and therefore cannot hold assets other than the investments we've recommended for your account.
Why is rebalancing important?
Rebalancing helps ensure that your portfolio will maintain its original design. This can significantly control your investment risks.
Your portfolio will be based on a detailed assessment of your situation and will comprise as many as 19 separate asset classes and market sectors. Over time, some of these investment categories will perform differently than others. If left unchecked, this would cause your portfolio's composition to drift (perhaps dramatically) from the target allocation we've designed for you. To prevent this from happening, we continuously monitor your portfolio, and if we determine that your account is out of balance, we will automatically execute trades to restore your portfolio back to its target allocation.
Note: Rebalancing is used to manage your risk tolerance and investment objectives and does not ensure positive portfolio returns.
When do you rebalance?
Although portfolio rebalancing is an essential part of professional asset management, most consumers never rebalance their investments, and many advisors merely rebalance accounts on a quarterly or annual basis without regard to what's actually happening within a client's portfolio.
Calendar rebalancing can easily trigger trades that provide no benefit to you. After all, just because it's March 31 doesn't mean a rebalance is needed. And if you look at your portfolio just four times a year, a question arises: What about the other 196 business days each year? Do you really want to hire an advisor who looks at your portfolio only four times a year? It's easy to see why calendar rebalancing can cause you to easily miss valuable opportunities generated by current market conditions.
That's why we examine your portfolio on a daily basis -- an approach that is far more effective at uncovering rebalancing opportunities. We'll rebalance your portfolio whenever we determine that the amount of cash in your account is too high or too low, or if any of the funds within your portfolio have drifted beyond their target allocation. Typically, we expect to rebalance your portfolio only two or three times per year, but it's impossible to know exactly when the need will arise. That's why we review your portfolio every single day that the financial markets are open for business -- so we don't miss any opportunities for you.
It's important to note that we rebalance your account based on your investment objectives. If your objectives change, please tell us right away so we can determine if changes are needed in your portfolio's asset allocation. You can call us or send an email, or you can update your Edelman Stay-in-Touch Profile®. If there are no changes in your objectives, we will continue to rebalance your portfolio as needed, based on your initial allocation.
Do you have to call me before you rebalance my portfolio?
Fortunately, no. Your life is busy enough as it is, and due to the speed of today's financial markets, it would not be in your best interests to have important rebalancing and other changes delayed. That's why our clients give us permission to make such changes to their accounts on their behalf, without having to contact them beforehand. This advance permission is very limited, and allows us to only conduct periodic rebalancing or replace an investment if we find a superior alternative.
By allowing us to move with speed and agility and eliminating the need to obtain approvals with each administrative action, you avoid extensive delays and potentially significant investment losses.
Will you notify me when you rebalance or make other portfolio changes?
Yes. Whenever any change occurs in your account, you will receive notification by mail within a few days. These confirmations will give you complete details of each trade in your account.
Is there a fee for rebalancing or making other changes in my portfolio?
No.
What is the fee for EMAP?
EMAP clients pay no commissions, trading costs, brokerage fees or other administrative charges. Instead, EMAP features an annual fee, calculated and debited quarterly from your EMAP account in arrears, based on the beginning and ending values of all the accounts in your household (adjusted for any money you deposit or withdraw during the quarter). Your quarterly statement will show the management fee for the quarter; you will also receive a year-end summary.
The annual fee schedule is shown below:
| First $150,000 | 2.00% |
| Next $250,000 | 1.65% |
| Next $350,000 | 1.25% |
| Next $250,000 | 1.00% |
| Next $2 million | 0.75% |
| Next $7 million | 0.60% |
| Next $15 million | 0.50% |
| Amounts above $25 million are negotiable | |
Thanks to EMAP's economies of scale, the higher your account value, the lower the rate.
To compare the costs of EMAP with other financial advisors, read, "Do You Really Know the True Cost of Your Advisor?"
If you move assets into or out of your EMAP account during the quarter, your fee is pro-rated so that you are charged only for the time your assets are in the account. You are free to terminate your account at any time without penalty; the fee stops immediately upon termination.
If you establish multiple accounts, you can, at your option, have the fee debited proportionately from each account or have the fee billed to just one account.
What does the fee include?
We'll tell you the exact cost before you establish your EMAP accounts. You will also receive a prospectus for each fund, containing expenses and other charges.
EMAP's fee covers all our investment management and account-related services as well as execution of all trades, plus securities custody and clearance services.
We only recommend no-load institutional-class mutual funds and exchange-traded funds. Typically, their total fee -- which includes the annual expense ratio and the charges listed in each fund's Statement of Additional Information -- is less than 0.40% per year. This is among the very lowest in the entire fund industry. If your portfolio contains variable annuities, costs will be higher.
You can learn more about the costs of investing by reading "Do You Really Know the True Cost of Your Advisor?"
Is the fee tax-deductible?
Yes, investment management fees are tax-deductible. Ask us to learn more, or check with your tax advisor.
What is the minimum investment amount?
You can establish an EMAP account with as little as $50,000.
The minimum is $3,000 for households that establish multiple accounts, provided the total for all accounts is at least $50,000. When calculating the fee, we aggregate the total value of all your household's accounts, assuring you the lowest possible rate.
Can I add money to my EMAP account?
Yes, you can add money to your accounts at any time via check, wire or automatic electronic deposit. Deposits to retirement accounts are subject to IRS limitations.
How do I withdraw money from my EMAP account?
You can withdraw money at any time, with no fee. A check can be sent directly to you, or money can be wired directly to your bank account. Because EMAP is a securities account designed for investment management, it does not offer check-writing privileges, and liquidation requests are subject to a three-day settlement period.
Can I receive monthly income from my account?
Yes. In fact, this is one of our most popular benefits. Many of our clients are retired and receive money monthly. We can do the same for you, too; you can start, stop or change your monthly income at any time and you can have your income deposited directly to your bank account, just like a Social Security or pension check. There is never any charge for this service.
How can I check the status of my account?
You'll receive monthly statements via U.S. mail or delivered online -- whichever you prefer. You can also monitor your account 24/7 using our online access. And we can show you how to download your account information into Quicken or Microsoft Money.
Is my personal and financial information secure?
You can be confident that we are fully committed to safeguarding your personal privacy. We hold all the information you give us in the strictest confidence, and we deploy the latest security encryption methods and firewalls to safeguard computer data.
And, as a Registered Investment Advisor (registered with the U.S. Securities and Exchange Commission), we are a fiduciary, which means we are legally obligated to work in your best interests at all times.
How do I get started?
Just call us at 888-PLAN-RIC. We'll take care of everything for you right over the telephone.
Note: There are risks associated with investing, including possible loss of principal. Past performance does not guarantee future results. Investors should consider the investment objective, risks, charges and expenses carefully before investing.
