Edelman Financial Engines today named Jay Shah as its new chief executive officer, replacing Larry Raffone, who will become chairman of the board while remaining a “meaningful shareholder,” according to a news release from the company.
For the last 13 years, Shah had been the CEO of Personal Capital, a Silicon Valley-based online financial advisor and personal wealth management company. The firm was acquired in 2017 by the retirement plan record-keeper Empower.
In his new role, which begins on August 18, Shah will lead a nationwide workforce of about 1,500 employees, including more than 650 planners, client service associates and analysts, the release noted. “He will oversee a business that works with many of the nation’s largest employers and top retirement plan record-keepers, while providing employees and clients with institutional quality asset management, proprietary technology, and access to world-class personal financial planning,” it said, adding that he will continue to focus on growth opportunities by adding more clients and planners, as well as acquiring wealth management and financial planning businesses that align with the firm’s business model.
Shah's appointment underscores the growing symbiosis between traditional advisory firms and robo advisors. Financial Engines, launched by Nobel laureate William Sharpe in 1995, is generally considered the nation's first robo advisor. It struggled in its early years before finding a strong market for its services in the 401(k) business.
For its part, Personal Capital was launched as a robo advisor in 2009 by former Intuit executive Bill Harris. But almost from the start, it hired human financial advisors and sought to blend its technology with personalized service.
Allen Thorpe, partner at Hellman & Friedman, a majority shareholder in Edelman Financial Engines, said in a statement that the shareholders and board members had known Shah for years and were united in his selection. “He is the ideal candidate to build on our successful foundation, while complementing the capabilities of our strong existing leadership team,” Thorpe said.
“On behalf of the board of directors,” he added, “I am thrilled to announce Jay’s appointment and also congratulate Larry for his significant contributions. For the past two decades, Larry has been an integral part of the growth and success of the firm, helping us to become the top investment advisory business that today provides millions of Americans with access to high-quality, unbiased financial planning-led advice. Jay is a proven leader who brings an incredible depth of new skills and experiences to build on Larry’s legacy as we accelerate our next phase of growth.”
Shah said he has long admired Edelman Financial Engines and sees incredible opportunity in “pairing the distribution opportunities of the workplace business with the best financial planners in the industry. I’m thrilled to join a firm that is committed to always doing the right thing for its clients. And we have an incredible opportunity to deliver world-class face-to-face, phone-based, and digital financial planning experiences to help more people lead better lives—from their first paycheck through retirement.”
Raffone has been with the firm for more than two decades and has served as president since November 2012, and as a chief executive officer and board member since January 2015. The release noted that he “helped evolve legacy Financial Engines from a small, venture-backed Silicon Valley startup to the largest independent registered investment advisor in America, with more than $246 billion in assets under management today, approximately 1.3 million clients and key relationships with the largest employers and retirement plan record-keepers in America.”
He also led Financial Engines through some of its most transformational moments, including the build-out of the Financial Engines retail capability, and the merger with Edelman Financial Services in 2018, resulting in what is now Edelman Financial Engines, the release noted.
Ric Edelman, who along with his wife, Jean, founded Edelman Financial Services in 1986, said Shah’s appointment is “very exciting news for the firm, its planners and staff, and clients.”
Edelman, who stepped away from the company two years ago and remains a board member, added, “Jay not only understands the opportunity that exists to provide more workplace employees with access to broader financial planning services, he has a proven track record of providing financial planners with innovative technology so they can deliver high-touch services to their clients, enabling them to transform their financial lives.”