Overview of Alight Financial Advisors
Alight Financial Advisors (AFA) is an investment-advisory firm that provides financial advice and portfolio management to participants of employer-sponsored 401k plans. While the company’s service is inexpensive, there are many features missing, although a sister company helps to fill the gap, albeit at higher cost.
AFA is owned by Alight, Inc., an IT and human resources company that has been offering a broad range of services for America’s workers since 1940. AFA has been in business since 2011 and has more than 230,000 advisory accounts managed on a discretionary basis. In total, this produces more than $32 billion in client assets.
Although AFA is not a public company, its parent company Alight trades on the New York Stock Exchange under ticker symbol ALIT.
AFA partners with Financial Engines Advisors LLC to create target allocations and to provide sub-advisory services.
Services Available through Alight Financial Advisors
AFA does not offer its services to the general public. Only employees of companies with workplace retirement accounts that have contracted with the investment firm are eligible to enroll in AFA’s services.
Alight Financial Advisors is just that: financial advisors. These advisors are fiduciaries under U.S. federal law. AFA is not a broker-dealer and does not offer any self-directed accounts. The firm specializes in three broad areas:
- Financial planning
- Portfolio management
- Financial education
There are a variety of services available through these three areas. Examples include:
- Social Security guidance
- Online advice (non-discretionary investment advice)
- Income planning
- Asset management (discretionary advisory 401k account)
- Retirement evaluation, including advice on retirement accounts outside of the workplace plan
- Regular portfolio monitoring
Investment products that are available inside 401k plans managed by AFA include mutual funds, Separately Managed Accounts (SMAs), closed-end funds, and ETFs. Most other securities are off limits, including stocks, bonds, and options. AFA will sell stocks but not buy them.
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Alight Financial Solutions
A subsidiary of Alight, Alight Financial Solutions, offers brokerage services to the same employees that participate in the company’s investment-advisory program. These brokerage services provide a great deal of self-directed trading opportunities. However, these self-managed trading services are not offered to the general public.
Alight cautions its clients that the self-directed service is only designed for people
“who have a strong knowledge of the investment marketplace, want greater flexibility to create a more customized portfolio, and have the ability, time, and desire to personally research and evaluate different investments.”
Alight clients who feel they pass the standard will have access to a much larger selection of tradable instruments. These asset classes include option contracts, stocks, Unit Investment Trusts (UITs), corporate and municipal bonds, U.S. Treasuries, brokered CDs, and more. A self-directed account can also sign up for all sorts of features, including:
- Check writing
- Dividend reinvesting
- Systematic mutual fund purchases
- Real-time quotes (for a balance of at least $10k)
- Debit card
- Margin trading
It’s easy to transfer money from an advisory account to a brokerage account on the Alight website. A free cash balance will be moved into a money market mutual fund (HEWXX to be exact) and will be available for trading the next business day.
Alight Financial Solutions uses Pershing as its clearing firm.
Margin
Margin trading is available in a Financial Solutions account. Here are the rates:
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Debit Balance
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Margin Interest Rates
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$0–$24,999
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12.125%
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$25,000–$49,999
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11.625%
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$50,000–$99,999
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11.125%
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$100,000–$249,999
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10.875%
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$50,000 - $99,999
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11.25%
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$100,000 - $249,999
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10.625%
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Regulations
As already mentioned, Alight Financial Advisors isn’t a broker-dealer. So, for obvious reasons, the company isn’t registered with any securities agency as a broker-dealer. It is registered with both FINRA and the SEC as an investment advisor.
Alight Financial Advisors’ FINRA # is 158744, and its SEC # is 801-72679. It is not registered in the state of Wyoming.
Alight Financial Solutions has separate registrations with FINRA and the SEC as a broker-dealer (# 36509 and # 8-47344). It is not registered as an investment advisor.
The brokerage arm of Alight has been registered with both securities regulators since 1994. It has just 4 disclosures on its FINRA profile, a very small number for nearly 30 years of registration.
Alight Financial Advisors Pricing
Alight Financial Advisors charges a percentage of assets under management. For many clients, this will be 0.60% per year. Accounts will balances above $100k may get reduced rates. The investment-advisory firm may charge a $10 platform fee per year as well. There are no other fees on these accounts, which means they’re a pretty good value, given the large range of services that are available through this department.
Alight Financial Solutions has a completely different fee schedule. The brokerage firm charges a $20 quarterly fee on any taxable account with a balance. Tax-advantaged accounts have higher quarterly maintenance fees. There is also a $75 fee for closing an account.
Although there is no yearly asset-based fee on brokerage accounts, there are commissions. Trading a stock costs $19.95 (accounts above $50k in assets pay $12.95; accounts above $500k pay $9.95). These trading fees are valid on trades up to 1,000 shares. There is a surcharge of 1.5¢ on every share after that ceiling. Penny stocks (equities below $1 in price) cost 5% of trade value.
Option contracts have a base charge equivalent to the regular stock commission. Then there is a per-contract fee of $1.50 or $1.25, depending on account balance. Exercises and assignments are $34.95.
Some mutual funds have a transaction fee of $46.75. Automatic mutual fund purchases are $2 each.
Cash management features like check reorders and stop payments have various fees, which will depend on the account balance.
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Customer Service
Customer service issues for Financial Advisors accounts are handled through the workplace. Financial Solutions accounts are able to get help through a brokerage department at Alight. It is open during the week from 9:00 am until 7:00 pm, EST. The number is 800.890.3200. There is also a customer service email address that can be used outside of these hours (afscustomerservice@alight.com).
Alight Financial Advisors Review Judgement
Alight Financial Advisors has an investment-advisory service at very low cost that will suffice for many employees and employers alike. Clients can receive help with outside retirement accounts like IRAs, which we want to point out here, because such accounts will have cheaper commission schedules than the pricing plan at Alight Financial Solutions.
Updated on 8/6/2024.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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