Interview Synopsis

Envestnet – wealth management tech & organic growth outlook

  • Multi Asset
  • Financials
  • North America

Several trends are impacting the wealth management space, including the rise of “robo” advisers and the consolidation of independent broker dealers and registered investment advisers. Advisers also want an end-to-end solution rather than working with an array of “point-solutions” that address just one of their day-to-day activities, a former executive at Envestnet told Third Bridge Forum. 

Technology, consolidation and retirement driving wealth management change

“It’s an interesting market right now. I think there’s a lot of opportunity,” the expert said in the Interview. “Table stakes over the last number of years have really been taken up a notch by the robo movement… and that’s really pushed the envelope on technology and the importance of technology in wealth management.” 

There is also increasing value in players that have “figured out the plumbing” in areas such as data aggregation and integration. Yodlee, which Envestnet acquired in 2015, gives the company a competitive edge in this respect. Meanwhile, technologies focused on client interaction and customisation are “really hitting a stride”, as advisers seek to improve the client experience and be more efficient. 

As the average age of advisers is 59, retirement is another big trend, resulting in the widespread consolidation and sale of books of business. There is also a growing emphasis on fee-based business and portfolio diversification versus the “old school” stock brokerage approach, the specialist said.

In terms of headwinds, market risk is Envestnet’s biggest challenge, which is “the nature of the beast in this space”. The expert added that the company has been pushing harder into the subscription side of the business. 

Overall, the Interview suggested that Envestnet is well positioned against some of its rivals. The expert sees custodians, which can “almost give the technology away for free for the price of clearing and custody”, as the industry’s greatest threat. Fidelity is an example of a company that has been ramping up in this area, with its acquisition of eMoney Advisor. 

The Interview also looked at industry pricing pressures, Envestnet’s weak spots compared with its competitors, the company’s performance across business segments and M&A scenarios — including speculation around potential acquirers.

To access all the human insights from Third Bridge Forum’s Envestnet – wealth management tech & organic growth outlook Interview, click here to view the full transcript.

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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