Envestnet says advisers are opening fewer new accounts in 2018

Fintech giant prepares for slower growth in net flows for the rest of the year

Aug 8, 2018 @ 1:55 pm

By Ryan W. Neal

The bull market marches on, but Envestnet is preparing for slower growth in net flows for the rest of 2018.

In a conference call discussing the financial technology giant's second-quarter earnings, Envestnet CEO Jud Bergman said the rate of new account openings by advisers slowed during the quarter. While he acknowledged that could be an anomaly, Mr. Bergman said the company expects the trend to continue for the rest of the year.

Growth was similarly slow in 2011 and in 2015, and Mr. Bergman attributed a 2018 slowdown to the natural ebbs and flows of the market.

"I think it's more of a news cycle that may be taking its toll on some psychology of investors, causing a little bit of slowness," he said. "Advisers across the industry are not opening up as many new accounts and there is higher redemption rates with existing accounts."

The slowdown has not impacted Envestnet's overall growth. The company grew second-quarter revenue by 20% from the prior-year period. Excluding the FolioDynamix purchase for $195 million in cash, Envestnet's revenue grew organically by 12%.

Regarding FolioDynamix, Mr. Bergman said Envestnet has completed the first tranche of customer transitions and is underway with the second.

(More: Envestnet deal driven by commission-based IBD accounts)

The company is also focusing more on financial planning, client relationship management and other areas critical to RIAs, which Mr. Bergman said are its fastest growing adviser channel. He added that the shift away from commission-based compensation models will fuel Envestnet's long-term strategy.

(More: Envestnet Tamarac announces new client portal features and financial planning)

"We expect that outsource technology in general and improved digital solutions in particular will be an increasingly important source of growth for our advisers and enterprises," Mr. Bergman said. "We expect wirehouses will continue to be a force in the industry as they more fully embrace a fiduciary standard of care and seek technology innovation."


What do you think?

View comments

Recommended for you

Featured video


Transamerica's Boan: Crafting better retirement income conversations

Retirement income is a challenge for investors. How can advisers have better conversations about retirement income? Transamerica's Joseph Boan offers insights and tips for advisers.

Latest news & opinion

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

Ameriprise to pay $4.5 million to settle SEC charges that five reps stole more than $1 million from clients

Agency censures firm for not protecting clients from thieving brokers.

SEC slaps Lockwood with $200,000 fine over unseen trading costs to clients

Clients were forced to pay fees in addition to the usual wrap charges, the regulator maintains.

Gotcha! 10 lessons from brokers gone bad

These cases show why regulators nabbed reps and firms, and how to avoid their fate.

Tax-credit investigation may trip up Wells Fargo

Justice Department is investigating bank's dealings in tax credits for low-income housing, sources say.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print