Technology Update

A new tool kit to help advisers track household wealth

Through its platform upgrade, Envestnet gives users a better way to keep an eye on retirement assets held elsewhere

Nov 21, 2010 @ 12:01 am

By Davis D. Janowski

Envestnet Inc., a turnkey technology and wealth management provider that went public in July, is adding several unified-managed-household features to its platform this week.

In a lengthy demo, I counted 18 new features I would consider significant.

Among these are new research filters and comparison views for use in product selection, new proposal generation features, new views for portfolio analysis that include a full unified-managed-household view and “what-if” hypotheticals, as well as reports that can extend from households down to sleeve level, and FONs (more on those later).

When I first heard about all this, I rolled my eyes and thought, “That's just great; I'm finally starting to grasp the extent of their offerings and they add more.”

Envestnet is one of those companies that can be a challenge to explain or categorize because it does so much. Currently, it handles 800,000 investor accounts containing more than $106 billion in total assets through a product-agnostic platform that can provide an advisory firm with soup-to-nuts tools covering initial risk assessment, investment proposals, research, account monitoring, re-balancing, reporting, due diligence on money managers, performance reporting and even fee billing.

The consensus view — gathered from advisers, asset managers, analysts and experts in the managed-account business over the past two years — is that while the comprehensiveness of Envestnet's platform can be confusing, it is at the same time very well-suited to the needs of advisers.

In particular, it can work well for registered investment advisory firms that want to share models and money management with other RIAs, and for independent broker-dealers that don't want to reinvent the wheel by building their own platforms.

About the only negatives I've heard about Envestnet up to this latest release is that some advisers would like to see better integration of the platform's unified-managed-account features. and the usual grumbling about cost. Envestnet fees are based on assets under management and deducted quarterly.

“After looking at alternatives in the marketplace, we found that Envestnet was significantly less expensive, yet offered greater flexibility and more customization options than the competition,” said Kent Fitzpatrick, a managing director of Asset Strategy Consultants LLC, a registered investment advisory firm that manages $7 billion, largely in institutional assets.

“They are doing things we as a boutique firm don't have the capacity to do or want to do in-house,” said Mr. Fitzpatrick, whose office in Boston manages $100 million in assets for high-net-worth clients.

Asset Strategy Consultants generally uses the “adviser's manager” portion of the Envestnet platform, allowing advisers to create their own asset management models, use the model monitoring features and access separate-account managers, funds and ETFs. It also uses the system for client billing.

In particular, Mr. Fitzpatrick said his firm expects to achieve greater efficiency from the new unified-managed-household features, which will permit Asset Strategy to combine account aggregation and portfolio management with assets managed externally.

“Someone may have their 401(k) or 529 plan with someone else, but we still want to know how those will interact [with the rest of their holdings at our firm],” he said. “The UMH allows us to be more strategic as a wealth manager.”

He also appreciates that Envestnet has built in many screening and filtering tools for carrying out fund diagnostics and evaluations that once were doable only by using third-party analytic software outside the platform.

Those features are the ones that Bill Schiffman, president and co-founder of Schiffman Grow & Co., believes most improve the platform.

“The biggest thing, honestly, is that the site now has a far more integrated and comprehensive feel to it, which will lead to a far more complete adviser/client experience,” said Mr. Schiffman, who is a certified public accountant and an investment adviser representative through Valmark Advisers Inc., the RIA affiliate of Valmark Securities Inc.

He contends that the easy-to-run matrix of filters and side-by-side comparisons are the most significant new features Envestnet has added.

“They will help us make far better decisions and figure out the advisers and managers we specifically want,” Mr. Schiffman said.

Envestnet also has high hopes for a new feature it calls Fiduciary Oversight Notes (the FONs mentioned above). This relatively simple feature consists of pop-up screens that open and allow advisers to enter explanatory notes any time a change is made to a client's account. These notes, which are designed so advisers can meet expected new standards that may incorporate fiduciary responsibility, can later be collated, sorted and added to client reports or compliance documentation.

While Mr. Schiffman readily admits that the Envestnet platform can be intimidating and overwhelming at first — the platform has 700 configuration points spread among its modules, according to the company — advisers can avail themselves of an abundance of training opportunities.

Even among advisers who have grumbled over the system's cost admit to having been surprised by the knowledge of Envestnet's staff and the high level of customer service they receive.

“It has been my experience that most people in the business are into asset harvesting first and foremost, not service or support, or the adviser experience. That's not the case with Envestnet,” Mr. Schiffman said.

“They continue to pay as much attention to our administrative and back-end support people as they do to us,” he said with a hint of surprise in his voice.


Advisers planning to treat themselves to a new computer this holiday season may be wondering what to do with their old machine. Many will recycle, of course, but what should you do with the old hard drive?

Azio Corp. has an answer. The company is introducing a line of SuperSpeed USB 3.0 drive enclosures that allow you to remove that old drive and snap it into a new external enclosure. Essentially, this converts the old internal drive into an easily accessible external storage drive.

Visit the technology blog for more details.

E-mail Davis D. Janowski at


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