Envestnet bolsters $315 billion AUM with expanded services

Fintech giant Envestnet posted a 46% year-over-year increase in assets under management following the firm's expansion into new service areas including trust services and alternative investments, according to Envestnet’s second quarter earnings. 

Envestnet’s AUM clocked in at $315.4 billion at the end of the second quarter, boosting the firm’s No. 1 status as the largest turnkey asset management platform by assets. Moreover, revenues grew to $289 million, a 23% increase compared to the second quarter of last year. 

That growth is due, in part, to an increasing number of advisers on Envestnet’s platform and new accounts that are opening at a faster pace than prior quarters, said Envestnet CEO Bill Crager during the firm’s earnings call Thursday evening. 

The number of advisers on the Envestnet platform is now almost 108,000 with 14 million accounts that make up $5.2 trillion in assets, Crager said. “Our data aggregation business serves over 500 million aggregated accounts each day,” he said. “New accounts are being opened at a faster pace and we are averaging well more than 10,000 new accounts every week.” 

Envestnet’s exchanges are activating more advisers onto its platform, Crager said. The most recent exchanges include Envestnet’s Trust Services Exchange, launched in February, and designed to let advisers facilitate the transfer of wealth from generation to generation without dealing with external attorneys or trust administrators. In July, Envestnet announced its Alternatives Exchange that will provide advisers curated UBS and iCapital alternative investment products. 

Envestnet also partnered with insurance marketplace Fiduciary Exchange, a company that connects wealth management firms with insurance providers, to launch its own Insurance Exchange in 2019.

During the second quarter, Envestnet also serviced approximately 15 million trades and completed 1.8 million service requests. The firm reported that it generates more than 8 million data driven recommendations a day for clients and claims to be on its way to 10 million recommendations a day by year-end and over a billion a day by 2025, Crager said. 

There are several ways that Envestnet is looking to monetize its overall data strategy and the ambitious growth goals of its data recommendations, Crager said. 

“The more data that firms provide, or clients provide to us, the more intelligent our recommendations can be back to that firm,” he said. “So in our underpinning data strategy is how we help firms, manage their data, reconcile their data, create security and protect their data on an ongoing basis and then a feature level on top of that is the data intelligence, we call it Envestnet data intelligence. 

“The Envestnet data intelligence will power these recommendations more and more to help the adviser understand the next appropriate action with each of their clients with the highest areas of opportunity for them,” he said. 

As for Envestnet’s $30 million investment in its digital “financial wellness ecosystem,” the firm says it expects investments to ramp up throughout 2021 with most of the impact in the second half of the year and annualizing to a run rate of approximately $40 to $45 million in 2022.

“Additionally, we continue to expect to begin to generate faster revenue growth in 2022 as we create a better, more streamlined ecosystem, which elevates our value proposition to existing clients and expands our total addressable market,” Crager said.