Envestnet on Wednesday acquired Finance Logix, a
financial planning software provider — marking yet another indicator of the industry's turn toward goals-based
financial planning.
Finance Logix's software will be integrated into Envestnet's platform, allowing advisers to access
financial planning as well as investment strategies for clients.
Envestnet paid $24 million in cash and $6.5 million in stock for Finance Logix, according to the
company's latest 8-K filing with the Securities and Exchange Commission. The stock component equals a total of 123,410 shares of Envestnet common stock at $52.67 each to be paid by 2025. Envestnet has also agreed to pay an earn-out in cash, stock and options over the next three years.
“In the past how the industry evolved, it was very product-centric, more portfolio strategy centric,” Bill Crager, president of Envestnet, said. “The next level is goals-based wealth management.”
The acquisition marks a new trend in wealth management by pairing wealth management with financial planning.
“People didn't want to pay for financial planning, only
portfolio management. The pendulum was swinging for the investment platform,” Michael Kossman, chief operating officer of Aspiriant, a wealth management firm in San Francisco, said. “It's now starting to swing back to the value add of clients going to see the personal relationship,
estate planning, tax planning — all the things the electronic platform can't do.”
Mr. Crager said goals-based financial planning is what advisers need because it's what investors want. Being able to speak with an adviser about where they want their money to go and being able to track their goals is where the financial advice industry needs to be.
“Wealth management is in the transition period,” Mr. Crager said. “We need to adapt to the investor with what the investor wants to achieve. Financial planning is at the base of that.”
Envestnet has been targeting acquisitions to expand its reach in a variety of markets. In 2012, it acquired Prima Capital Holdings, which provides research and analytic tools, and Tamarac for
portfolio management software. Last year it acquired Placemark Holdings, which focuses on the
unified managed accounts market. And in February, the company bought Upside, which provides advisers with online investment tools.
Oleg Tishkevich, Finance Logix's president and chief executive, will join Envestnet as managing director and chief technology officer of financial planning.
The company intends to continue to support Finance Logix's standalone financial planning software model of new and existing clients.
