Envestnet announced Thursday the acquisition of fintech Harvest Savings & Wealth Technologies to further build out its digital financial wellness ecosystem by merging customers’ wealth and savings accounts.
The acquisition gives Envestnet ownership of Harvest’s technology, including its automated micro-savings tool and digital account opening. Harvest’s tools are typically provided to banks, credit unions, trust companies and other financial institutions. Terms of the deal were not disclosed.
Harvest's automated micro-saving technology delivers data to the bank or firm, which can then signal when it's time to move a customer from savings to the right wealth offering. That's a major reason the acquisition made sense for Envestnet and its connected financial wellness ecosystem, said Dani Fava, head of strategic development at Envestnet.
“Banks are under constant pressure in this digital transformation that we're all experiencing to continue to add innovative technology tools, which Harvest does for them really easily as a software install,” Fava said. “When you set up a new savings goal, using Harvest, and you as a customer sweep that money from your checking into that savings tool, what's really happening behind the scenes is that it's going into an omnibus account structure.”
Part of why Envestnet acquired Harvest’s technology is that it allows the customer to start a savings account with $0, and not pay any fee or any new account maintenance fee to start saving money, unlike traditional banks, which will ask for minimums or charge customers fees to open savings accounts, which is “counterintuitive,” Fava said.
Harvest's technology is “a way for customers to want to start saving money without spending money,” she said.
The other piece to the acquisition is Harvest’s digital account opening, which enables customers to open accounts across savings, wealth and trust systems. “This puts Envestnet in a position to accelerate that capability for our current clients,” Fava said.
As for new product rollouts, Envestnet is still exploring the ways it will leverage Harvest’s technology, she said. However, the fintech is thinking that Harvest could become very much an extension of what Envestnet does inside of its MoneyGuidePro Blocks, which was developed to deconstruct MoneyGuidePro’s financial planning into small, bite-size components.
“To give you a hint of what products might look like, think about MoneyGuidePro capabilities, and specifically their Blocks, which help you calculate something that's important to your financial planning picture,” Fava said. “For example, how much emergency savings does a customer need? The MoneyGuide Blocks can help you arrive at that answer.”
What Harvest does is helps execute the implementation of that and provide the next steps for a customer to start doing what MoneyGuide Blocks recommends.
Envestnet’s data aggregator, Yodlee, could also see implementation of the Harvest technology, Fava said. “Banks and financial institutions that are using Yodlee could sell the Harvest technology to Yodlee clients as it stands today,” she said.
Craig Iskowitz, a business and technology strategy consultant and CEO of management consulting firm Ezra Group, wrote on Linkedin that the acquisition is “a huge step in [Envestnet’s] recently announced move into the trust market.”
In February, Envestnet announced registered investment advisers and broker-dealers that are part of the Envestnet network have the option to manage trust and estate planning accounts for their clients thanks to a new integration with Trucendent.
“I see this as an integral part of a trust ecosystem that Envestnet can offer #wealthmanagement clients with estate planning (Apprise), trust attorneys & advisors (Trust Exchange) and #digital onboarding, new account opening & client experience (Harvest),” Iskowitz wrote on LinkedIn.
While it could make sense for Envestnet to offer digital account opening for trust accounts down the road, it is not the reason behind the acquisition, Fava said.
Still, the acquisition news builds on Envestnet's strategy of building, buying and combining capabilities instead of developing proprietary technologies from scratch, said Jack Sharry, chief marketing officer at LifeYield.
“Investors want more than products, they want solutions that combine better ways to save, invest, manage risk, minimize taxes, maximize retirement income and enjoy better overall financial outcomes,” Sharry said. “Wealthtech is no longer about who has the best capability, but who can combine with other tools and products to demonstrate and deliver better financial results for advisers and their clients.”
Envestnet revealed in its fourth-quarter earnings call in February that it added $30 million to its operating expenses this year, with the funds partly dedicated to building a digital financial wellness ecosystem.
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