Envestnet is honing its business model -- and message -- as it drives toward an IPO
The giant product clearinghouse is recasting itself as a purveyor of fiduciary process
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Bill Crager shuffles the deck on management team created just seven months ago: Tony Leal is out of 'Big Three' inner circle, replaced by Morgan Stanley vet Rose Palazzo
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January 7, 2023 at 1:50 AM
Envestnet just named an ESG head to meld 'wellness,' 'The Intelligent Financial Life' and 'sustainable investing' into a single nirvana -- that starts outside of the product realm
Ron Ransom earned CEO Bill Crager's trust as chief business development officer and now will define how Envestnet conducts itself as a global citizen and vendor of wellness.
July 27, 2022 at 2:27 AM
Biz Briefs: SEC cracks down anew on RIA reverse churning ~ Envestnet borrows $350 million to buy its own stock ~ Fidelity is creating a crypto waiting list while exec questions crypto ecosystem
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Walt Bettinger sheds 'president' title and Bernie Clark gets new boss as Schwab appoints Rick Wurster as president and No. 2 in charge
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December 20, 2021 at 11:59 PM
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Tiburon Strategic Advisors
Asset Manager for RIAs
Top Executive: Charles Roame
Envestnet Inc
TAMP
Top Executive: Jud Bergman
Stephen Winks
IS ENVESTNET THE KEY TO LARGE SCALE INSTITUTIONALIZED SUPPORT FOR FIDUCIARY STANDING?
Under regulatory reform recently reconciled in Congress, if a broker or advisor renders investment advice they are held to a fiduciary standard of care based on objective, non-negotiable fiduciary criteria of statute, case law, regulatory opinion letters. If firms can not support their brokers being held to the objective fiduciary standard of care, they are not advisors but salesmen whose clients, as buyers, must be aware that their best interests are not being served. This places non-compliant brokers and brokerage firms at a significant disadvantage. Top brokers with the most assets will not continue to pay 60% of their gross revenue for an inferior competitive market position.
Thus the brokerage industry will be pressed to develop (a) the prudent processes (asset/liability study, investment policy, portfolio construction and management) tied to statutory documentation necessary to assure fiduciary standing, (b) enabling technology that facilitates accountability, transparency and the continuous, comprehensive counsel necessary for fiduciary standing (the suitability standard entailed no ongoing responsibilities after a product sale), (c) practice/work flow management support entailing a functional division of labor (Advisor, CAO, CIO) that simplifies the execution of an extremely high level of counsel, (d) conflicts of interest management (not just disclosure), and (e) expert advisory services support for each of the ten major market segmements (Mass, Retail, HNW, Ultra HNW, DC, DB, Public Funds, Profit Sharing, Foundations and Endowmwents, Taft-Hartley) advisors serve.
Envestnet/PMC is not there yet but is working to help the independent broker/dealer which do not have the resources to execute, to support the fiduciary standing of their brokers. There is a much innovation required, but Envestnet/PMC has scale B/Ds do not and if successful, Envestnet can extend its services to RIAs.
Thus, Envestnet can play an important role in simplifing advice, streamlining advisory services around prudent processes and advanced technology which is the large scale institutionalized support for fiduciary standing that presently does not exist in the brokerage industry. Again Envestnet is not there yet, but they are closer than our major wirehouses because they do not have to manage commission brokerage cultural push back. However, Envestnet must negotiate with their B/D client base on the level of counsel those B/Ds will support essentially, over time transforming brokerage firms to advisory services support firms principally outsourced to PMC. If under resourced IBDs decide not to manage conflicts of interest there is nothing Envestnet can do but abide by the wishes of their IBD clients. Under resourced independent broker/dealers have no option, unless they try to replicate Envestnet which is not cost effective. In this process Envestnet’s value proposition enables the entire IBD market to literally act in the consumer’s best interest—a most welcome outcome.
Wirehouses have no such option and must reconcile their transition from caveat emptor brokerage support to advisory services support in the consumer’s best interest, which by necessity must be disruptive in nature in order to be effective.
SCW
