Envestnet, a Berwyn, Pa.-based fintech company, announced today that it’s deepening its relationships with BlackRock, Fidelity Investments, Franklin Templeton and State Street Global Advisors to offer custom investment strategies for advisory clients, accounts that will help clients meet specific financial goals and risk tolerance.
These strategies will include direct indexing for unified managed accounts and custom solutions for the wealthy.
The unified managed account solutions, previously limited to clients of Envestnet’s in-house managers, will be delivered at scale to the more than 109,000 advisors on its platform, the fintech company said in a press release.
“As wealth management continues to advance, these relationships will fuel our collective growth through investment, collaboration and focused sales efforts,” said Tom Sipp, Envestnet’s executive vice president of business lines, in a statement.
“By bringing these solutions from asset managers into our ecosystem, we believe advisors will be able to capture share and serve more of their clients’ unique needs.”
Envestnet, founded in 1999, reported $452 billion in assets under management at the end of March, 50% of that related to unified managed accounts. For the three years ended December 31, 2023, Envestnet posted total managed account annualized organic asset growth, as measured by AUM, of 14%, nearly twice the industry growth rate.
“The unified managed account is where we project the greatest growth,” said Dana D’Auria, group president of solutions and co-CIO at Envestnet, in an interview with Financial Advisor.
BlackRock has said the model-portfolio business, which uses tailored strategies, could grow to $10 trillion over the next five years from around $4 trillion. BlackRock and companies such as Charles Schwab package their own products into off-the-shelf strategies, and intermediary Envestnet provides the technology. Envestnet has overseen more than $360 billion in model-portfolio trades, it says.
D’Auria suggested that Envestnet’s partnering with these four asset management titans sets its effort apart from competitors.
“This is really expanding our abilities in terms of customizing solutions to clients,” she said. “These four large asset managers are dominant in the space, and all are in agreement that they want to work with us to deliver customized solutions. They’re very much leaning into the Envestnet platform to do that distribution.”
In its announcement today, Envestnet said it will invest in enhancements to its UMA ecosystem.
“These asset managers are betting heavily on an emerging convergence point where personalization, integrated technology and solutions meet as an opportunity to invest in the trends that are shaping the future of wealth management,” the Envestnet release said.
In the press release, D’Auria said Envestnet’s advisors and clients have been asking for personalization at scale and “affordable platform options” taking advantage of the firm’s unified managed account capabilities.
“We believe working with a focused opportunity set of like-minded asset managers invested in our mutual success will enable us to provide the choice and functionality our clients want now and the road map to an even more enhanced ecosystem down the line,” she said in a statement.
In the announcement the asset managers also touted the alliance’s ability to meet clients’ and advisors’ desire for technology-based customized solutions to help provide holistic, comprehensive solutions to high-net-worth clients and investors.
“As technology reshapes clients’ relationships with their advisors and makes it easier for advisors to engage at key life stages, there is an increased desire for additional products to build better, more diverse and more personalized portfolios,” said Gary Gallagher, head of wealth advisory and portfolio solutions at Fidelity Institutional, in the press statement. “Through this strategic relationship, we aim to bring Fidelity’s investment solutions to Envestnet’s clients in a modern, highly integrated way.”