Envestnet unbundles portfolio management software for RIAs and it won't be a sideshow

The Chicago firm serves 19,000 TAMP clients with technology, now it wants to take on Advent/Black Diamond

Wednesday 7.6.11 by Heather Underwood and Brooke Southall

Envestnet has long been the undisputed leading platform for separate account managers, used by tens of thousands of advisors. The portfolio management software capability it provided, on the other hand, was always viewed as an add-on service.

No more. Last year, Envestnet took the Silicon Valley- and Trivandrum, India-based technology unit and began to offer it as a standalone service called Envestnet Vantage.

“We always aim for leadership in the markets we enter and are approaching the world of RIA reporting with that same commitment, plus a history of deep expertise,” says Envestnet president Bill Crager. “We have the scale to have a significant impact on the marketplace … Envestnet takes the burden from the advisor’s office and handles it cost effectively and accurately better than anyone else.”

Bill Crager: We have the scale.
Bill Crager: We have the scale.

Head banging

Case in point: In 2006, Josh Yager and Rick Fogg, two Santa Barbara lawyers, were approached by two ultra-high-net-worth individuals with large real estate holdings who wanted specialized expertise in overseeing their assets. The result was that Anodos Advisors, an RIA that now oversees about $400 million of assets for about 15 different accounts. About $100 million of those assets are illiquid.

The company initially tried to keep track of assets with an Excel spread sheet but quickly became overwhelmed as more clients came aboard. After flirting with the idea of using Advent Software products, in 2008 the company went with a company famous in RIA circles – but not for portfolio management systems.

“We banged our heads for two years and then we found Envestnet Asset Management,” Yager says. With it, Anodos gained access to the data feeds of multiple custodians used by his biggest clients including Goldman Sachs and Northern Trust Investments.

Yager also appreciated Envestnet’s ability to manage illiquid assets alongside liquid ones and the ability to customize reports. And the price was right: Envestnet charges about $12,000 quarterly whereas the quote it got from Advent a couple of years ago was $125,000 annually.

Josh Yager: We banged our heads.
Josh Yager: We banged our heads.

Advent declined to comment for this article.


Envestnet’s bid to provide stand-alone software services to RIAs shows promise, says Joel Bruckenstein, producer of the T3 conferences and newsletters.

“I do think that they have a great deal of potential. They have something like 19,000 reps on the platform, but they have had very limited penetration on the independent RIA side. Clearly, they are aware of this and they are devoting resources to become a player in the RIA business. They hired Marion Asnes from Financial Planning magazine to help with the RIA strategy. They have also made a few other significant hires with RIA experience.” See: Ron Fiske comes aboard at Envestnet as company unveils its grander technology vision

Envestnet now serves 35 big, standalone RIAs.


Now that Envestnet has gotten a taste for this high-margin niche, its goal is “absolutely” to be the countervailing force to the coming Advent/BlackDiamond juggernaut in terms of scale, integration, product offerings, staff, support and pricing, according to James Lumberg, co-founder and executive vice president of business development for Envestnet. See: Why Advent and Black Diamond are merging and how advisors look at the deal

Joel Bruckenstein: Sees potential.
Joel Bruckenstein: Sees potential.

“We see this as a large robust business unto itself,” says Lumberg. “Our ambition is to become the leading provider of aggregation performance reporting and billing solutions in the marketplace, and we’re investing accordingly.”

Another TAMP that unbundled its software offering to success is Adhesion Wealth Advisor Solutions Inc. . See: Little-known Adhesion’s big RIA wins less surprising when underlying pedigree is considered

The firm has a good shot at gaining a prominent place in the portfolio software market, says Bruckenstein.

“With the Advent/Black Diamond combination, there is clearly room for another competent player in the PMS space, and Envestnet has the expertise and scale to fill that role. Execution will be the key, but they are very smart folks, so I take them seriously until proven otherwise.”

Silent partner

One advisor who is pleased with Envestnet’s execution is Kent Fitzpatrick, an advisor with Asset Strategy Consultants in Natick, Mass. With $130 million currently in AUM, Fitzpatrick’s firm has used Envestnet as its investing platform over the last ten years — and now is upping its use of the portfolio management system.

Kent Fitzpatrick: We’ve never seen this level of detail.
Kent Fitzpatrick: We’ve never seen this
level of detail.

“We’ve never seen this level of detail,” says Fitzpatrick, comparing Envestnet favorably to some of the larger custodial platforms his firm tried out in the past. Not being obliged to use any proprietary software was also a selling point for Fitzpatrick, who emphasized Vantage’s front-end flexibility.

“Envestnet is a great silent partner. Silent in terms of what the clients sees, but certainly not silent in terms of the resources or back office support they provide us,” he says.

With 450 employees, Envestnet believes it has the workforce and the infrastructure to provide RIAs with an edge on data accuracy and overnight reconciliation. Two hundred employees are dedicated to matters relating to back office technology, ensuring that data is “trade ready” and accurate on a daily basis, according to Marion Asnes, chief marketing officer of Envestnet.

Besides the data-dedicated employees, Envestnet claims Vantage’s superior data accuracy and timely reconciliation is due in part to its global reach, according to the firm.

The 200 employees at Envestnet’s office in Trivandrum, India, are not an outsourced operation in the sense that they are full-time Envestnet employees. They frequently rotate through U.S. offices to promote company cohesion and shared knowledge.

Envestnet is in the process of erecting its own headquarters building in Trivandrum, and is looking to continue expanding its global reach.

Release Date 1999, and the Envestnet Vantage product went standalone in 2010
Price For a firm with a single account (excluding ByAllAccounts aggregation) the Envestnet Vantage price is $100 per account per year. However, pricing scales with number of accounts to be as little as $40-$50 per account per year.
User Base 19,000 clients, over $140 billion AUM on Envestnet Vantage platform
Competitors Advent, PortfolioCenter, BlackDiamond
Web or Desktop Web-based
What does it do primarily? Portfolio management, customized performance reporting,analytics, billing, back office services

Held-away assets

In another effort to vie with Advent, Envestnet began working with account aggregator ByAllAccounts six months ago and is just emerging from its pilot phase. Complete integration with ByAllAccounts will give advisors the ability to obtain information about held-away assets and incorporate that data into a client’s portfolio. See: After more than a decade of trying, ByAllAccounts is gaining momentum with advisors – by taking a new tack

“We’ve worked with eMoney, but it was really more of a snapshot of account balances, not really the analytics in terms of being able to pipe that data into a true platform where you can do reporting from an investment standpoint,” says Fitzpatrick.

Still many advisors appreciate eMoney. See: Advisor Tested: eMoney’s automation adds the biggest benefit; account aggregation still building.

“Bringing over a snapshot of someone’s account value is great, but being able to give detailed performance and also go in and do analytics for risk and allocation and deeper metrics is truly portfolio management,” he says.

Using ByAllAccounts, Envestnet can aggregate, analyze, and report on data from multiple sources with a consistent look and feel.
Using ByAllAccounts, Envestnet can aggregate, analyze,
and report on data from multiple
sources with a consistent look and

But there is a cost: Using the ByAllAccounts aggregation service comes at a $50 surcharge per account on a pay-as-you-go model.

Integration with third-party platforms other than ByAllAccounts is on Envestnet’s to-do list. Currently, Envestnet utilizes Excel import/export techniques to get data to other software platforms. Fitzpatrick uses the SalesForce CRM product in addition to Envestnet’s portfolio management services and hopes to see more integration of these products in the future.

Vantage features

Browsers, Macs, and iPads

Entirely web-based, Envestnet offers remote accessibility and external data hosting. The Vantage platform is browser compatible with Google Chrome, Firefox, Internet Explorer, and Safari, making it accessible on iPads and iPhones as well. Envestnet is also starting to work on native applications for “i-products” for advisors looking for a slick, mobile solution to use with clients.

Client portal

Envestnet, like most portfolio management software products we have reviewed in recent months, also includes a customizable client portal where clients can login to view documents and account data.

Historical transactions

Migrating performance data from one platform to another is a challenging but necessary process. Envestnet is trying to make a name for itself by accurately and quickly moving millions of accounts ont its platform from other platforms like Advent or Schwab PortfolioCenter. “It’s a big part of our value proposition…it’s definitely one of our core competencies” says Lumberg.

The user interface isn’t flashy, but it works. Intuitive, tiered navigation make getting data quickly a simple task.
The user interface isn’t flashy, but
it works. Intuitive, tiered navigation make
getting data quickly a simple task.

User Interface

Envestnet’s interface isn’t flashy – the basic white-and-blue color scheme and top-bar navigation do little justice to Vantage’s robust offerings. The navigation, however, is intuitive and hyperlinks and modal windows speed up workflow. While other portfolio management solutions are investing a lot of time into keeping UIs on the cutting edge, Envestnet has kept it simple.

Performance reporting

One of the goals of the Envestnet Vantage platform is making data from different sources appear uniform. This allows apples-to-apples performance comparisons to be made between portfolios, accounts and held-away assets.

“Because the data is normalized, we are able to look at all these different sources of data in a similar way,” says Lumberg.

Envestnet has put a lot of effort into its fixed-income reports. Lumberg demonstrated to RIABiz how data analytics, performance reporting and detailed data views can be performed even on balanced, separately managed accounts.

The interface for creating reports is simple and intuitive. Report groups can be created to make recurring reporting more efficient. Reports are highly customizable, including the ability to create customized benchmarks based on client-requested indicators.

Looking forward

Envestnet Vantage has its work cut out for it as the firm tries to push the fledgling stand-alone platform into a very competitive arena. But its growth rate, current number of clients, software robustness and 11 years of experience bode well for its future.

Recently Anodos further tested the responsiveness of Envestnet Vantage. It needed the ability to provide reports in a special form and gave the task to Envestnet on May 1. The project is already complete and cost $25,000.

Bill Crager | Josh Yager | Kent Fitzpatrick | Jim Lumberg

Advent | Goldman Sachs | PortfolioCenter | SalesForce | eMoney | Envestnet | T3 | ByAllAccounts | Anodos Advisors | Envestnet Vantage