Today’s financial advisor clients and investors are tech-savvy, demanding transparency and embracing change more willingly than previous generations. However, even the less tech-savvy had to adapt to a digital-first financial landscape during the pandemic and are increasingly embracing financial technologies for banking, payments, investing, and more. According to a 2021 Plaid report, 95 percent of millennials use technology to manage some aspect of their financial lives.
Yet, the fastest-growing segment, and the one that is driving the overall growth of the fintech sector, is the baby boomers. The usage of fintech products among consumers 56 and older nearly doubled year-over-year to 79% from 2020 to 2021. Baby boomers are also the demographic with the most wealth. It makes sense to marry these two facts and provide them with the tech tools to manage their collective $435.0B in assets and help them plan for future generations.
Pennsylvania-based financial and wealth technology corporation Envestnet is on a mission to do just that. Last week I attended the company’s Advisor Summit in Charlotte, NC, where I learned more about its connected fintech solutions and the wealth management technology and products it provides to financial advisors and institutions. Here, I share some of my takeaways.
First, some background. Although many technology tools, data, and analytics exist at the financial planning industry’s fingertips, it generally lags in technology adoption and usage. Advisors can be reluctant to introduce clients to technology-driven advising bells and whistles, fearing it will make their job obsolete. The traditional financial advisory process includes hours-long meetings to discuss assets, goals and retirement, culminating in the client signing a piece of paper. Given that, it’s easy to see how technology such as data analytics, AI, ML and advanced portfolio-building software could be overwhelming or even threatening. Some fear losing the human connection required in this kind of advisor relationship, especially given the higher-touch approach required by some clients.
Envestnet’s connected platform, built and bought with its active M&A strategy, seeks to supplement the human connection instead of eliminating it. Powering financial advisors from the likes of BlackRock, Russell Investments, and Nuveen, the platform boasts $5.5 Trillion in platform assets, over $361 Billion assets under management (AUM) by Envestnet PMC, and over $432 Billion assets under advisory (AUA).
An intelligent solution
The company’s overarching concept, which it refers to as “The Intelligent Financial Life,” was front and center at last week’s summit. Acknowledging that the industry is “straddling the past and future like never before,” the company’s CEO, Bill Craver, referred to Envestnet’s solution as “Relationships-as-a-Service.”
“Advanced technology needs human creativity and experience, and paradoxically, great technology enables advisors to be more human,” Craver explained. “When we combine what advisors do with what we do, we unlock something of enduring value. It is not technology or data that matter; it is people using technology and data that matter.”
What advisors and wealth managers need to keep up in this increasingly digital-first landscape is to embrace tech without solely becoming tech. Even as technology becomes more intelligent, people lift the effectiveness of the solutions, building on one another to amplify the value.
Envestnet showed off several products and solutions at the Advisor Summit that empower its customers to best guide their clients into the Intelligent Financial Life. The standouts for me were the firm’s two new portals. The Client Portal is a redesigned configurable interface for advisors to provide clients with real-time access to account information and data from any device. Envestnet’s Developer Portal gives access to APIs across the company’s entire ecosystem creating a single-entry point for developers to public and restricted tools for content, training materials, and testing.
From the outside, the company’s brand story has at times appeared fragmented, with many different operating platforms and solutions under various legacy brands (likely due to Envestnet’s many mergers and acquisitions). However, the Client Portal stitches the story together beautifully. Whether it’s Yodlee data and analytics or Tamarac portfolio management applications (two of many brands under the Envestnet umbrella), the Client Portal aggregates advisor tools and client information seamlessly into a slick interface that is highly sophisticated yet intuitive, easily configurable and navigated.
Other summit news
Envestnet’s other announcements at the summit included the acquisition of the advisor transition management platform, Truelytics, an end-to-end data-driven system for wealth management and insurance enterprises. The solution helps attract, grow and retain advisory businesses while reducing the costs related to advisor transitions.
The company also announced its cloud-based Wealth Data Platform, a business and client data intelligence suite for wealth advisory firms. Financial planning tool improvements and additions to Envestnet MoneyGuide’s MyBlocks include Impact Assessment to align portfolios with impact and sustainability goals. Next Best Dollar MyBlocks helps advisors allocate financial resources and assets for clients and future generations.
Optimizing the Intelligent Financial Life journey customer support
In a moment of vulnerability, the company acknowledged that some of its customers either underutilize the platform or don’t use it at all. The company shared at the summit that it recently revamped its customer support engine to ensure that advisors get the most from the Envestnet platform, regardless of usage level.
“Data doesn’t lie. Insights are where the data comes to life and where those opportunities for advisors and their clients emerge,” Molly Weiss, Head of Product for Envestnet Wealth, told me after the summit. “We also know that these insights, if acted on, develop trust and increase client retention. Intuitive technology, on-platform help, and specialized support are critical to the overall success of the ecosystem.”
Financial and wealth technology products are here to stay, and the tools, data, and analytics– and the insights those produce–only help financial advisors and wealth managers better serve their clients. Envestnet’s “Relationships-as-a-Service” approach provides the right balance of complementary solutions for advisors and real-time access and transparency for clients.
Fintech and wealth tech are becoming increasingly sophisticated, while the wealthiest population continues to age. Combining advisory support with emerging technology will narrow the gap between advisors operating in the past and comfortably bring them to wealth management’s present and future technology.
Next, I’d love to see more Envestnet consumer products that help bring The Intelligent Financial Life to the larger population. With the company’s API strategy, I’m guessing we’ll see just that.
Disclosure: My firm, Moor Insights & Strategy, like all research and analyst firms, provides or has provided research, analysis, advising, and/or consulting to many high-tech companies in the industry. I do not hold any equity positions with any companies cited in this column.