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Jud Bergman Envestnet Photo by Samuel Steinberger
Jud Bergman

Bergman: Envestnet's Plans for PortfolioCenter, MoneyGuide

One-on-one with Jud Bergman, who discusses financial planning, Apprise Labs, the big tech name he hopes to emulate and more in a wide-ranging Q&A. How does financial planning add value for Envestnet?

Jud Bergman: We've been committed to financial planning for a number of years. We bought Logix in 2015. We were deeply integrated with eMoney and with MoneyGuide, and we found that planning was central to the value prop of advisors.

We think that out of the 300,000 advisors in North America, maybe only about 90,000 to 100,000 really do serious planning. Logix was more a planning solution for the nonplanner, so we still needed a goals-based plan and we still needed a cash flow and tax and estate plan. That's where MoneyGuide fits in, as the premier goals-based planning software. And we're developing, with Apprise, a very sophisticated high-end collaborative tool.

There are many different personas out there in terms of advisors and planners, so by owning the code base, we're able to customize or personalize these installs.

WM: If you looked at acquiring MoneyGuide as a way of bringing in better financial planning capabilities, what are the other missing pieces in the wealthtech ecosystem for Envestnet?

JB: When you're a platform provider, in some ways you're only as strong as your weakest link. Advisors will rake you over the coals, so to speak, for something that has never been a core competency. So, improving financial planning was something we were getting consistent feedback on.

We still get asked, “When are you going to do more on the alternatives side?” The experience we've had is that advisors ask for it more than they actually use it. So, I think we're going to rely on the existing partnerships that we have to do that.

And then the customer relationship management (CRM): We've got an integration to Salesforce, which has a dominant share among our top 50 enterprise clients, but then they have a very low share against all the other enterprise clients and they are nonexistent in the registered investment advisor space. We have a Microsoft Dynamics-based CRM for advisors who use Microsoft Office as kind of their OS. But we get consistent feedback that 'you should do more on CRM in the RIA space.' We're a small company and don't want to compete against a Salesforce or an Oracle, but we are aware of a shortcoming there, let's just put it that way.

But let's focus on the positive. We've got a lot that we're working with.

WM: I'm glad you brought up Dynamics. Is there a roadmap for building a CRM?

JB: We have a Dynamics-based CRM, but it is not one of our top three priorities to improve that right now. The market for that is pretty limited.

WM: Looking downstream, away from enterprises, what does the business model look like for Envestnet, especially for Tamarac?

JB: We have this barbell-shaped client base with, let's call it $3 trillion in assets. About half those assets support a thousand of the largest RIA firms. We've got about a 40% share of the RIAs with a billion dollars or more. Then about half the assets are with representatives at financial enterprises—tens of thousands of advisors in different broker/dealers, different insurers and different banks.

We haven't focused on the mid-sized RIA and that's an area of keen interest for us and focus going forward.

We had some pricing challenges, because a mid-tiered RIA wants the full suite of services that a Tamarac can offer: a CRM, rebalancing, performance reporting, a client portal, access to managed accounts. But they're not able to pay a high annual subscription fee. So how do we make that attractive? How do we make a version of it that's affordable? It's a huge market and great work is being done. It's more of a pricing challenge, and it's a product configuration challenge, and we've made a tremendous amount of headway.

The business combination that we announced about a month ago with PortfolioCenter is the centerpiece to that strategy, no pun intended. It's the centerpiece of our strategy of going for those mid-sized RIAs.

WM: What should advisors expect from the PortfolioCenter acquisition?

JB: More investment in that product and more investment in that platform.

WM: What is that investment going toward?

JB: It's going toward improvements in the current Schwab PortfolioCenter software and an expanding array of options for advisors who may want to graduate from PortfolioCenter to a more fully featured advisor platform.

WM: And that would be Tamarac?

JB: It would be a version of Tamarac that would be at a price point that is less than the version that the billion-dollar RIA is using right now.

It’d be the same client portal, the same reporting engine, but the portfolio management tools may be slightly altered. It’s a version that’s appropriate for the mid-sized RIA. You're not going to need as many users in your install. You might only need two or three, or one, in some cases.

WM: Looking at the partnership with, what’s the plan there?

JB: The wealth management world is going down a couple of paths. One path is advisors who want a fully bundled application stack and user experience, right down to a rolled-out advisor portal and client portal. And that market we have to solve for—and we do solve for that.

Another market is large enterprises. They have a value proposition of creating a user experience that's unique and their own. So, another path is delivering all that functionality, through application programming interfaces (APIs), enabling large enterprises to create their own user experiences.

While those are the two extremes, that doesn't fit everybody, because there's always a path in the middle that covers everybody else. They don't want the fully integrated solution, and they don't want to be in the technology integration business for the rest of their lives. So, they say, “Give me something that can plug and play with my existing environment.” Again, APIs are an important part of getting all that in place. Oleg Tishkevich and are going to help get us to where we need to be in that middle tier, and for the larger enterprises.

WM: What's the strategy behind the Insurance and Credit Exchange?

JB: That's broadening the definition of advice. That's helping advisors have more areas in life that the HNW investor can engage with them on. That’s making the advisor omnichannel.

WM: Given the focus these days on video chats, video calls, mobility and remote advising, why does the “office of the future” include a touch screen display? (This question came out of Envestnet's announcement at their conference of a 60% discount being given to financial advisors associated with the firm on large Dell touch screens; monitors that can be easily used for real-time in-office demonstration and collaboration with clients.)

JB: It’s omnichannel. There still are collaborative meetings that are essential for the advisor. This is about creating multiple synapses and an exchange [of information]. Where the exchange used to be paper-based or notes-based, it now has to be supported digitally, but collaboratively.

WM: How is Apprise Labs going to be integrated with Envestnet’s product suite?

JB: The Apprise offering, targeted at the ultra-high-net-worth individuals—anybody that's got tax and estate planning and legacy planning issues—that's a place in the market that's underserved. That's the product mandate for Apprise. Apprise will be available for adoption later this year.

We expect that there will be other benefits to working with them, too. Edmond Walters’ knowledge of the high-net-worth advisor, his entrepreneurial brilliance, his knowledge of how advisors think and act and feel—all of that is going to play a role.

WM: Envestnet is what I’ve called a “vertical dash” company, because you have Envestnet | Yodlee and Envestnet | MoneyGuide, for example. When, if at all, will the vertical dashes be eliminated, and you'll just have Envestnet?

JB: Everybody wants to be Apple, right? We have so much respect for that company—who wouldn't? But we see ourselves, aspirationally, a little more like Microsoft in that we want to be the operating system for financial wellness.

We just announced going from four business units to two and so that's its own process. Then we just acquired MoneyGuide, which gives us three again. We'll have Envestnet Data & Analytics, run by Stuart DePina; Envestnet Wealth Solutions, run by Bill Crager; and Envestnet | MoneyGuide, run by Tony Leal.

We'll continue to invest in product brands, or platform brands, underneath that—this assembly of verticals—not unlike people who still use Microsoft Word or Microsoft Excel or Microsoft PowerPoint.

Edited for clarity and concision.

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