Envestnet announced Wednesday it had acquired cloud-based billing technology provider Redi2 Technologies.
Terms of the deal were not disclosed.
Envestnet CEO Bill Crager said in a WealthManagement.com interview last month that while the firm had taken its “foot off the gas in terms of acquisitions,” it nonetheless remained in a “very good cash position.”
He said of future acquisitions at the time: “It would need to be a deeper opportunity and be able to deliver scale.”
“When the opportunity comes up we are ready to act on it,” said Crager.
And Redi2, which provides not only hosted fee-billing solutions but also revenue management technology that can be applied across channels and business lines, is something Envestnet’s many units can benefit from.
William Trout, director of wealth management at Javelin Strategy & Research, said Envestnet has long been in need of billing at the sleeve level for SMAs, and the lack of it had put the firm at a competitive disadvantage in the past.
"My view is that this is something of a case of eliminating competition through M&A, but one where there is also competitive upside, in that Envestnet is upgrading its fairly vanilla billing toolkit," said Trout.
He said the crown jewel in this particular acquisition was Redi2's Wealth Manager offering.
"You can look for Envestnet to strip out this component to go after broker/dealers and other big fish," said Trout. Less certain, he said would be the fate of BillFin, which can be considered somewhat duplicative to technology Envestnet already possesses.
The decision of what to do with Redi2's third offering, Revenue Manager, "will be telltale, as it’s something of a litmus test around Envestnet's commitment to the asset management business," according to Trout.
More than a decade ago, Redi2 was already at work helping to standardize billing across the financial services industry. In 2010, it worked with the Money Management Institute’s Managed Account Solutions Standards committee in publishing new billing messaging standards to improve communication of fee data between investment managers and sponsors, broker/dealers, custodians and other industry participants.
"Whether you are an asset manager, a TAMP, a broker/dealer, a wealth division of a bank, or an RIA, Envestnet now provides billing solutions that are purpose-built for each organization's specific needs," said Seth Johnson, chairman and CEO of Redi2, in the statement announcing the deal.