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Dana D’Auria, the group president of solutions and co-CIO at Envestnet
Dana D’Auria, the group president of solutions and co-CIO at Envestnet

Envestnet Partners With BlackRock, Fidelity, Asset Managers on Customized Portfolios

BlackRock, Fidelity Investments, Franklin Templeton and State Street will work with the firm to "personalize" investment portfolios.

Envestnet announced today it would collaborate closely with four of the world’s largest asset managers by deepening the levels of customization that can be achieved in building investment portfolios on its platform.

The four firms—BlackRock, Fidelity Investments, Franklin Templeton and State Street Global Advisors—will be the first among the more than 800 asset managers that Envestnet works with to develop custom-tailored investment strategies that will be available to the 109,000 financial advisors on its platform and their clients.

According to Dana D’Auria, the group president of solutions and co-CIO at Envestnet, the first of these new developments will be available sometime in the third quarter.

These new levels of customization will result from a more granular set of choices embedded in Envestnet’s technology around personalization, and three new product area collaborations have been announced.

The first is the development of UMA-eligible personalized direct index products from each of the four managers.

Next are strategist UMAs, essentially one-to-many models created for advisors to HNW and UHNW clients that can be further customized and incorporate separately managed accounts, not just ETFs or mutual funds, with a minimum account size of $250,000.

Finally, HNW Consulting will be able to deliver both one-to-many and one-to-one bespoke models for accounts over $1 million. This is the highest-touch of the three, creating models based on client specifications, whether by the asset manager itself or Envestnet | PMC.

To be sure, customizations on the Envestnet UMA platform are not new, D’Auria said. In looking at how an SMA works on the firm’s UMA program today, an advisor can make some limited, incremental customizations.

She said that in the new products, Envestnet will fully utilize the optimization algorithms developed during its years of offering direct indexing, which began in 2013, and apply them to models of any kind.

Advisors and UMA managers will have 100 points of customization to choose from in the new products. These will include everything from market capitalization size to selection of factor tilts—whether value, quality, momentum or low volatility—and a wide selection of sustainability themes, which have additional preference settings within them (say, “climate” and tilt toward “green transportation” within it), to name just a few.

Those client-specific models created will then be backtested to ensure stability, and Envestnet will work with the advisor to ensure the result is investable and create the client’s own custom-indexed portfolio.

“We’ll have a series of products with each of the four managers, basically a menu of solutions that advisors and home offices can use,” said D’Auria, referring to what will be available later this year. D'Auria also noted that a big driver of the project had been firms seeking to build personalized portfolios in an affordable way and at scale.

While she said it was too soon to tell which of the managers might be the first to come online, she added that, among many other considerations, much work remained regarding which asset classes would be selected for the products.

When asked how the four initial asset managers had been selected, she said that the firm sought managers who had been most amenable to working with Envestnet in the past. The announcement of the products did note that Envestnet would be compensated by the managers, but details of those arrangements were not disclosed.

In a May interview with, Molly Weiss, a group president at Envestnet who oversees all the firm’s wealth platforms and technology, said these and other developments were part of a fundamental change in how the firm’s clients access managed accounts.

“The place that creates the most value is portfolio construction and management, and historically, the UMA has been something that Envestnet trades and allows for the advisor to manage sleeves on their own and/or outsource others to other managers, but Envestnet traded it,” she said.

“The technology enhancements that we are working on and continue to work on is the ability to have different parties trade; the advisor can trade their one part of the sleeve and an outsourcer another,” said Weiss.

Envestnet currently works with more than 500 of the nation’s largest RIA firms and reports having more than $6 trillion in total assets on its platform.

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