Envestnet Summit Focuses on the Digital Advisor

Envestnet Summit Focuses on the Digital Advisor

Throughout the company’s annual Advisor Summit in Chicago this week, Envestnet executives urged advisors to embrace automated programs developed by the robo-advisors rather than fear and reject them.

“Most advisors have a digital divide that separates their practice from a more complete engagement from their investors,” said Jud Bergman, Envestnet’s chairman and CEO, during his opening remarks on Wednesday. “I believe that there is no industry on Earth more conducive for leveraging digital technology than our own wealth management business.”

According to Bergman, 60 percent of clients want video chat instead of face-to-face communication, but fewer than 20 percent of firms can provide it. Sixty percent of investors want their advisor to provide online recommendations and portfolio analysis, but only 12 percent actually do.

Bridging the Divide

Bergman said the company is currently developing new technologies around financial planning, asset class selection and allocation, investment vehicle selection, portfolio construction and rebalancing, and tax management.

On Wednesday, Envestnet announced its acquisition of Finance Logix, a company that creates goal-based financial planning software. Finance Logix will plug into Envestnet’s wealth management platform to let goal-based planning flow right into advisors’ other programs.

On Thursday, Envestnet launched ENVESTAT, a new data analytics platform to deliver insights, trends and predictions about investor behavior and advisory practices. The company said this, along with some data analytics initiatives it has in the works, will help give advisors a more holistic picture of a client’s finances and will better integrate goals into wealth management.

Bergman said financial planning can add hundreds of basis points over the lifetime of a relationship between an investor and advisor; Envestnet will also be working towards deeper integration with other planning tools like eMoney and MoneyGuidePro.

Envestnet also revealed its plans for Upside, the robo-advisor startup it acquired in February. In addition to demos showing advisors how they can use Upside to create their own automated advisor service, Envestnet also introduced Advisor Now, a new digital advice portal powered by the company’s technology.

How I Learned To Stop Worrying And Love The Robo

In addition to bridging a digital divide, one of the other big themes of the Envestnet Summit was addressing the growing presence of robo-advisors, who have increased their estimated AUM to $19 billion by the end of 2014.

When Bergman polled the audience, few advisors would admit to feeling threatened by robo-advisors.

“Advisors provide far more value than any digital advisor platform ever could,” Bergman said.

But advisors can’t ignore the things robo-advisors do well, such as asset class selection and allocation. Robo-advisors have also helped the wealth management industry set the market price for commoditized advice, proved the value of data aggregation, and demonstrated that a segment of investors want 24-hour-a-day access.

Stuart DePina, Envestnet’s president of the Tamarac group, echoed this sentiment when unveiling Advisor Now, and said advisors need to adopt a digital-human hybrid approach to survive in the modern age.

There’s also the matter of reaching the millennial generation. Seventy-seven percent of high-net-worth millennials want most or all of their wealth management business to be digital, and Bergman expects that number to climb to 82 percent by 2019. He said by not accommodating this group, advisors are hurting their own firm.

“If you don’t adapt, if you’re not ready to cross the digital divide, your business or practice will not be all they can be,” Bergman said. 

TAGS: Technology
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