As hinted at earlier this year, Envestnet | MoneyGuide is tying insurance and financial planning closely together, with an announcement that Jackson National Life Insurance Company is partnering with Envestnet’s MoneyGuideElite, the upper-tier offering of the popular financial planning software. The immediate outcome is an annuity-valuation feature embedded in the financial planning software called Secure Income Modeling.
Envestnet | MoneyGuide is framing the partnership as a win for advisors interested in showing the advantages and disadvantages of lifetime income products. “Early on, we worked with Jackson to enhance our annuity functionality,” said Kevin Hughes, chief growth officer at the division. “Their insight has enabled MoneyGuide to do a better job showing the benefits and tradeoffs a lifetime income solution can provide within a comprehensive wealth management plan.”
Jackson, meanwhile, sees its positioning within the module as an advantage. By partnering with MoneyGuide, “this strategic alliance allows Jackson to help advisors better solve for the retirement income needs of their clients,” said Dana Malesky, SVP of strategic solutions at Jackson National Life Distributors LLC. The partnership will be more than a melding of software. The two companies are teaming up, with Jackson providing a team of “Advisory Integration Consultants,” consisting of Jackson wholesalers, to help advisors find a way to fit the tool into their practices. The training will be tailored for MoneyGuideElite users, said Patrick Rich, a spokesperson for Jackson, but it will be carrier agnostic. Training will be carried out in person and via webinars, he said.
But that's just part of a broader strategy behind the $500 million forked over by Envestnet.
The larger story is around use of MoneyGuide's planning capabilities as a product delivery channel. If all goes as planned, advisors won't just be making financial plans but also facilitating the provision of products needed to execute on clients' goals. Just as it's now a conduit for insurance, financial planning will be a delivery mechanism for Envestnet's Credit Exchange, currently in pilot, and perhaps even an alternatives exchange down the road, said the firm's co-founder, Bill Crager.
"We have a plan—let's say retirement or buying a second home or elder care or legacy—and you want to achieve it. How do you optimize the achievement of that plan?" Crager asked during an interview in July. "Some [goals in the financial plan] may be more investment centric. Some may need more protections or be insurance-related in some way. Some may be achieved more through credit or loans, such as college funding."
"It becomes a data model," he explained. "There are multiple things that are connected in there: one is data; one is software—financial planning; and one is solutions."
Advisors are curious about how the firm plans to tie its products together. At its Advisor Summit earlier this year, Envestnet welcomed a standing-room-only crowd to its session on the Envestnet Insurance Exchange, a portal using FIDx technology that's meant to bring insurance products directly into an advisor’s practice. At the same conference in May, a panel of executives from Envestnet, Goldman Sachs and The Bancorp were peppered with enthusiastic questions about advisor-facilitated credit that will be offered through Envestnet Credit Exchange.
Envestnet's vision is to embed those solution opportunities into its financial planning. The hope, according to executives at the firm, is that it will strengthen the financial plan, by making it more responsive to solutions that are proposed and executed upon within the plan, and create fewer reasons for advisors to turn to other technologies or financial service providers to find the answers to the questions asked by clients.