Two advisor-focused cryptocurrency platforms simultaneously announced integrations with Envestnet on Thursday.
A wholly owned subsidiary of MassMutual, the Flourish Crypto platform is part of that firm's advisor-focused investment management tool for crypto and cash management. Gemini BITRIA is a digital asset management platform for advisors acquired by cryptocurrency custodian Gemini in January. Each announced integrations with the RIA-specific Tamarac division of Envestnet, giving them potentially lucrative access to the wide pool of independent financial advisors who use the TAMP for investment management.
None of the three parties would comment on the simultaneous timing of the announcements, and an executive for Envestnet sought to avoid favoritism to either party.
“Envestnet’s crypto strategy right now is two-fold, built on education and access,” said Dani Fava, group head for product innovation at Envestnet.
“We have three partners, Anthony ‘Pomp’ Pompliano will be providing crypto education, helping advisors understand the asset class and providing dynamic updates and certification around the basics,” she said. Pompliano is the head of a Miami-based family office, and a a well-known podcaster and commentator on crypto as an investment.
“And then access, for now, provided through Gemini BITRIA and Flourish Crypto,” said Fava, noting that while there is overlap between the two offerings they do differ somewhat, “Flourish being more rooted in the advisor space and a curated list of currency limited to Bitcoin and Ethereum, whereas Gemini BITRIA has access to a less curated, far broader list of cryptocurrencies.
The move is a show of confidence by the firms that cryptocurrency has staying power among independent advisors, despite recent pullbacks in valuations.
A recent survey on behalf of Gemini by Data Driven Consulting Group found that 20% of Americans had purchased cryptocurrency. The survey covered 20 countries between November 2021 and February 2022 with a total of 29,293 adult respondents—2,300 in the U.S.—aged 18 to 75 with household incomes equivalent to $14,000 or more in the respondent's local currency.
In its own “2022 Intelligent Financial Life National Study,” which surveyed 2,158 U.S. adults aged 25 to 65, Envestnet found that 42% of Americans that own cryptocurrency checked their accounts daily or more. Executives had not replied to a query from WealthManagement.com about the percentage of the total respondents that owned cryptocurrency, or if there was any demographic data discovered about crypto investors. Nonetheless, the survey indicates a significant percentage of those who own it are passionate about monitoring its value.
“We’ve been investing in digital assets as just an advisory firm for three years,” said Matthew Kolesky, president at the advisory firm Arbor Capital Management Inc. and director of Arbor Digital, a digital SMA manager and subadvisor. The firm manages $305 million in assets and has used Envestnet | Tamarac as its portfolio management platform for more than a decade.
“The big advantage that this Gemini BITRIA integration has for us is that we can see the data flow through in one place and have all of it showing up in one integrated report,” he said.
Michael Moriarty, chief investment officer for Wealthspire Advisors, which has about $17 billion in AUM and 18 offices, and is a Tamarac client, and has a similar view on the merits of the integration.
“Wealthspire is always focused on evolving to meet the needs of both our advisors and our clients. Increasingly we’ve seen a demand for crypto, and searched for options that aligned with our investment strategy and integrated with our core reporting system,” he wrote in an emailed response to Wealthmanagement.com. “We were pleased to work with Flourish Crypto and Envestnet | Tamarac to bring this integrated solution to our clients, and built to work for advisors."
Ben Cruikshank, president of Flourish, said it was demand from clients like Wealthspire that led his firm to pursue the integration with Envestnet.
“No partner does this just because they like working together. Mutual clients of ours were asking for it. And building really smooth reporting integrations is hard, a lot of work goes into them from both sides because advisors are using this for billing and performance reporting,” he said noting that there were about 50 RIA clients of Flourish that used Tamarac, with an average of about $1.6 billion in AUM.
The integrations between the two crypto firms and Envestnet | Tamarac are, for now, limited to reporting, feeding a client's cryptocurrency holdings and performance data into Tamarac’s reporting engine to provide advisors an aggregated view of a client’s assets.
“This is the first full one-stop shop-integration between a crypto custodian and Envestnet,” said Dan Eyre, the co-founder and former CEO of BITRIA who now heads up the BITRIA unit within Gemini, describing his own firm’s integration.
“We are reaching a level of maturity in the industry where ... it has been talk, and now we are getting into execution,” said Eyre.
