About Envestnet Asset Management, Inc.

Envestnet provides managed account services for around 50,000 financial institutions and investment advisers. The company's online financial planning programs assist brokers, banks, insurance companies, and registered investment advisers with portfolio construction and analysis, generating proposals, and managing client accounts. Subsidiary Portfolio Management Consultants (Envestnet | PMC) provides consulting services to financial advisors and affords them access to managed accounts, mutual funds, exchange-traded funds, and alternative investments. Founded in 1999, Envestnet supports approximately $851 billion in assets across some 3.5 million investor accounts.

Operations

In addition to its AdvisorSuite software and Envestnet | PMC services, the company operates Envestnet Reporting Solutions (Envestnet | Vantage), which provides investment advisors with a detailed picture of their clients' holdings. Altogether, Envestnet's capabilities allow advisors to select from a wide range of investments and services that best match their client's needs.

Envestnet operates two segments: Envestnet, which generated 97% of the company's total revenue in 2015 and provides wealth management software and services to support financial advisors and institutions; and Envestnet | Yodlee, which began in 2015 and is a data aggregation and data analytics platform for digital financial services.

Envestnet earns most of its money by charging fees based on a percentage of assets managed or administered on its platform by its financial advisor clients (the majority of its revenue) and by licensing its its technology. It generated 79% of its total revenue from assets under management or administration during 2015. The remainder of its revenue came from subscription and licensing fees (18% of revenue) for its platforms and professional services and other income (3% of revenue).

Geographic Reach

Chicago-based Envestnet has offices in nine US cities, including Boston, New York, and Seattle, and an office in Trivandrum, India. The firm generated 92% of its revenue from business in the US during 2015, while the rest came from overseas.

Sales and Marketing

The company's major clients include FMR LLC, Northwestern Mutual, National Financial Partners, and National Planning Holdings. Financial services giant FMR accounted for 18% of Envestnet's total revenue in 2015. More than 950 companies were using the firm's Envestnet | Yodlee platform as of early 2016, including 12 of the 20 largest US banks and hundreds of Internet services companies.

Envestnet markets its products and services through paid print and online advertisements, e-blast campaigns, and sponsored webinars for financial advisors. It also partners with independent broker-dealers to create direct mail campaigns to target financial advisors. The firm's sales teams are organized by sales channel and product offering, with its enterprise sales team focusing on enterprise clients, its advisory sales teams serving financial advisors of broker-dealer and RIA firms, and a direct sales and pre-sales team to serve leading global financial institutions.

Altogether, the company spent $645,000 on advertising during 2015, down from $675,000 and $1.03 million in 2014 and 2013, respectively.

Financial Performance

Rising financial markets and new customer business from acquisitions have helped Envestnet's assets under management and administration swell over the years, causing revenue to more than triple since 2012. Meanwhile, its annual profits have risen more than ten-fold as the firm has kept a lid on overhead costs.

The company's revenue jumped 21% to $420.92 million during 2015 mostly thanks to 13% growth in assets under management or administration income as its platform AUM/A swelled by 20% to $851.44 billion. Subscription and licensing income spiked 31% as demand for its Envestnet | Tamarac professional services grew.

Despite strong revenue growth in 2015, Envestnet's net income plummeted more than two-thirds to $4.44 million during the year mostly as a string of recent acquisitions led to higher headcounts, systems development costs, professional and legal fees, and other associated costs. The company's operating cash levels fell more than 55% to $24.43 million in 2015 mostly due to the sharp fall in cash earnings.

Strategy

Envestnet maintains a growth strategy centered around making acquisitions that bolster the attractiveness of its technology platforms, hoping to expand its client base and grow its assets under management. To build its business organically, the firm, which entered a new business market after acquiring data aggregator and analysis company Yodlee in late 2015, intends to cross-sell its new Envestnet | Yodlee product to existing customers.

With its eye on the long-term trend, Envestnet has been catering to the growing number of independent and boutique investment advisers, a market which may not have the technological resources and tools of larger firms. The company sees a promising trend of advisors leaving larger firms to start their own practices or move to boutiques.

Mergers and Acquisitions

In November 2015, Envestnet bought Yodlee Inc, a data aggregation and data analytics platform which offered cloud-based support for digital financial services for 20 million paid subscribers and 950 financial institutions and financial technology innovators. The $590 million acquisition formed the Envestnet | Yodlee segment.

In August 2015, the company acquired Castle Rock Innovations, which provided data aggregation and plan benchmark solutions to retirement plan record-keepers, broker-dealers, and advisors.

In May 2015, the firm bought Arizona-based Oltis Software LLC (doing business as Finance Logix), which provides financial planning and wealth management software services to banks, broker-dealers, and RIA firms.

In February 2015, the company purchased Upside Holdings, a "robo advisor" technology company registered as an Internet Investment Advisor, to expand its service offerings on its wealth management platform.

In October 2014, Envestnet acquired Placemark Holdings, a developer of Unified Managed Accounts (UMA) programs for banks, broker dealers, and registered investment advisors (RIAs). The business will become part of Envestnet/PMC.

In July 2013, the firm acquired the Wealth Management Solutions (WMS) division of Prudential Investments for about $9 million in cash upon closing (plus contingent consideration of up to $23 million in cash based upon future performance). WMS helps financial services firms develop and improve their wealth management offerings.

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Envestnet Asset Management, Inc.

35 E Wacker Dr Ste 2400
Chicago, IL 60601-2310
Phone: 1 (312) 827-2800
Fax: 1 (312) 827-2801

Stats

  • Employer Type: Public
  • Senior Vice President: Christopher Curtis
  • Manager: Donald Frerichs
  • Regional Director: Mark Olson
  • Employees: 447

Major Office Locations

  • Chicago, IL

Other Locations

  • Denver, CO