Hoping to replicate the start-up environment that launched what has become a $1.7 billion market cap company, Envestnet has funded and launched Envestnet Retirement Services (ERS) to take on the retirement market. Envestnet has a 57% share in the new venture.
Just as retail advisors needed an integrated platform to access various money managers that are not readily available — and afford some fiduciary protection in their third-party asset management platform — ERS is trying to offer plan advisors a single dashboard to access plans and participants on multiple record keepers while offering fiduciary oversight and managed accounts, as well as reporting and CRM practice management tools.
Second acts are hard, as is creating a start-up environment built on a corporate framework, but ERS seems to have the right goals in a rich market — and some early successes under its belt.
Having access to data, especially participant data, will be critical if providers and advisors hope to be able to diagnose plan and participant success and then respond with customized solutions. While some record keepers might be reluctant to share the data, hiding behind privacy issues and citing technology challenges, BDs and larger RIAs like LPL and CAPTRUST are forcing the issue.
ERS is trying to position itself as the middleman, which allows record keepers and custodians to pass data to one entity that will then redistribute it. With that data, ERS can also populate its own reporting tools and systems that help plan advisors manage plans and participants. While Morningstar and Mesirow can serve as 3(21) and 3(38) fiduciaries on static menus, in theory at least, ERS can provide those same services dynamically regardless of the menu.
While Financial Engines provides managed accounts for larger plans, ERS has set it sights on smaller companies overseen by advisors. That has everything to do with technology.
There are have been some good early successes, including Alerus and Hightower recently choosing ERS over RPAG (now owned by NFP), its main competitor. Some experts are predicting continued success based on ERS' neutral business model and more attractive pricing.
