The Envestnet Advisor Summit kicked off in Chicago Wednesday afternoon with a welcome from Ron Fiske, conference chair and managing director for strategic partners, to the standing-room only crowd at the Westin RiverNorth hotel ballroom. After Fiske told the 550 attendees, including 330 clients of Envestnet, that the theme of the conference was “Changing the Rules,” he saluted those clients by saying that “you’re changing the rules,” before handing off the stage to Envestnet CEO Jud Bergman.
- That investment firms are best able to determine the proper disclosure and pricing.
- That New York-based investment firms attract the best advisor talent.
- That “big spends” on legacy systems ensure that advisors would have access to leading wealth management technology.
- That Modern Portfolio Theory simply applied creates value.
Bergman then suggested what the four new, emerging rules are and how they have changed the conversation and business realities for advisors. The New Rules:
- That practice standards are evolving, particularly when it comes to the fiduciary standard for advice givers.
- That advisor independence is a superior, less-conflicted business model.
- That emerging technologies will bring about holistic end-client relationship management.
- That MPT, thoughtfully applied, still works.
Going deeper on these new rules, Bergman told the crowd a parable about the fiduciary standard, and with a nod to HighTower CEO Elliot Weissbluth’s “butcher” analogy.
Bergman talked about a baker friend of his whose products he frequently buys, after he asks her, “What’s good today?” The products are good, he explained, but the baker never tells him that “you’re putting on a little weight, Jud, maybe you should have a low-fat smoothie” instead of her baked goodies. “She’s never recommended to me” that he do anything else than buy her wares. But end clients remain ignorant, he said, citing research that 66% of HNW clients think their brokers operate under a fiduciary standard. “We know that’s not true,” Bergman said.
As for emerging rule number two, he recalled that at Envestnet, when “we started 12 years ago,” our goal was to “enable the independent [advisor] to compete with the wirehouses.” Admitting that it took “six or seven years to gain parity” with the wirehouses, he felt confident that Envestnet’s wealth management platform now empowered advisors to compete.
Bergman than argued that Envestnet is helping to change the rules through becoming the “leading provider of integrated wealth management solutions,” and that integration of new capabilities through its three most recent acquisitions—FundQuest, Prima Capital and Tamarac—would allow it to enhance its offerings to advisors.