Jud Bergman: The 2012 IA 25 Extended Profile

Our cover story profile of Envestnet in June 2011 suggested that the company stood squarely at the crossroads of the main issues facing advisors today: performing increased due diligence on investment products while seeking alpha-producing investments at a time of slow growth; adapting to a fluid regulatory environment; improving back-office efficiency; accommodating the evolving business-affiliation models of advisors while remaining BD- and custodian-neutral; and providing holistic advice to clients, with a fiduciary approach, through account aggregation. As the visionary placing Envestnet directly into that crossroads, Jud Bergman is highly qualified to be a member of the 2012 IA 25.

Since then, Bergman and Envestnet have not been complacent, particularly on the acquisition trail. Over the past six months, the Chicago-based company has acquired or announced the acquisition of FundQuest, Tamarac and Prima Capital. And in its 2011 Q4 earnings, the company reported a 33% increase in revenue from assets under management. That’s much greater growth than mere market appreciation, and suggests that Envestnet is broadening its revenue base well beyond its roots in providing packaged investment solutions to broker-dealer reps.

Multiple interviews with Bergman over the past few years reveal that Envestnet’s strategic growth hasn’t happened by chance. “The world is coming our way,” Bergman said on the day the company went public in July 2010, referring to the need for fee-based advisors to gain access to the best investment products, run their practices more efficiently, and to do so in a fiduciary way, all of which they can accomplish through Envestnet’s integrated wealth management platform. That platform, Bergman has said, includes four “quadrants”: advise, invest, manage and report. Having a “public currency,” Bergman suggested then, might well accelerate the company’s already-impressive organic growth from adding new advisors to the Envestnet platform . And so it has. It has also acquired all three of those companies using cash: FundQuest for $24.4 million; Tamarac for $54 million; and Prima for $13.4 million.

Adding FundQuest, Tamarac and Prima to the fold were not AUM plays or ways to remove competitors from the field: They were, and likely will be, accretive in the broadest sense. Yes, they may help Envestnet grow beyond Bergman’s stated goal of 20% organic growth, partly through providing entree to a different tranche of advisors (such as Tamarac’s large-RIA client base or Prima’s presence in the bank channel). In addition to acquisitions that are financially accretive are ones that Bergman calls “value accretive” deals, in which acquisitions include technology or products that can enhance Envestnet’s existing platform (such as Prima’s expertise in due diligence and access to the bank channel, and FundQuest’s TAMP products and investing human capital, which will bolster Envestnet PMC’s offering). It’s all part of Bergman’s vision that positions Envestnet in those crossroads where he and his team (including thought and business leaders in their own right from these most recent acquisitions such as Gib Watson of Prima, Stuart DePina from Tamarac and Tim Clift from FundQuest) can “empower the advisor to manage wealth holistically.”