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Jud Bergman: The 2013 IA 25 Extended Profile

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This is Jud Bergman’s second appearance on the IA 25. Read his extended profile from the 2012 IA 25. Click here to view the complete list and Special Report schedule for extended profiles for each of the 2013 IA 25 honorees.

Over the now 11 years that Investment Advisor has named the 25 most influential people in and around the advisory universe, we’ve acknowledged the regulators and money managers and advisors themselves who we deem influential, but also individuals like Jud Berman who lead organizations that are ahead of the curve in serving the evolving needs of advisors. Envestnet began as a turnkey asset management provider, where it remains a leader punctuated by its announced acquisition in mid-April of Prudential’s Wealth Management Solutions, with its $12 billion in assets. Even that acquisition, which gives Envestnet a wider presence in the bank investment channel, signals more of an evolutionary development than a turnabout for the company. When that acquisition was announced, Bergman noted that “most of our new advisor and enterprise relationships are some kind of a conversion from a legacy” business model.

Even before making its acquisitions over the last few years of FundQuest, Prima Capital and Tamarac, “that kind of conversion became a core competency for us; it plays to our strength” as a company that, as we wrote in a June 2011 cover story here, Envestnet “stands at the crossroads” of the major issues facing advisors then and now: “performing increased due diligence on investment products; adapting to a fluid regulatory environment; improving efficiency in the back office and directly with clients; finding alpha-producing investments at a time of slow economic growth and continued volatility in the markets; succession planning; deciding which business model—broker-dealer or RIA—to adopt; and providing holistic financial advice to clients on all their investments, not just those over which the advisor has control.”

In his own words, Bergman provided examples of how Envestnet has integrated its acquisitions: “We’ve placed Prima’s institutional-quality research into our PMC offerings: embedded into our platform, but still available on a license basis.” Tamarac, another acquisition, “is fully integrated at the portfolio accounting level” on Envestnet’s platform; so beyond Tamarac’s RIAs, who relied on Schwab Portfolio Center as their portfolio accounting software, “the Envestnet platform allows us to offer Tamarac to a whole new segment of advisors,” providing a “terrific solution for the high-end portfolio manager” type of advisor.

In fact, said Bergman, Envestnet is a leader in serving the two main types of advisors. First are those who serve as “quarterbacks for their clients’ investments.” Those advisors, whom Bergman calls “wealth advisors,” will lean on Envestnet to outsource technology and certain administrative tasks, but will avail themselves of Envestnet | PMC and Envestnet | Prima for their research as well. The second group of advisors, he said, is “the portfolio manager business model—larger, higher-end” firms where the advisor serves as “chief investment officer of the practice—selecting funds, securities, SMA managers.” That model of advisor wants help with “more administrative tasks and practice management help.” While he acknowledged that among advisors “there are as many permutations as you can imagine,” he argued that “Tamarac is an ideal solution for that larger RIA who is the chief investment officer” of his or her firm.

Bergman stuck with his previously announced goal of maintaining 20% annual growth for Envestnet, the majority of which is organic growth, but “strategic activity,” such as its acquisitions, “adds to that from time to time.”

Getting back to Envestnet’s primary goal, Bergman said “the fundamental undertaking of Envestnet when we started was to unify and fortify the wealth management process through good technology, and then the necessary services advisors would look for—back office, billing administration—to free advisors up to do their highest value activity—meeting with clients and prospects, and solving investment issues.”

What’s next for Envestnet and the broker-dealer and RIA advisors it serves? Bergman sees a “rapid movement from desktop solutions to fully mobile solutions; we already have advisors using the Envestnet platform with clients through their iPads.” Another example of where Envestnet will remain at the crossroads of what advisors are facing: benchmarking for larger enterprises. “Larger firms are looking to deploy business intelligence—how certain advisors perform against certain benchmarks. We’re seeing increasing requests for benchmarking intelligence.” Bergman said, “Envestnet Intelligence” will help advisors improve their “performance to the end client by having advisors play to their strength, by using different portfolio models within the organization. We’re excited to see how we can help large RIA firms and large broker-dealers with large commitments to the advisory business” with that benchmarking intelligence. Finally, Bergman said Envestnet is looking at new products, including “launching shortly a new product,” called concentrated stock portfolios, “that we think has some important advantages over ETFs.”