BlackRock is buying about 5% of Envestnet, worth about $123 million, as part of a digital-wealth deal announced by the two firms early Tuesday. The aim of the strategic partnership is to boost investment technology tools for advisors and their clients.
According to one equity analyst, the deal is big win for Envestnet and its two platforms, Tamarac for RIAs and ENV2 for broker-dealers.
First, the integration of BlackRock portfolio construction and risk tools should give the platforms a new leg up on the competition, at least for a time, say Chris Shutler and Andrew Nicholas of William Blair.
Second, the tie-up is likely to “enhance advisors’ movement to fee-based accounts, which helps Envestnet’s growth as a primarily fee-based platform,” the two CFAs explain in a recent note.
Third, by purchasing a stake of Envestnet, BlackRock is giving “more firepower for M&A activity, which feels imminent,” the analysts say.
This news comes about a year after BlackRock consolidated its digital efforts, including its robo technology FutureAdvisor (acquired in 2015) and the iRetire planning tool.
“Integrating BlackRock Digital Wealth offerings into the Envestnet platform represents an industry milestone, advancing advisors’ ability to help investors meet their financial goals,” according to Envestnet President Bill Crager.