One day after it the news broke that wealth platform provider Envestnet is buying the financial planning software group PIETech, which owns the MoneyGuide suite, for $500 million in cash and stock, plenty of conflicting views on the deal have emerged.
Some opinions — shared via Twitter — are that Envestnet is spending too much money on it. Others see the move as a checkmate in the game of acquiring advisor dollars and loyalty.
Tech consultant Tim Welsh of Nexus Strategy found the price tag shocking. “They waaaaaaaay overpaid. Financial planning software is now a commodity; anybody can create a calculator,” Welsh said. But for popular blogger and advisor Michael Kitces, the PIETech acquisition is “a real coup” for a variety of strategic reasons.
When it comes down to why the deal really happened, Envestnet Chairman and CEO Jud Bergman made the motivation pretty clear while discussing it with equity analysts late Thursday — coincidentally, Pi Day. Admiration for the MoneyGuide suite and its innovative leadership had given Envestnet a desire to acquire PIETech “for about as long as we’ve been a public company,” Bergman said, or nearly nine years.
“We’ve been trying to get to it” for a while, he explained. “And we were not the highest bidder. There was another party. We were a much better fit for their client and employee base, and for … the legacy the [leaders] want to leave.”
PIETech founder and co-CEO Bob Curtis “took 40% [of the deal] in Envestnet stock,” Bergman added.
Paired with the $660 million purchase of Yodlee in 2015, the announced acquisition represents “a profound shift in Envestnet’s focus from its investment/separately managed account roots into a full-scale advisor tech platform with a financial planning focus,” Kitces explained.
The move comes less than a month after Envestnet said it was buying the PortfolioCenter management and reporting technology from Charles Schwab — prompting some rival tech firms to offer discounts and other enticements for their competing products and services.
The deal “makes perfect sense from Envestnet’s perspective in their quest to own the advisor desktop and client experience,” said Gavin Spitzner, president of Wealth Consulting Partners. “They already had fairly deep integration with MoneyGuidePro, and now they’ll clearly tighten things even further across planning, proposal generation, data analytics, client portal and aggregation.”