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Financial Planning > Behavioral Finance

Envestnet Reveals New ‘Personal Financial Ecosystem’

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What You Need to Know

  • The firm intends to roll out new tools for advisors connected to the vision in the next few months.
  • An app for consumers should be available by year-end.
  • Separately, its MoneyGuide unit is now sharing its financial planning algorithms with any personal finance based digital offering.

Envestnet is building a new “personal financial ecosystem” that aims to educate consumers and help them better connect with financial professionals — while also improving the user experience and data-sharing capacity of both advisors and consumers.

“The digital engagement model is not very fulfilling in financial services today,” said Envestnet CEO Bill Crager in an interview with ThinkAdvisor Friday, ahead of the Monday release of his white paper “The Intelligent Financial Life.”

The ecosystem includes new Envestnet tools, which should be available for advisors over the next few months, that are designed to serve as advisors’ “superpower to help them bring together the individual’s or family’s financial picture,” Crager explained.

There will also be a planned consumer app by year-end that is “like a rope that gets thrown out on the front of the boat that helps people understand finance and then begin to find the financial advisor who’s on the other end of” that rope, he said.

Dani Fava, head of strategic development at Envestnet, used another analogy to describe the firm’s plans in a tweet on Friday: ”Envestnet is transforming the way advice is delivered. The caterpillar becomes the butterfly. Check back Monday for take-off!”

Separately Monday, Envestnet’s MoneyGuide launched MoneyGuideEngine, a collection of its financial planning algorithms now used by advisors, for any personal finance-based digital offerings.

“Essentially, we are now enabling firms to integrate our tried and tested ‘calculation brain,’ or the central API engine that makes Envestnet | MoneyGuide tick, within their own planning software offerings and products,” said Tony Leal, president of MoneyGuide, in a statement. 

“This means firms and advisors can own the fun part of creating the client planning experience, and they can rely on our award-winning APIs for the boring, yet essential, math and algorithms that connect the dots of the financial plan.”

Commenting on Envestnet’s announcements and their possible impact on personal financial management, platform provider Altruist’s CEO Jason Wenk tweeted Monday: “This is pretty cool. I could envision some cool pfm tools on the Altruist app.”

Competitive Landscape

While Crager conceded that Apple, Microsoft and other tech giants may seek to play a much bigger role in consumers’ financial lives in the future, “It’ll be very interesting to see how the market unfolds,” he said. 

Still, he stressed: “Envestnet’s incredibly well-positioned to be an underpinning [for] and power the future of what your financial life will look like.”

Envestnet has a huge amount of financial data thanks to its Yodlee business, along with the financial planning capability it has with MoneyGuide and its ties to $4.5 trillion of invested assets in the insurance and credit markets, as well as other areas it’s working on, giving it a “pretty big footprint,” he explained.

The company plans to provide updates over the coming weeks with additions and enhancements to the ecosystem made through 2021, it said.

‘Intelligent Financial Life’

Artificial intelligence will play a key role in personalizing clients’ experiences with the new Envestnet environment, Crager says in the white paper he wrote. 

In addition to integrating financial education initiatives to help consumers achieve financial balance, Envestnet will “deploy algorithms to reshape the way consumers manage their finances,” according to the white paper.

“It’s something I have been thinking about for a while” and “the time is necessary to really push towards this now,” Crager told ThinkAdvisor.

The timing of the white paper and Envestnet’s related moves was partly influenced by the coronavirus pandemic, its impacts, Crager’s own experience and input he’s received from advisors, he says.

During the pandemic, “people are spending more time thinking about” financial issues, he explained. They “have more time to ask questions, and they are piecemealing together answers.”

In addition, “they turn to us, and we can explain it to them. But the conveyance of that — the expression of that — is… just [happening via] digital pieces” that are found across multiple apps and websites, Crager said.

Meanwhile, although “digital has accelerated during this period of time, some really evident problems have accelerated as well,” he stressed.

On one hand, “you have the wealth gap just broadening very rapidly,” but you also have a community that’s “served well and will be served better by technology going forward — the folks who have money,” he said. However, “everybody else is left to try to figure that out for themselves,” Crager said.

The company’s “thesis is… that there are consumer apps that Envestnet can build that will go out into the greater marketplace — meaning the consumer marketplace — for consumers to educate, understand and then ultimately [use] to network and connect back to the advisors who work with Envestnet,” he said.

Through the firm’s algorithms and matching based on specific criteria, “We can do a very good job of connecting human beings to financial advisors if they want one,” Crager added.

At the same time, Envestnet can “help educate consumers more about finance” and get them to be “more comfortable with money — to feel some sense of confidence around money, to learn more — and then take the steps to begin to manage their finances into something that’s more coordinated,” he said.

More Advisor Tools Details

A test group of advisors have been using Envestnet’s new advisor environment, he noted, adding: “We’re getting that feedback. We’re enhancing [it], and then we’ll launch.”

Asked if advisors who aren’t in Envestnet’s user base will be able to access the new tools, Crager said: “I hope so…. I want it to be an open network.”

Life events such as the loss of a parent or spouse, the launch or sale of a business, a marriage or the birth of a child are moments when investors most need a financial advisor, he explained. 

The related capabilities of Envestnet’s new tools “will be the super high value” of the offering, Crager said. Everyone benefits from a “human connection” and “emotional support” when it comes to big decisions tied to life events, he noted.

Envestnet also wants other firms and technologies to be part of the ecosystem it’s helping to build. “We want the asset managers, the insurance carriers [and] the banks all to be part of” the modular capabilities it’s creating, so advisors can “meet the needs of their practice.”

As these needs change each year, advisors can remove and add to what they are using. The firm’s fee structure will likely adjust as the tools are launched and “begin to change” over time based on platform usage, he added.

More Consumer App Details

The consumer app will be like a “stepping stone,” the CEO said. “I don’t envision that being something that we’d charge a subscription for.”

“Where we’re going with the consumer app is to help individuals who don’t have the financial background or experience to gently come into that environment, be able to ask questions, find support and then we can help lead them back to the right environment that can serve them,” he explained.

The company is looking to “empower financially underserved communities,” according to the white paper.

Also, the consumer apps will not be Envestnet-branded.

“What we’ve been doing is making investments in innovative companies that can get to market very quickly,” Crager said. 

This means “we’ll be an investor in the app,” like the firm previously has done with its credit and insurance exchanges, he noted.

Why not put the Envestnet logo on the planned consumer app? 

“One [reason] is that we’re not a consumer company. We don’t really want to be a consumer company… you need [a specific] DNA to be successful [in that area],” Crager explained.

A second reason “is that we want to move fast and … a smaller group of individuals who are just focused on that from the time they wake up until they go to bed… just moves faster” that Envestnet, he added.

Asked if Envestnet had already invested in the firm building the app, Crager said: “We’re exactly right there.”

(Pictured: CEO Bill Crager of Envestnet.)


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