Envestnet Reveals New ‘Personal Financial Ecosystem’

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!”

“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.