© 2019 SourceMedia. All rights reserved.

Envestnet’s $500M deal for MoneyGuide could vault it to ‘top of rankings’

In a seismic move expected to lend it dominance over a sizeable portion of advisors’ desktops, Envestnet will acquire PIEtech, the creator of financial planning software MoneyGuide, for $500 million.

“It’s a substantial investment,” says Bill Crager, CEO of Envestnet Wealth Solutions. “It brings the financial planning process together for advisors, and ultimately creates a broader set of tools for an advisor to expand beyond traditional wealth management. That mean generating more income and potentially optimizing those relationships over time.”

Envestnet will pay $295 million in cash and 3.185 million shares, according to the company. The deal, which follows the announcement of a partnership with PIEtech in February, is expected to close in the middle of this year.

The transaction means Envestnet will own the popular MoneyGuide software group, including MoneyGuideOne, MoneyGuidePro and MoneyGuideElite. More than 150 wealth management data and technology providers, serving tens of thousands of financial advisors, use the tools, according to Envestnet. Nearly two million financial plans have been created using MoneyGuide solutions in the past 12 months, the company said.

Envesnet revenue IAG 030119

“Integrating wealth is really a core idea of ours,” Crager says. “For the consumer, they have statements from insurance providers, from investment portfolios and from banks. None of them are coming together in a single place. The consumer has a higher expectation that these things should lean on each other and inform each other. We’re pulling the pieces together.”

Financial planning tools are used by 82% of all advisors, according to Financial Planning’s 2019 Tech Survey. MoneyGuidePro has the most market share of any product on the market, with 31.3% of advisors using the tool. Envestnet ranked third in portfolio management tools in the survey, cornering more than 10% of the total market.

The PIEtech acquisition makes it easier for Envestnet advisors to create financial plans and could mark the birth of a new giant in the advisor tech marketplace, says Joel Bruckenstein, creator of the advisor technology conference Technology Tools for Today.

“It creates the potential to do great things,” Bruckenstein says. “What happened with the [Schwab] PortfolioCenter deal, this now really vaults Envestnet to the top of the rankings.”

The MoneyGuide software will remain “platform agnostic,” said PIEtech founder and CEO Bob Curtis in a memo sent to advisors and reviewed by Financial Planning.

“We have been working with Envestnet more closely this last year and have found we have similar goals for our industry. We both believe in the importance of financial wellness for all individuals and getting financial planning into the hands of more individuals.”

Envestnet  CEO Jud Bergman
"Jud had the optimism of a true entrepreneur: He believed," says former Financial Planning editor, Marion Asnes.

In February, the world’s largest TAMP by assets also created Apprise, a new fintech joint venture with PIEtech and former eMoney CEO Edmond Walters. With the technology, advisors will be able to show clients cash flow projections in real time, through focus areas, like retirement savings, inheritance gifts or endowment contributions, according to the firm.

“By the time Apprise Labs was coming together, I have to believe that they were well down this path,” Bruckenstein says.

Also in February, Envestnet said it acquired Schwab’s PortfolioCenter, an aging portfolio management software platform. Terms were not disclosed.

While the price of the deal was “immaterial” to the firm’s overall balance sheet, according to Envestnet CFO Pete D’Arrigo, the acquisition did give Envestnet | Tamarac access to thousands of advisors on the Schwab platform and a chance to upsell premium products.

Envestnet expects to add $10 million in revenue once the PortfolioCenter deal closes later this year, according to CEO Jud Bergman in an earnings call. The company posted fourth-quarter revenue of $210 million, up from $183 million for the year-ago period.

For reprint and licensing requests for this article, click here.