Envestnet is making its digital asset intentions more clear by announcing a new pair of partners in crypto.
The Flourish Crypto deal deepens the company's relationship with Envestnet and introduces a fresh slate of offerings to advisors with a familiar sheen. Flourish already had a partnership with Envestnet to provide advisors on the platform access to their
Flourish President Ben Cruikshank said the new deal means Flourish Crypto data will flow into the Envestnet | Tamarac wealth dashboard through a direct custodial integration, allowing RIAs to work cryptocurrency investing into their practice just like any other asset. That includes being able to view Flourish Crypto data in feeds and client portfolios; performance reporting on crypto; billing and regulatory AUM calculations; and financial planning.
Gemini's integration with Envestnet is the second partnership celebration in as many weeks for the company.
"Our ability to fulfill our mission to unlock the next phase of financial freedom through crypto is dependent on our ability to unlock access for advisors," Dan Eyre, head of Gemini BITRIA, said in a statement. "With trillions of dollars in advised accounts in the U.S., our strategic relationship with Envestnet is an enormous step forward in allowing us to do just that."
Education and access
While Envestnet has been fairly quiet on the cryptocurrency front thus far,
As they've studied the asset class, Fava said Envestnet noticed not only a growing interest among their RIA clients, but in the broker-dealer space as well. With that, the company decided to deploy a two-pillar crypto strategy focused on access and education.
Flourish and Gemini represent the access pillar, Fava said. She described Flourish as the "advisor layer," bringing a curated list of cryptocurrency that introduces exposure to both Bitcoin and Ethereum through Paxos, a qualified custodian and certified trust company regulated by the New York State Department of Financial Services. She added that Gemini offers a less-curated, more open offering with access to different coins.
"We've got these two different levels of partners that are integrated onto our platform so that advisors can allocate cryptocurrency for their clients and have cryptocurrency positions show up in all of the client reporting, which is really important … to be able to see that cryptocurrency allocation in context of the broader strategy for that client," Fava said. "And to be able to bill for the cryptocurrency allocation as part of the overall portfolio. I would think that is a really unique part of what the access partnerships bring to the table."
The education pillar will come via a service to be made available to advisors through the Envestnet platform and in partnership with
More details on that partnership are coming soon, but Fava said Envestnet wants to make sure the new solutions they're serving up are well understood.
"Especially in this space … there's no general certification or understanding that the industry acknowledges and accepts yet, so we kind of went out there and said, where can we find a great program for our clients?" she said. "And I don't think that crypto education can be static like so many educational platforms. The securities industry has been tried and true, but I don't think education can be static for cryptocurrency because it's constantly evolving and changing."
Fava said the partnerships forged were done so with the goal of maintaining Envestnet's neutral position on crypto, much like it does with the other asset classes supported on the platform.
"And we will remain neutral with our position as a technology provider. But what we really want to do is provide a seamless access point for an advisor to make the most informed decision — where they can see all of their client's assets in one place and not have to swivel chairs and do their own calculations," she said. "If we give them access and inform them in all the ways that we possibly can so they can become as smart on this topic as they want to be, we trust that they will make the right decision for their clients."
Cruikshank said that kind of neutrality is also important to Flourish. Despite being in the cryptocurrency business, his firm isn't "betting the farm on crypto" and is embracing its position as a multiproduct platform.
What is vital, Cruikshank said, is working with entities like Envestnet now to build solid cryptocurrency infrastructure for advisors to stand on regardless of where the market goes next.
"We are not here to sell crypto. I'm not here to promote Bitcoin. As a company, we are in the business of providing advisors with access and solutions. And I can also look at the empirical data that's telling me tens of millions of Americans, many of them the clients of RIAs, are doing this on their own," he said. "They're going to open an account at retail exchanges away from their advisor. The data is very, very clear on that.
"Clients are doing it. You need to decide as a firm, are you going to be in the business of providing solutions for something your clients are very interested in?"
Cruikshank said when working to prepare advisors for the future, integrations with companies like Envestnet are "everything." And Flourish Crypto, despite just hitting its
Much like you can expect to see the beloved soft drink whenever you pull into one of America's biggest fast food chains, Flourish Crypto has a presence on some of the most well-known advisor platforms in the industry, including
"Integrations are a gating factor for so many firms that we work with. They come in the door. They say, 'your product is interesting. This is great. Do you work with Envestnet?' And if the answer is no, do not pass go. Do not proceed. The conversation is over," Cruikshank said. "That has benefited us, and that has hurt us. I've been on all sides of that. But it's a gating factor because there's just too much out there for RIAs … and when you get us something like crypto, advisors have enough reasons to say no."
The integration is also a plus for firms like the New York City-based Wealthspire Advisors, a mutual client of Envestnet and Flourish Crypto with $17.4 billion in assets under management. Wealthspire Chief Investment Officer Michael Moriarty said the firm is always focused on evolving to meet client needs, and the newly announced partnership supports them in that mission.
"Increasingly we've seen a demand for crypto and searched for options that aligned with our investment strategy and integrated with our core reporting system," Moriarty said in a statement.
Staying hot in crypto winter
The rising interest in crypto noted by Cruikshank and Fava persists despite 2022 being a rough year for crypto. Bloomberg reports that turmoil in the crypto markets, including the collapse of the popular algorithmic stablecoin TerraUSD, have saddled investors with billions of dollars of losses and increased calls for U.S. lawmakers to pass significant crypto legislation.
But several high-profile, bipartisan bills poised for approval before the end of the year are running out of daylight as next month's elections loom. Bills under consideration include legislation to regulate crypto stablecoins and to give the Commodity Futures Trading Commission more power to oversee digital assets.
Along with the lack of regulatory clarity, Bloomberg reports the price of Bitcoin has fallen by more than 50% since the beginning of the year. Bitcoin's price of around $20,000 Thursday morning was down from a record of more than $68,000 last November.
But the topic remains hot, and the tens of millions who got crypto when things were good are still holding it today, Cruikshank said, making deals like the one struck between Envestnet and Flourish even more important.
"So if you're an advisor and you're looking to provide more holistic services and you're looking to speak to your clients about their holistic financial picture — which by the way, every RIA and advisor in America saying yes, I want to do those things — some of those clients (holding crypto) are sitting on a big, painful losses. Some are sitting on big gains. At the height of the hype, they may have gotten some NFT, and they're not sure what to do about it," he said. "Whether or not you believe in crypto, your clients are still holding onto those accounts. This is a great opportunity. Often when times are hard is when advisors provide value and shine."
