Homebound advisors prove boon for Envestnet

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Envestnet reported record volume on its platforms as homebound advisors relied on its technology more than ever.

The firm — which lost its previous CEO in a tragic accident last year — did so even as it met the challenge of shifting its own employees to a remote work set-up.

“We handled the volumes. We illustrated our scale. We more than held up during the storm,” Envestnet CEO Bill Crager said on a call with analysts. “The challenging markets late in the quarter do not appear to have affected our platform in a meaningful way.

Trade orders were up fivefold in March compared to the previous year; advisor service requests skyrocketed 78%; and clients checked their Tamarac client portals 80% more frequently, according to the company.

Gross sales surpassed $40 billion in the first quarter, a record high for Envestnet. The firm also onboarded more than $20 billion in asset-based conversions. Average account size grew 4.5% year-over-year, and total advisors grew 1.3%.

Envestnet’s data and analytics business was a particularly bright spot in the quarter. Market volatility drove consumers to check their financial accounts more frequently, boosting subscription revenue 5% from financial institutions using Yodlee’s data aggregation to power digital tools and mobile apps.

Envestnet named Bill Crager permanent CEO in March.

“When there is uncertainty, users absolutely click on these apps. They want to know. The data we provide becomes essential,” Crager says.

He also says that Envestnet has answered the Federal Trade Commission’s questions with regard to Yodlee and data privacy concerns raised by three senators. The firm is awaiting reply.

Envestnet is also working to create better alignment inside the company to create cost savings as well as accelerate product development, Crager adds.

For William Blair equity analyst Chris Shutler, this indicates management is focusing on putting together a holistic, integrated platform with functionality that can be easily turned on or off per client request.

Despite the market upheaval, Envestnet is still likely to participate in M&A and is not writing off bigger deals, Shutler says.

“[Envestnet gave] no change to commentary around not needing to own Yodlee; feels like a deal is still possible,” Shutler says.

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