BERWYN, PA — Envestnet is expanding access to customized investment portfolios for registered investment advisers and broker-dealers through programs that combine asset manager-designed strategies with outsourced trading, billing and reporting, potentially reducing operating costs for advisory firms while preserving control over investment decisions.
The Berwyn-based wealth technology company introduced Custom Model Solutions for registered investment advisers, or RIAs, and Institutional Partner Models for broker-dealers, with participation from 10 investment management organizations.
Participating firms include BlackRock, Envestnet PMC, Fidelity Investments, First Trust, Franklin Templeton, Goldman Sachs Asset Management, Invesco, Northern Trust Asset Management, Russell Investments and T. Rowe Price.
Under the arrangements, asset managers develop and maintain investment models based on an advisory firm’s preferences, while Envestnet provides the infrastructure to execute trades, manage billing and produce reports.
Participating asset managers may cover some or all of Envestnet’s platform fees. Certain programs may also waive tax-overlay fees for RIAs, reducing the cost of implementing customized investment strategies.
The programs target advisory firms seeking to expand their investment offerings without building additional portfolio management and operational infrastructure.
Unlike standardized model portfolios, Custom Model Solutions allows an RIA to establish investment parameters that an asset manager uses to construct a strategy.
Advisers review and approve models before implementation and can collaborate with the asset manager on subsequent refinements.
Envestnet executes trades according to the adviser’s direction, allowing firms to retain responsibility for their investment approach and client relationships while outsourcing administrative functions.
“Many RIAs don’t want someone else making investment decisions for their clients. They want better tools to scale what makes them unique,” according to Sean Meighan, Envestnet’s head of RIA distribution.
The structure also supports collaboration between advisers and asset managers on portfolio construction, investment selection and adjustments based on client requirements.
Firms can incorporate Envestnet’s Fund Strategist Tax Management services, which provide tax-overlay capabilities for managing portfolios.
The tax-management option allows advisers to incorporate tax considerations into customized strategies without developing their own tax-overlay infrastructure.
Envestnet’s Institutional Partner Models program extends a similar approach to broker-dealers, allowing firms to make selected investment models available to designated financial professionals.
Each institutional engagement requires a separate Envestnet committee review and legal contracting process.
The broker-dealer offering also uses a streamlined implementation structure intended to integrate investment models into participating firms’ existing operations.
For RIAs, Envestnet offers two approaches to investment discretion.
Under RIA discretion, advisers must approve model changes before implementation. Under Envestnet discretion, the platform can implement changes directly on the advisory firm’s behalf.
The distinction determines whether the adviser retains approval authority over individual model adjustments or delegates their execution to Envestnet.
Envestnet’s Proposal Desk provides support for onboarding and conversion activities associated with Custom Model Solutions.
The company’s expanded model programs also create another distribution channel for major asset managers seeking to provide portfolio construction services to independent advisory firms.
Goldman Sachs Asset Management identified custom portfolios as an area of demand among its RIA clients.
“Custom models are among the most in-demand solutions for many of our RIA clients,” according to Greg Wilson, co-head of the Americas third-party wealth business at Goldman Sachs Asset Management.
The participating investment managers bring capabilities spanning active and passive strategies, portfolio customization, tax management and alternative investments.
Their involvement allows advisory firms to draw on external investment expertise while maintaining their own investment preferences and client-facing services.
Dana D’Auria, Envestnet’s executive vice president of wealth solutions and chief investment officer, described the programs as an effort to standardize collaboration between advisers and asset managers while reducing implementation costs.
“By standardizing the program and waiving certain fees, we’re making it easier than ever for asset managers and advisors to work together,” D’Auria explained.
The expansion positions Envestnet to serve advisory firms seeking greater portfolio customization without corresponding increases in staffing, trading systems or administrative expenses.
For participating asset managers, the arrangements provide access to advisory firms through Envestnet’s technology and operational platform, while advisers retain the ability to tailor investment strategies to their clients.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.