Wealthtech provider Envestnet is taking its unified managed account (UMA) tools once used internally by management to four mega asset managers: BlackRock, Fidelity, Franklin Templeton and State Street.
The agreement announced on June 5 gives exclusive access to these firms. More than 109,000 advisors will be able to use Envestnet's platform to create more personalized direct indexing through unified managed accounts. Access to Envestnet's UMA tools is scheduled to go live in the third quarter, said Dana D'Auria, group president of solutions and co-chief information officer at Envestnet.
"We see this demand for UMA, and at the same time, we see demand for direct indexing solutions and customization and personalization. So the question is: How do you provide true personalization in a platform that's meant to be model-traded like the unified managed account … where the chassis, if you will, is doing that for you," she said. "So those two converge. And that's really what we're trying to do with this program."
D'Auria said Envestnet also wanted to create broader investment choices for advisors in their portfolio management, which is why these particular four firms were selected with exclusivity.
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Envestnet wanted "managers who are interested in really partnering with us on personalized solutions, really interested in leaning in," she said. "These four managers we partnered with are really state-of-the-art managers that cover a gamut of types of solutions. So the clients and the advisors, and their clients, really have some good choices."
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Firms like BlackRock already had a relationship with Envestnet through its platform. Jaime Magyera, BlackRock's co-head of U.S. Wealth Advisory Business, said they're "building on that with this new program."
"We have traditionally offered models comprised of mutual funds and ETFs," Magyera said. "This partnership expands the universe of investments that we can embed within a model or UMA to include additional capabilities that are critical to winning high net worth investors, like direct indexing, fixed income SMAs, option overlay SMA strategies and private markets."
Numerous studies have indicated that investors increasingly want more personalized service, especially as new investment options emerge.
"Integrating customization and optimization tools (e.g., direct indexing) into wealth managers' standard asset allocation service offerings is increasing firms' ability to provide their clients additional value," said industry research firm, Cerulli, in a report released in February. "Implementing more bespoke investment solutions and private market investment access to clients at scale increasingly requires intermediaries have a robust account aggregation and performance reporting ecosystem."
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In a separate survey conducted by Cerulli released in March, the firm found that 10% of target-fund managers said they offered customization to 401(k) participants. Another 40% said they could begin to include customization in the next year.
"Technology partnerships like ours with Envestnet are essential for helping advisors looking to grow their business and provide customized solutions at scale," Allison Bonds Mazza, head of Intermediary for State Street Global Advisors, said in an emailed statement. "This partnership will allow advisors to spend more time on holistic financial planning, improve the overall client experience and build a more scalable practice."
— This article was updated to include comments from Jaime Magyera of BlackRock.
