Shareholders Service Group gives its 700 RIAs access to Envestnet's services

September 8, 2010 — 5:09 AM UTC by Brooke Southall


One of the smallest RIA custodians has made its third big-league move in a little over a year by signing a deal with Envestnet Inc.

Shareholders Service Group will now be able to offer Envestnet’s platform to its 700 RIAs, La Jolla, Calif.-based SSG announced yesterday. The platform, which offers investment management and client management outsourcing, may help SSG attract more advisors or help those already with the custodian to grow their AUM faster.

Envestnet, meanwhile, grows its potential market of RIAs by 700. It also taps into SSG’s fast growth — the small custodian, which declines to reveal its assets in custody, has been bringing on an average of one advisor per business day, according to earlier interviews with SSG executives.

Envestnet has been making particular efforts to court RIAs because it believes its future is aligned with advisors who embrace a fiduciary standard. The majority of its current assets are gathered through IBD reps with less than full fiduciary care for clients.

Peter Mangan, CEO of SSG says that he pursued a deal with Envestnet because of all that it can do for advisors.

No shopping around

“It gives advisors the opportunity to run their business efficiently and completely. They don’t have to shop around for managers and piece it all together. It’s very thorough due diligence [on managers] and it gives them everything, from an investment policy statement to billing, all in one place.”

The Envestnet deal is the latest in a series of noteworthy moves made by SSG.

In July of 2009, Shareholders Service Group hired Dan Skiles away from, installing him as executive vice president. He has been instrumental in making the company’s platform work more seamlessly with Pershing’s NetX360 and his presence has lent credibility to a firm that has quietly grown since 2002. See:

Earlier this year, SSG made a special deal with Black Diamond Performance Reporting of Jacksonville, Fla. that allows its 700 RIAs to hook in at a monthly rate of $5 per account or $60 per year. See:Several hundred small RIAs gain access to Black Diamond software at reduced rates

Fast Black Diamond adoption

It already has 30 advisors that have started using Black Diamond. “Advisors have taken to it pretty quickly,” Mangan says. He thinks advisors have been drawn to the deal by the low price and a required commitment of only a month, as well as the software’s easy implementation.

“The relationship between SSG and Envestnet gives independent RIAs the opportunity to expand their practices through innovative investment solutions offered by experienced and highly-regarded money managers,” says Bill Crager, President of Envestnet in a prepared statement. “In addition, RIAs can use Envestnet’s robust proposal generation system, performance reporting capabilities, billing services and more, all through one online application.” See: Morgan Stanley report: Big deals will propel Envestnet’s growth much faster than investors realize

Envestnet has long been a fixture on the platforms of independent broker-dealers but the Chicago-based company was reluctant to form an enterprise relationship with SSG until it reached critical mass, Mangan says.

“We were interested in them longer than they were interested in us,” Mangan says. “They’ve been out there 10 years, and I’ve known about them all those years.”

Some SSG advisors are already moving separate accounts held elsewhere onto the Envestnet-SSG platform, he adds.

“Giving RIAs access to Envestnet offers them the ability to enhance their existing client relationships, and to efficiently develop business from new clients,” Mangan says.

Mentioned in this article:

Shareholders Service Group Inc.
Asset Custodian
Top Executive: Peter Mangan

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