Having won advisor assets, Envestnet's next -- more Google-like -- play is for their smarts

Big data cuts both ways as it exposes cost, pricing and effectiveness in highly transparent ways.

The takeaway is there is a lot of fat to cut, less costly, more modern and far more effective approaches to portfolio construction and far higher margins to be achieved at the advisor level. (Brokers have no control over their margins, it is set by their supporting firm determined by its overhead.)

This will make brokers selling of investment products to include investment advice products seem antiquated to advisors addressing and managing investment and administrative values in the best intererst of the investing public.

Importantly, advisors and brokers alike become accountable for and have ongoing responsibilities for their recommendations—presently not possible in a brokerage format—the principle industry push back on supporting the fiduciary standing of brokers.

EnvestNet begs the question of whether any broker/dealer afford can afford to self select not to support the highest level of advisory services and the associated professional standing accorded to brokers fulfilling their fiduciary duties in the best interest of the investing public.

Big data greatly simplifies the business by requiring simplifing processes. It boils down to a very simple equation—how effective is each individual avisor in addressing and managing investment and administrative values in the consumer’s best interest.

SCW

Anyone familiar with the Trust Universe Comparison Service (TUCS) which Wilshire created back in the 1980’s? Technology today makes the communication more immediate but the idea was the same only directed to institutional assets- gather all this raw data like account size, asset allocation, returns for peer groups etc. (for TUCS from the Trust companies and for envestnet from the advisor)- clean the data, organize and analyze it and sell it back to the providers of the raw data for a fee. So, if you want to know the quartile rankings of say…equity exposure for account between 2-5M you can. Or if you want the exposure to passive strategies you can as well. TUCS was very successful and perhaps this will be as well. Surprised the custodians don’t do this.