Behind Envestnet’s deal to acquire the 401kplans.com pension plan marketplace

Envestnet, the wealth management software giant used by 6,500 companies and 108,000 financial advisors managing more than $5.5 trillion in assets, announced last week that it has acquired retirement plan marketplace 401kplans.com. The deal, Envestnet saidunderscores the company’s commitment to the multi-trillion dollar pension industry.

The terms of the contract are not disclosed. Scott Buffington, who founded 401kplans.com in 2016, will join Envestnet and become its retirement sales manager. He will report to Sean Murray, Head of Retirement at Envestnet, who joined the firm in November 2021.

The marketplace, used by more than 28,000 financial advisors to solicit plan proposals from more than 20 providers, will be a central part of Envestnet’s retirement services strategy. The software company says it plans to become a major distribution channel for archivists and investment managers.

“Advisors have been shut out of retirement opportunities, simply because of the way the business has been run for the past 15 or 20 years, and 401kplans.com has really changed that landscape by creating more of a marketplace for advisors to to engage and makes it easier for them to help their clients,” said Andrew Stavaridis, relationship manager at Envestnet. “Everyone needs a retirement account and there’s an underserved market and we’re helping with this connection.”

When business owners want to offer retirement plans to their employees, they often hire a plan advisor; a separate professional from their private wealth manager (although many wealth management firms specialize in both). By using 401kplans.com, any advisor can provide this service to their clients, Murray told RIA Intel.

“It’s extremely easy for any advisor – not necessarily to become a pension expert – but to have the ability to offer the same services as a retirement planning expert through this portal,” Murray said.

Marketplace offers instant pricing from most major 401(k) providers, helps the advisor evaluate investment options, and allows advisors to compare plans from up to five archivists at once (it integrates with a total of 36 plan archivists). The platform automatically documents the due diligence process and claims it can save advisors over 10 hours of work to collect all the information on their own.

[Like this article? Subscribe to RIA Intel’s’ thrice-weekly newsletter.]

The marketplace “can really help all of these advisors democratize the space and help them keep this business right within their practice,” Murray said.

Envestnet has not decided on the cost of the new service, according to Stavaridis. It currently costs advisors nothing to use 401kplans.com.

Envestnet currently manages asset data for more than 200,000 pension plans and will integrate data from 401kplans.com, Murray said.

“With this acquisition, you will have the ability to instantly shop these plans with real-time information [from Envestnet’s data aggregation]“You will know how many members are in your plan, what the investments are, what the costs are, what the annual contribution rates are, all within our data aggregation.”

Envestnet is also a 3(38) or 3(21) investment manager for some plans, meaning it acts as a third-party trustee to manage retirement investments on behalf of the provider. All pension plans in the United States must have an appointed investment trustee, and some wealth management companies require their advisors to outsource this responsibility.

Envestnet hopes to combine its outsourced fiduciary offerings with 401kplans.com’s distribution offerings for old and new customers, Stavaridis said.

Envestnet has more than 108,000 advisors using the company’s services and plans to eventually bring 401kplans.com to all of them.

“We want to bring that to everyone, so we’re going to be talking to all of our businesses,” Stavaridis said.

Investnet said tuesday that it had reorganized its services into three business segments: Envestnet Solutions, Envestnet Data and Analytics and Envestnet WealthTech “to accelerate the growth of the Envestnet financial wellness ecosystem”.

Holly Deaton (@HollyLDeaton) is a writer at RIA Intel and based in New York.

Subscribe to RIA Intel’s tri-weekly newsletter and follow the post on Twitter and LinkedIn.



Source link