Ep. 227: Beyond the Platform: Envestnet’s Molly Weiss on Customization, Integration, and the Future of Managed Accounts

Come on in and sit back and relax. You’re listening to Episode 227 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group Consulting. This podcast features interviews, news and analysis on the trends and best practices, all about wealth management technology.

My guest for this episode is Molly Weiss from Envestnet. Molly Weiss is a 17 year financial services veteran, and she drives Envestnet’s end to end technology and solutions ranging from portfolio management, to financial planning, to performance reporting to digital account management tools and more. Molly’s work to integrate the firm’s acquisitions and its growing network of integrations with third party partners and maintains a focus on investor and advisor user experience. She holds an MBA from Santa Clara University.

I’ve known Molly for a long time and watched her meteoric rise through the company. She’s done a fantastic job there. And we spoke about a lot of interesting stuff. We covered the Envestnet platform, we’ll call it the old ENV2 Envestnet enterprise platform. It’s configurability and integrations we’d love talking about integrations here at Ezra Group. We talked about UMH, unified managed households and their holistic portfolio management oversight tools that Envestnet has and something new, which I was excited about a little geeky here we’re gonna geek out on managed accounts. It is multi actor trading, UMA sleeves where multiple people including advisors can get into a single UMA sleeve and make trades. Very cool stuff.

But before we get started, let’s talk about tech stacks. At Ezra Group, we’ve seen tech stacks of hundreds of RIAs and let me tell you, most of them are loaded down with tech debt. So you shouldn’t feel too bad about yours. But let’s face it tech debt is like a giant anchor, holding back your business growth. If you want to free your firm for exponential growth, you should run, not walk to our website EzraGroup.com and fill out the Contact Us form. Our experienced team can evaluate your current tech ecosystem, deliver targeted recommendations, optimize your existing systems and operations or run an RFP and help you implement new software to take your firm to the next level. You can take advantage of our free consultation offer by going to EzraGroup.com.

Topics Mentioned

  • Enhancing Advisor Identity and Integration Capabilities
  • Configurability and Customization
  • Reimagining Unified Managed Households
  • Multi-Actor Tradable UMA Sleeves

Episode Transcript

Craig: I am proud to introduce our guest, Molly Weiss, Group President of Wealth Management Platforms for Envestnet. Hey Molly.

Molly: Hey Craig, it’s always good to talk to you.

Craig: I can’t get away from you, everywhere I go I turn around, you’re there. You’re at T3, you’re at this conference that conference.

Molly: It’s great.

Craig: Where are you calling in from?

Molly: I’m in Walnut Creek, California. My kids have the week off from school so I’m with my dad, they’re changing out with their grandpa.

Craig: I remember those days, when the kids had off from school. So we are talking all things Envestnet, technology, how we’re helping advisors. For anyone that’s been living under a rock, can you give us the 30-second elevator pitch for Envestnet?

Molly: Well what I like to say is that Envestnet provides technology for any kind of advisor or advisory firm persona that exists in our industry. From an independent advisor in an RIA, all the way through to a broker dealer representative. We really focus on helping the advisor serve their client. Portfolio management tools, reporting tools, data analytics, financial planning, billing, everything from an end to end ecosystem that an advisor needs to serve their clients.

Craig: It is amazing how you guys have grown and expanded over the years into a comprehensive platform. I remember when you just started out.

Molly: So do I.

Enhancing Advisor Identity and Integration Capabilities

Craig: One of the things we wanted to talk about is integrations, and you were saying how the capabilities of Envestnet integration is helping advisors to maintain their identity. How is that working?

Molly: I think it’s both advisors and larger institutions, but what we’ve seen is that advisors and advisor grade firms are using the way that firms like Envestnet opened up their architecture to integration to customize their client experience or their advisor experience. And I think particularly a large institutions that have development teams and big technology stacks, they’re able to use the power of our engines within their platforms, so that they have a strong identity out in the marketplace, but they’re not having to rebuild a trading system or rebuild a compliance and oversight system or proposal generation capability.

Molly: So I like to think about Envestnet really approaching the marketplace with optionality, we think about it sort of as three different ways. One is, you take our native user experience, it’s very customizable or configurable, but if you need it out of the box, we give it to you. If you’re in the middle and you want some of your own technology stack and some of Envestnet’s, that’s a that’s a possibility as well. But if you really are one of these larger institutions and you want to create a completely custom, your own identity, the advisor or the client doesn’t even necessarily have to know Envestnet’s in the background, you build your user experience and Envestnet powers you with our engines and our scale and all the capabilities that we have. So I think that really allows firms and advisors to create an identity if they want one to be really independent in the marketplace without having to build their tech from scratch.

Craig: I think it’s what a lot of people don’t realize is if you’re going with the firm like Envestnet and you’ve got this full end to end platform, you don’t have to use the whole thing. You could just use some pieces of it. You could use the core then add some stuff on the round and you could put some point solutions in and you’ve got a wide range of integrations. You guys do score very well on the Ezra Group Wealthtech Integration Score, because of the the capabilities you’ve built over the years so you give me an example like a use case for an enterprise broker dealer enterprise or a nationwide RIA, on how they would implement Envestnet but also bring in point solutions where they wanted to.

Molly: I always think about CRM. So CRM is something that most firms, especially the larger ones, have a very specific tool that they want to use or the way that they want to customize. Almost every larger institution and a good number of RIAs are using their own CRM solutions and then deeply integrating particularly something like a Salesforce where there’s workflows and there’s a lot of capabilities within the CRM, but then behind the scenes, it’s Envestnet’s portfolio management system or performance engine, and so we’re serving up data into a CRM. So that’s an obvious example, but some of the ones that maybe people don’t recognize as widely as something like a different risk assessment tool.

Molly: Our proposal generation capability has a native risk assessment tool. But if a firm or an advisor has another one that they love to use, we have a plug and play so we can just let them use that experience. But then taking the risk score from that other vendor. And it becomes something that if the firm or the advisor wants to it’s very much their sort of secret sauce and they’re creating this proposal onboarding experience. And again, they’re using our scale and our engine in the background. So examples like that are really common.

Craig: Most enterprise broker dealers enterprise RIAs, for CRM, they’re almost all using Salesforce, it’s just become the CRM of choice. Not which is a good or bad thing, but I know from our clients working with you, you have very tight integration with Salesforce bidirectional, which is a huge benefit, because in the past, you’d update something in the CRM and then maybe wouldn’t go back to Envestnet or vice versa, the custodian would update something and then wouldn’t get back to the CRM. So you talked a little bit more about that and how those integrations are helping firms build out their capabilities?

Molly: It comes down to and this is one of the things I always like to say we do well at Envestnet and it’s my absolute favorite part of my job. I think you probably do a lot of this too, but it’s sitting down with the firm and understanding the practices that they have. What’s first thing they do when they walk in in the morning, when a client calls in what system do they go to first?

Molly: I think if you think about it that way, a lot of advisors and a lot of firms are living in their CRMs and so our approach to integration with the Salesforce has been to make create integrations that allow for the advisor to pull up a client in their CRM, in Salesforce, but then see the performance data that we’re so a client calls in and the advisor immediately sees Well, this is the client portfolio evaluation, the performance their most recent transactions, and then the client, maybe they’re calling because they need some cash. They can click a button and initiate a withdrawal request or a money movement request that involves trading and it goes straight through to the Envestnet platform and our trading or portfolio management engine. And then to the custodian. So, I mean, I think that what we want to enable is to allow the adviser to do business the way that they want to and power the experience that they’re looking to support and we see that all the time of Salesforce. So that’s pretty typical kind of use case.

Craig: We do have a lot of clients, we’re seeing more and more where broker dealers and enterprise RIAs are building more and more capabilities into Salesforce to become the tool that advisors live in all day. They never have to leave it they open accounts with Salesforce, they check of course, all the CRM they can check as you mentioned, performance holdings inside Salesforce and kickoff many different workflows and actions from inside there. So it’s become the the interface of choice.

Molly: It has.

Configurability and Customization

Craig: So moving on to you mentioned configurability. One thing we hear a lot when we’re now we do a lot of RFPs for broker dealers and enterprise RIAs and when they talk about Envestnet, they might say, well, everyone’s got Envestnet, we don’t want to be like everyone else. But can you talk about how configurability enables firms to build out a completely unique platform?

Molly: It’s funny because on the one hand, it’s the thing that really makes Envestnet unique and it’s one of our strengths. On the other hand, it’s the bane of my existence because it means we support a lot of different features and a lot of different flavors of those features. But when we started building a platform over 20 years ago, we took a very intentional approach of configurability. So we weren’t building custom platforms for anybody. As we added new features we used to call them brand values, because the very first thing we made configurable was a firm’s branding. And so we very intentionally decided that every time we built a new feature, we weren’t going to create custom code or create something that was very dedicated. We were going to add something that anybody could use.

Molly: So what that’s resulted in is thousands of points of configuration and that means that a firm or an advisor using Envestnet’s technology can create almost what feels like a custom platform, but then it’s not maintained like a custom platform. And the most important thing about that is it means that you get the benefit of all of the things that we add. Every time we add a new feature an advisor or a firm can decide to turn that on or off, and it doesn’t then interfere with what they’ve created for themselves. It’s definitely a challenge because that means that my team has to know exactly how to support these different flavors of configurability and these almost custom platforms that are really just specific configurations. But I think what it allows goes back to the point before, it allows for great personality in the platform that’s very specific to that firm or that advisor, but in a scalable way. And that’s I think, probably of all the decisions that we’ve made in at Envestnet that’s been one of the smart ones that we that we made very, very, very early on.

Craig: It’s funny, you mentioned that because it just today I just posted an article that I wrote, it’s called From Chaos to Clarity: Why You Should Change Your Processes, Not Your Vendor’s Software. Because I’m you you’ve seen it. We’ve worked with you guys on this on clients who shall remain nameless, who gave you a punch list of hundreds of things they want to change before they would bring your software on because that’s the way they were doing it with the other vendor. And we tried to convince them look, you picked Envestnet or if you’re moving away from Envestnet to another vendor you pick this other vendor, because you like them better and because the they have these capabilities that you didn’t have before. Why don’t you give them a chance to see well, here’s other things they’ve got that they’ve done better. They’ve been in business for a long time. Their software is the coalescence of hundreds of decisions, thousands of decisions and inputs of best practices from the biggest companies all over the country and you’re getting that advantage. Why not take advantage of it? Don’t ask them to change those workflows to match the way you’re doing and maybe the way you’re doing it isn’t so good.

Molly: Yeah, well, and then that goes back Craig to the to the thing I said about what I love about my job and what I think you love about yours is is sitting down with a firm like that and being consultative and hearing what what they’re doing and then maybe giving them some insight on what we’ve seen other firms do. We have the great advantage of seeing how a lot of different firms are doing business and seeing what works and what doesn’t. I think that’s a great thing about this seat that I sit in and I know the seat that you sit in is just we get to sort of see what works and what doesn’t. And you’re right, changing vendors is not necessarily going to solve all your problems.

Craig: But it will solve some problems but let them solve the problems. Don’t give them a punch list and say you need to change all these features to make it match our workflow. Because oftentimes the workflow you’re doing isn’t your value added. It’s just the way you’ve always done it. And if you’re going with Envestnet, use Envestnet’s workflows, see how it goes you’re most likely in most cases, 8 out of 10, 9 out of 10, you’re going to be more efficient, you’re going to scale better because you’re using the system the way it’s designed rather than making you go through this whole change process go into development, changing screens, adding stuff adding buttons and whistles and bells and whistles, which is changing the workflow you’ve honed over the years to be efficient and effective. And it’s not just Envestnet, it’s anybody.

Molly: I mean, that said, sometimes you sit with the firm like that, and they tell you something about what they’re doing. And like in my opinion, I’ll be like, Well, yeah, that probably makes a lot of sense and we need to add that point of configuration but I think it’s about the discussion and sort of that consultation.

Craig: But it’s we have a methodology where we walk through all their requirements and say, do you need this and why are you doing it? And 9 times out of 10 they don’t need it and no one remembers why they’re doing it. And as you mentioned earlier, most likely most of what they want can be configured inside your platform to change the way things are working without calling the developers which requires a change order. You got to put it into your into your product roadmap, which is booked out till 2028, and then when you get it you gotta test it and who knows. Anyway, that’s all in my article. Anybody wants to read that go to wealthtechtoday.com. But now we’re talking about Envestnet. So we talked about we both love about our jobs. Yes, learning about how clients work and how they’re doing business and how we can help them. I like solving problems. That’s one of the things I like about being a consultant is we get to solve complex problems for our clients and so do you.

Molly: Absolutely. It’s my favorite thing to do.

Reimagining Unified Managed Households

Craig: And there you go. So let’s talk more about some of the capabilities of the Envestnet platform. Let’s talk about something that’s been on the agenda for a long, long time. Unified managed households. UMH, tell me something new I don’t know about what Envestnet’s doing with UMH.

Molly: I think that it’s something that has been around for a long time and I think a lot of people are talking about it a lot of firms or technology providers say that they do it. I think that the approach that we’re taking is to allow the advisor to manage a household that has any type of asset or solution. So rather than just saying we’re going to manage a number of investments at the household level in a tax efficient or asset location aware way, we want that to be broader. So we want to bring in illiquid holdings. So we’re bringing in alternatives to that structured notes, certainly fixed income, but longer term, I think it’s anything that goes into an investor’s net worth, that the advisor wants to manage around, being able to really have that model or look at that allocation at the household level, and then advise the client trade where they can and then advise the client on what else they might need to do to kind of keep the right asset allocation, risk level time horizon on that portfolio that’s at the household level.

Molly: So that’s the work that we’re doing right now. And the way we think about it is there’s kind of the UMA which is put anything in an account and we’re also investing in the UMA technology so that it can have alternative assets or, you know, illiquid sleeves and sleeves that are traded by multiple parties. But for us, it’s important that that extends to the household and not just the single account because clients are gonna have multiple registrations, they’re going to have children that have accounts within the household, they’re gonna have hard assets illiquid assets. And so that’s really one of the one of the big things that we’re focused on with our roadmap in the next year to two years.

Craig: And will we also be able to include insurance in that because you’ve got the insurance exchange.

Molly: Absolutely.

Craig: Because that’s one thing that’s been a problem. I know for a lot of a lot of people who are coming into wealth management and not necessarily in the higher net worth range, but even just the middle tier range is that they can’t see everything in one place. They have to go to one person for their insurance one person for their estate planning one person for their just standard wealth planning. And again, if they if they’re a higher net worth, they want to get to a liquids. That’s another another report. It’s another screen or it’s another, it’s another statement. So you’re saying investment will be able to bring all this together as one.

Molly: That’s correct. So we do annuities now. So annuities within the proposal, right next year, traditional investments, we have structured note capability as well. So think about now we’re adding alternatives. And then we’ll go kind of more broadly into not just those managed assets, but in time managed as well.

Craig: And that’s going to save I know a number of our clients a lot of headaches because now they’re doing all manually, right what they want to do the structured notes, they’re using another system. I know the platform works away from from Envestnet so it’s already there. They have to build a proposals by plugging in into a PowerPoint or into a Word document reports that they’re pulling out of Envestnet in their in their alternative investment provider and their annuity provider. And they had them they kept the Frankenstein their proposal together. So now we can do it all in one place.

Molly: Yeah, well and to be clear, some of some of what advisors do, think of alternatives as an example, they may do all of their research and the qualification process of an investor and advisor to use alternative investments may still happen on another platform, but it’ll be deeply integrated into the Envestnet technology and and that goes back to this open architecture approach. Because what we see is that firms may want to use different providers or point solutions for something like alternatives or structured notes or insurance and so it’s important that we just like we are when it comes to third party managers, it’s we take an open architecture approach, we’ll do the same, but ultimately being able to view that portfolio that household level portfolio and then allow the advisor to manage it holistically using our platform using our scale, you know that you and I talked about this that word “personalization” is so overused and I kind of even hate to even say it.

Craig: Don’t even say it. I’m going to kind of bleep that out like a curse word.

Molly: But what we know advisors want to do is to serve the needs of each of their clients but not have to pull out spreadsheets to do it because you can’t possibly scale and you’re not spending the right time on the right clients when you’re doing that. So that’s the goal. If you boil it down to its essence, I think that’s what it is.

Craig: One joke we make with with new clients is what what did they say what would happen if tomorrow when you came in, Excel didn’t work? And everyone goes, we would just shut our doors we couldn’t even operate. And doesn’t matter what provider what what platform what technology everyone’s got Excel plugged into all over the place, filling gaps, managing stuff, tracking, trading or everything. Not that I don’t love Excel.

Molly: I’m going to use another term you told me not to use but like, maybe somebody should replace Excel with AI.

Craig: I told you not to use that Molly? Whatever you do, don’t say the word friction.

Molly: Swivel chair?

Multi-Actor Tradable UMA Sleeves

Craig: Yeah, don’t say that either. We’ll have another episode where we’re just going to talk only in industry buzzwords. We’ll do industry buzzword bingo and everyone can have a card and they can they can follow along at home right. Maybe we’ll do that as panel at the next conference industry buzzword bingo. So we’re running rapidly running out of time. As we always do whenever you and I talk. So you mentioned you threw it out in passing like it was no big deal. Molly, you said advisor traded sleeves and you said multi actor sleeves. What the hell is that and how do you do that? I mean, we’ve had trouble getting one trader into a sleeve. You’re gonna get multiple traders in the sleeve? I don’t believe you. I’m calling BS on that.

Molly: All right, fair enough. But also to be fair, we’re, we’re legging into it. So what I would say is that the Nirvana of UMA technology and capabilities is that you have an account that has multiple sleeves, the sleeves own their shares or own their lots and you can have multiple actors meaning you could have a money manager in their trading sleeve, meaning executing trades of a sleeve. You could have an advisor executing their trades. You could have Envestnet, executing trades. And then maybe you have a more illiquid sleeve as well. When we talk about multifactor UMA that’s what we’re talking about. And so that’s our roadmap. So that’s where we want to get and where we know we need to get.

Molly: What we’re doing to leg into that is starting with more control over the sleeves and where we’re getting the most demand for that first is with the advisor sleeve. So we have a lot of firms that are leveraging the power of the UMA to help an advisor use more managed accounts. So they retain some of their special secret sauce when it comes to creating models. So maybe they’re a great small cap, model creation or model creator, but they love to outsource the other asset classes or the other parts sleeves of the UMA. But what the advisor wants is to retain control over that sleeve so they can decide to transition assets that maybe you have come over from another advisor or just to be able to explicitly say I want to trade this lead this specific way.

Molly: So the way that we’re legging into that future Nirvana state of multifactor trading is by giving them control first, so advisor controlled sleeves managed or controlled sleeve, where Envestnet is still doing the trade execution, meaning the actual submission to the custodian, and then longer term we step out of the submission of the trades and it is the adviser submitting the trade the manager submitting the trade and that’s where we get to that Nirvana. So you’re right. You’re right to say, are we going to get there? It’s the right question, but I think it’s really important. I think it’s the future of the UMA and I think it’s what we need to do.

Craig: We’re already seeing some of our larger broker dealer clients launch advisor traded sleeves, so it’s already here. So why not do multi actor traded sleeves? Might as well give them the the capabilities, they’re going to ask for it at some point. You mentioned the Nirvana state. And the you also mentioned transition sleeves and that’s one of maybe we can end with that. That’s something a lot of firms don’t think about how they’re going to handle that. And the capability of a transition sleeve to be able to sell down and slowly move assets over time into the model without incurring major tax consequences is a scalability play.

Molly: I think we’ve had the concept of like an unsupervised position where you’re just holding it off to the side. And that works to some extent, but I think what that doesn’t do is give the advisor a scalable, thoughtful way of getting out of the position over time and still having management of the position because the minute you say it’s unsupervised. It’s isolated. It’s out of the portfolio. The advisor can’t bill on it. The advisor can’t really manage it and isn’t taking management of it. And isn’t adding the value that they should be adding right so what we’ve added is and sometimes you’ll hear us call it parking flame, Envestnet we’re famous for having really creative names for things but really, it’s a transition sleeve within a UMA or within an account that allows the advisor to decide how it will be transitioned to manage or to the managed part of that portfolio and we’ve seen firms are excited about this advisors and firms are excited because it’s so much a part of their existing workflows, and that they don’t have to use Excel. So it’s awesome.

Craig: I’m excited. I love anything about UMAs anything, UMA related, managed accounts related. We’re gonna geek out on it, and that’s what we do here on this podcast. Alright, we’ve run out of time, Molly, fantastic. You’ve said it all. Can you please tell everyone where they can find more information about Envestnet?

Molly: Well, we have a lot of presence on LinkedIn. You can look me up on LinkedIn and then you can always find out more at Envestnet.com as well.

Craig: Molly thank you again, for being on the program and sharing all this great information for this.

Molly: Oh, always great to be here. Thank you very much. 

SEARCH

ABOUT ME

The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com

SUBSCRIBE TO OUR NEWSLETTER VIA EMAIL

@CRAIGISKOWITZ

ARCHIVES

Archives