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Volume 1 Issue 1 May 1, 2015 Fastest growing advisory practices allocate to UMA, SMA, and Fund Strategist Programs Comparing the fastest growing advisors on Envestnet’s platform to the average advisor in 2014, ENVESTAT revealed that the top decile of advisors were more likely to outsource investment management to professional money managers than create and manage portfolios themselves. This can be seen in the eight percentage point allocation difference to Separate Accounts and Unified Managed Accounts between the two groups. About Envestnet Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes. For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel. The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. © 2015 Envestnet, Inc. All rights reserved.

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Volume 1Issue 1

May 21, 2015

Fastest growing advisory practices allocate to UMA, SMA,and Fund Strategist Programs Comparing the fastest growing advisors on Envestnet’s platform to the average advisor in 2014, ENVESTAT revealed that the top decile of advisors were more likely to outsource investment management to professional money managers than create and manage portfolios themselves. This can be seen in the eight percentage point allocation difference to Separate Accounts and Unified Managed Accounts between the two groups.

About Envestnet

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

© 2015 Envestnet, Inc. All rights reserved.

About Envestnet

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

© 2015 Envestnet, Inc. All rights reserved.

Volume 1Issue 2

June 04, 2015

Comparing how advisors allocated products across client age groups in 2014, this week’s ENVESTAT reveals that the fastest growing advisors when compared to their peers:

Prefer using MF/ETF Wrap’s over other product types and have a lower % allocation to Advisor Models across client age groups. This trend was most evident for 'Next Gen' (<30 years) and 'Senior' (>60 years) clients and was largely offset by a two-fold increase in % allocation to SMA’s.

Have the lowest % allocation drift for 'Prime of Life' (30-45 years) clients and are less likely to use UMA’s for 'Next Gen' (<30 years) clients.

Product Type. Next Gen (<30) Prime of Life (30-45) Retiring Soon (45-60) Senior (>60)

0% 20% 40% 0% 20% 40% 0% 20% 40% 0% 20% 40%

Advisor Model

MF/ETF Wrap

UnifiedManagedAccount

SeparateAccount

Others

42%

29%

10%

17%

29%

34%

21%

15%

36%

34%

12%

17%

12%

19%

42%

31%

12%

12%

18%

13%

46%

28%

13%

11%12%

Advisor Product Usage Across Client Age

322,800 clients of peer advisors27,237 clients of top decile advisors

2% 1% 3% 2%

The outer bar shows % allocation of peer universe Sample size: The inner bar shows % allocation of top decile advisors (based on % growth in AUM) who have $1 million or more in assets Sample size:

31% 32%33%

37% 34% 30%

25%

Fastest growing advisors prefer MF/ETF Wrap's and allocate twice as much to SMA's for 'Next Gen' and 'Senior' clients

© 2015 Envestnet, Inc. All rights reserved.

Volume 1 Issue 3

June 18, 2015

Comparing how sales and redemptions contributed to advisor AUM growth, this week’s ENVESTAT reveals that over the last 3 years, the fastest growing advisors:

Contrary to conventional wisdom, controlling redemptions and attrition isn't what separates top advisors from the pack

Had similar AUM decline in percentage terms due to redemptions as peers.Increasingly leveraged sales to drive AUM growth compared to peers. In 2012, AUM growth from sales for the fastest growing advisors was 3.3 times that of peers. This increased to 4.5 times in 2013 and 2014.Grew AUM by 97% (CAGR) from net new assets (sales-redemptions) compared to 13% (CAGR) for peers.

Sales and Redemptions: Their Impact on Advisor Growth

20%40% 0% 20% 40% 60% 80% 100% 120%

13%

15%

13%

14%

16%

14%

26%

29%

26%

133%

118%

87%

%AUM decline from redemptions: Top advisors

%AUM decline from redemptions: Peer advisors

%AUM growth from sales: Top advisors

%AUM growth from sales: Peer advisors

2013

2012

2014

%AUM decline - Redemptions %AUM growth - Sales

The outer bar shows % change in AUM due to sales and redemptions of peer universeThe inner bar shows % change in AUM due to sales and redemptions of top decile advisors after applying asset threshold limits

© 2015 Envestnet, Inc. All rights reserved.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end commentary connects insights derived from the digests published during the quarter to highlight the significance of the quarterly theme and its impact on advisory practices.

Issue No: Date Topic

1 May 21, 2015 Fastest growing advisory practices allocate to UMA, SMA and Fund Strategist Programs Top decile advisors were more likely to outsource investment management to professional money managers than create and manage portfolios themselves.

2 June 04, 2015 Fastest growing advisors prefer Mutual Fund/ETF wrap portfolios over advisor models for clients This trend was most evident for 'Next Gen' (<30 years) and ‘Senior’ (>60 years) clients and was largely offset by a two-fold increase in % allocation to SMA’s. Fastest growing advisors are also less likely to use UMA’s for ‘Next Gen’ clients.

Published Envestats :

The Q2 2015 Envestat report series focuses on the key drivers contributing to the growth of an advisory practice and the attributes that set top growth advisors apart from their peers.

The next Envestat issue will continue to explore the relationship between sales/redemptions and AUM growth by examining how top advisors expand wallet share with existing clients.

Register on www.envestnetinstitute.com to view published Envestats.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for investment professional use/financial institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

Quarterly Theme

Coming Soon

© 2015 Envestnet, Inc. All rights reserved.

Volume 1 Issue 4

June 30, 2015

Top Growth Advisors: 3 times faster at growing wallet share

AUM Growth from expanding wallet share of existing clients

0%

2%

4%

6%

8%

10%

12%

14%

9%

4%

14%

5%

14%

2012 2013 2014

Growth from existing clients: Peer Advisors Growth from existing clients: Top Advisors

The left bar in each year shows % change in AUM due to sales from existing clients of peer advisors The right bar in each year shows % change in AUM due to sales from existing clients of top decile advisors after applying asset threshold limits

% change in AUM

5%

One factor that sets top growth practices apart from peers is the ability to maximize revenue opportunity in their existing client base.

This week's Envestat reveals that over the past two years, top growth practices expanded wallet share at almost three times the rate of their peers, growing AUM by 14% in sales to existing clients, compared to 5% for peers.

© 2015 Envestnet, Inc. All rights reserved.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end commentary connects insights derived from the digests published during the quarter to highlight the significance of the quarterly theme and its impact on advisory practices.

Issue No: Date Topic

1 May 21, 2015 Fastest growing advisory practices allocate to UMA, SMA and Fund Strategist Programs Top decile advisors were more likely to outsource investment management to professional money managers than create and manage portfolios themselves.

2 June 04, 2015 Fastest growing advisors prefer Mutual Fund/ETF wrap portfolios over advisor models for clients This trend was most evident for 'Next Gen' (<30 years) and ‘Senior’ (>60 years) clients and was largely offset by a two-fold increase in % allocation to SMA’s. Fastest growing advisors are also less likely to use UMA’s for ‘Next Gen’ clients.

Published Envestats :

The Q2 2015 Envestat report series focuses on the key drivers contributing to the growth of an advisory practice and the attributes that set top growth advisors apart from their peers.

The last Envestat issue on the quarterly theme of ‘Advisor AUM growth’ will explore whether the fastest growing advisors are able to generate superior market return on managed assets compared to peers.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for investment professional use/financial institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

Quarterly Theme

Register on www.envestnetinstitute.com to view published Envestats.

3 June 18, 2015 Contrary to conventional wisdom, controlling redemptions and attrition isn't what separates top advisors from the pack Fastest growing advisors had similar AUM decline due to redemptions as peers, increasingly leveraged sales to drive AUM growth.

Coming Soon

© 2015 Envestnet, Inc. All rights reserved.

Volume 1 Issue 5

July 7, 2015

2012 2013

0%

5%

10%

15%

20%

25%

% Change in AUM - Market change

12%10%

25%

13%

8%

4%

Peer Advisors Top Decile Advisors

The left bar in each year shows % change in AUM due to market movement of peer advisors The right bar in each year shows % change in AUM due to market movement of top decile advisors after applying asset threshold limits

2014

Impact of market movement on AUM growth

Top Growth Advisors – Winning the Final CategoryIn previous releases, we noted that in two key components of growth—new assets from new clients and new assets from existing clients—top growth advisors outpaced their peer group.

This week’s Envestat reveals that % growth in AUM from market movement of top growth advisors significantly outperforms their peers, specifically in time periods where the market is in a steep upward curve.

Investment decisions, including product selection and asset allocation, play a key role in generating AUM growth. In a previous Envestat release, we showed the top growth advisors were less likely to utilize advisor directed models. We believe this decision is a major driver in the growth from market movement and is evident in this week’s Envestat.

© 2015 Envestnet, Inc. All rights reserved.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end commentary connects insights derived from the digests published during the quarter to highlight the significance of the quarterly theme and its impact on advisory practices.

Issue No: Date Topic

1 May 21, 2015 Fastest growing advisory practices allocate to UMA, SMA and Fund Strategist Programs Top decile advisors were more likely to outsource investment management to professional money managers than create and manage portfolios themselves.

2 June 04, 2015 Fastest growing advisors prefer Mutual Fund/ETF wrap portfolios over advisor models for clients This trend was most evident for 'Next Gen' (<30 years) and ‘Senior’ (>60 years) clients and was largely offset by a two-fold increase in % allocation to SMA’s. Fastest growing advisors are also less likely to use UMA’s for ‘Next Gen’ clients.

Published Envestats :

The Q2 2015 Envestat report series focuses on the key drivers contributing to the growth of an advisory practice and the attributes that set top growth advisors apart from their peers.

Through the intersection of our data and human capital, Envestat's quarterly commentary will bring together the key statistical findings from this quarter with relevant industry insights.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for investment professional use/financial institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

Quarterly Theme

3 June 18, 2015 Contrary to conventional wisdom, controlling redemptions and attrition isn't what separates top advisors from the pack Fastest growing advisors had similar AUM decline due to redemptions as peers, increasingly leveraged sales to drive AUM growth.

Register on www.envestnetinstitute.com to view published Envestats.

4 June 30, 2015 Top Growth Advisors: 3 times faster at growing wallet share One factor that sets top growth practices apart from peers is the ability to maximize revenue opportunity in their existing client base

Coming Soon

© 2015 Envestnet, Inc. All rights reserved.

Volume 2 Issue 1

July 28, 2015

Millennials: Top Growth Advisors Really are Paying Attention

0

5

10

15

20

Gro

wth

mul

tiple

- To

p vs

Pee

r adv

isor

s

15

18

5

9

Next Gen (<30) Prime of life (30-45) Retiring soon (45-60) Senior (>60)

At a time when the “robo” movement is getting a lot of press, whether or not advisors are truly targeting growth in emerging

investors is a common industry question. This week’s Envestat shows the top growth advisors are paying attention and

targeting the next generation investor, growing assets in this age segment at a rate of 15 times the overall peer group. While

this high growth is from a low asset base, advisors should take note of this definite shift, given the future generational wealth

transfer and career growth this segment can give to younger employees.

Growth multiple indicates how fast have top advisors been able to grow their AUM compared to peers in 2014 The analysis universe comprises of advisors above specified asset and account threshold limits

Growth multiple of top vs peer advisors by client age demographic

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for investment professional use/financial institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

With a continued emphasis on examining what sets top growth practices apart from their peers, Envestats this quarter will explore underlying factors such as capacity, geography and client demography that influence advisor growth.

Coming Soon

Register on www.envestnetinstitute.com to view published Envestats.

The next week's Envestat will explore the impact of capacity on growth by examining whether the fastest growing advisors devote a higher capacity to serve larger households compared to peers.

© 2015 Envestnet, Inc. All rights reserved.

Volume 2 Issue 2

August 12, 2015

Economic Indicators Not Enough To Forecast Asset Growth

Bottom 5 states based on AUM growth Top 5 states based on AUM growth

This week's Envestat shows the strategic complexities of expanding geographically. Many firms consider economic metrics as the leading indicators of potential growth.The chart above shows there is no silver bullet in determining where to grow:

The analysis universe comprises of advisors above the specified threshold limits

2014 Envestnet Advisor Growth Rate1

Sources:1 Envestnet Platform 2 BEA official website. News Release: GDP by State 3 "Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2014". 2014 Population Estimates. United States Census Bureau, Population Division. December 23, 2014. Retrieved December 23, 2014.

ND SD NM OK FL ME NV SC UT WV ND SD NM OK FL ME NV SC UT WV

0%

5%

10%

Growth %

1%

4%2%

0%0%1%

3%

0%

3%

12%

1%2%1%1%0%

1%0%0%

1%2%

2010 - 2013 GDP Growth Rate by State2 2013 US Population Growth Rate3

While Florida lags other states in economic indicators, it ranks in the top five by advisor asset growth due to the overwhelming pool of retirement assets.

On the other hand, North Dakota's strong economic indicators were positively correlated with advisor asset growth due to the increase in oil production during the period.

ME-16%

UT-12%

AL13%

AR20%

AZ12%

CA15%

WA12%

CT13%

DC20%

DE16%

FL21%

GA17%

IA13%

ID13%

WI17%

IN15%

KS17% KY

12%

LA19%

MA13%

MI13%

MN14%

MO15%

MT18%

NC14%

ND28%

NE12%

NH11%

NJ14%

NM22%

NY13%

OH14%

OK21%

OR18%

VA13%

SD24%

TN10%

TX11%

WY22%

VT19%

NV-1% WV

-4%

CO9%

MS6%

IL6%

PA8%

SC4%

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for investment professional use/financial institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

With a continued emphasis on examining what sets top growth practices apart from their peers, Envestats this quarter will explore underlying factors such as capacity, geography and client demography that influence advisor growth.

Register on www.envestnetinstitute.com to view published Envestats.

Issue No: Date Topic

1 July 28, 2015 Millennials: Top Growth Advisors Really are Paying AttentionTop growth advisors are paying attention and targeting the next generation investor, growing assets in this age segment at a rate of 15 times the overall peer group.

Published Envestats :

© 2015 Envestnet, Inc. All rights reserved.

Volume 2 Issue 3

August 25, 2015

$10M is The Magic Number

The analysis universe comprises of advisors above specified threshold limits

Advisors won’t really accelerate the growth of their fee business until it becomes a substantial part of their overall book. Small advisors grew AUM at a far lower rate than their larger peers in each of the last 3 years. In fact, in 2014, advisors in the low asset tier grew AUM by just 1% compared to 18% and 15% for advisors in medium and high asset tiers.

Achieving a critical mass in advisory AUM (~ 10 M based on our asset tiers) may be a key driver of future growth. Once critical mass is hit, advisors then focus on developing processes and procedures to efficiently scale their business.

Low (<10M) Medium (10-50M) High (>50M)

2012 2013 2014 2012 2013 2014 2012 2013 20140%

5%

10%

15%

20%

25%

30%

AUM

Gro

wth 18%

7%

1%

25%

31%

18%

25%

28%

15%

Advisor AUM growth across asset tiers

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for Investment Professional/Financial Institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

With a continued emphasis on examining what sets top growth practices apart from their peers, Envestats this quarter will explore underlying factors such as capacity, geography and client demography that influence advisor growth.

Register on www.envestnetinstitute.com to view published Envestats.

Issue No: Date Topic

1 July 28, 2015 Millennials: Top Growth Advisors Really are Paying AttentionTop growth advisors are paying attention and targeting the next generation investor, growing assets in this age segment at a rate of 15 times the overall peer group.

Published Envestats :

2 Aug 12, 2015 Economic Indicators Not Enough To Forecast Asset Growth Many firms consider economic metrics as the leading indicators of potential growth. However there is no silver bullet in determining where to grow.

© 2015 Envestnet, Inc. All rights reserved.

Volume 2 Issue 4

September 08, 2015

Changing Of The Guard

The analysis universe comprises of advisors above specified threshold limits

High (>50M)

0%

20%

40%

60%

15%

32%

43%

8%2%

12%

46%

30%

10%

2%

57%

15% 17%

9%2%

UMA APM FSP SMA others UMA APM FSP SMA others UMA APM FSP SMA others0%

20%

40%

16%

27%

43%

12%

2%

11%

45%

26%

17%

1%

15%

52%

11%

20%

2%

Medium (10-50M)Low (<10M)

Advisor asset allocation across product type in 2014: Peer advisors

Asset allocation %

Advisor asset allocation across product type in 2014: Top advisors

Asset allocation %

60%

While many advisors grew significant businesses based on advisor-as-portfolio-manager (APM) programs, our most recent Envestat suggests that there is a changing of the guard underway, with emerging practices and top-growth larger practices leveraging more scalable solutions such as UMAs.

Because reaching the threshold of $10M is a primary inflection point in the growth of a practice, product use may show trends that are antithetical to building scale. For example, while low asset practices are more likely to use scalable solutions such as strategist-managed asset allocation programs (FSPs) and UMAs, larger practices show significantly higher use of more labor-intensive advisor-managed solutions.

The prevalence of advisor-as-portfolio-manager (APM) programs among larger practices is less a reflection of a trend to take control of asset management as a practice grows than a reflection of the fact that when most of the larger practices were established there were few multi-strategists FSP solutions available in the industry, which slowed adoption of outsourced asset management programs.

Advisors in the top decile by growth rate do in fact show a higher propensity to use scalable solutions such as UMAs, with $50M+ practices allocating nearly double the assets to UMAs compared with their peers at the same practice size. Envestnet believes that these trends reflect the importance of solutions that both help advisors scale their business and deliver investment planning advantages in driving sustainable growth.

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for Investment Professional/Financial Institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

With a continued emphasis on examining what sets top growth practices apart from their peers, Envestats this quarter will explore underlying factors such as capacity, geography and client demography that influence advisor growth.

Register on www.envestnetinstitute.com to view published Envestats.

Issue No: Date Topic

1 July 28, 2015 Millennials: Top Growth Advisors Really are Paying AttentionTop growth advisors are paying attention and targeting the next generation investor, growing assets in this age segment at a rate of 15 times the overall peer group.

Published Envestats :

2 Aug 12, 2015 Economic Indicators Not Enough To Forecast Asset Growth Many firms consider economic metrics as the leading indicators of potential growth. However there is no silver bullet in determining where to grow.

3 Aug 25, 2015 $10M is The Magic Number Achieving a critical mass in advisory AUM (~ 10 M based on our asset tiers) may be a key driver of future growth.

© 2015 Envestnet, Inc. All rights reserved.

Volume 2 Issue 5

September 22, 2015

The analysis universe comprises of advisors above specified threshold limits

Conventional wisdom and industry belief has been that advisors prefer using sophisticated products like Unified Managed Accounts (UMAs) with larger clients (> $1M) and MF/ ETF Wraps with smaller clients ($25K-100K).

Our analysis supports this thesis that alignment of product sophistication with client size enables advisors to grow their assets faster than peers.

Top quartile advisors, as segmented by UMA allocation, placed on average 38% of large client assets in UMAs and grew their assets much faster in 2014 compared to advisors in the bottom quartile who opted not to use UMAs with large clients.

In fact, advisors in the top decile grew AUM by 22% by allocating 71% of large client assets to UMAs.

Similarly, top quartile advisors as segmented by MF/ETF Wrap allocation, who exclusively used MF/ETF Wraps with small clients, grew their assets much faster than advisors in the bottom quartile who opted not to use MF/ETF Wraps with small clients.

Top quartile advisors stand out for their ability to understand their client base and then select the most appropriate products for them.

Growth Rate of Advisors

0%

50%

0%

50%

100%

0%

38%

-1%

20%

0%

100%

4%

20%

Top Quartile by UMA Usage Bottom Quartile by UMA Usage Top Quartile by UMA Usage Bottom Quartile by UMA Usage

One Size Doesn't Fit AllProduct Use and Advisor Growth: Large Clients ($1Mn+)

Advisor UMA Allocation

Advisor MF/ETF Wrap Allocation Growth Rate of Advisors

Product Use and Advisor Growth: Small Clients ($25K-100K)

Top Quartile by Wrap Usage Bottom Quartile by Wrap Usage Top Quartile by Wrap Usage Bottom Quartile by Wrap Usage

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for Investment Professional/Financial Institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

With a continued emphasis on examining what sets top growth practices apart from their peers, Envestats this quarter will explore underlying factors such as capacity, geography and client demography that influence advisor growth.

Register on www.envestnetinstitute.com to view published Envestats.

Issue No: Date Topic

1 July 28, 2015

Published Envestats :

2 Aug 12, 2015

3 Aug 25, 2015

4 Sep 08, 2015

Millennials: Top Growth Advisors Really are Paying AttentionTop growth advisors are paying attention and targeting the next generation investor, growing assets in this age segment at a rate of 15 times the overall peer group.

Economic Indicators Not Enough To Forecast Asset Growth Many firms consider economic metrics as the leading indicators of potential growth. However there is no silver bullet in determining where to grow.

$10M is The Magic Number Achieving a critical mass in advisory AUM (~ 10 M based on our asset tiers) may be a key driver of future growth.

Changing Of The Guard There is a changing of the guard underway, with emerging practices and top-growth larger practices leveraging more scalable solutions such as UMAs.

© 2015 Envestnet, Inc. All rights reserved.

Volume 3Issue 1

October 27, 2015

Advisors who were active both during Jan 2007 and June 2015 have been considered for the analysis. ’Strayed to cash’ advisors have more than 15% cash allocation in at least 3 months during the analysis period.

Of the many ways advisors create value, coaching and mentoring clients to stay disciplined to their investment plans through market cycles has been traditionally regarded as a ‘soft skill’ difficult to quantify.

This week’s Envestat reveals that advisors who persuade their clients to remain invested during periods of market stress outperform advisors who increase their allocation to cash.

‘Disciplined to Financial Plan’ advisors outperformed ‘Strayed to Cash’ advisors by 700 bps over a complete market cycle. This translates to 64 bps on an annualized basis – the value advisors create for clients through behavioral coaching.

Though their investments dropped more during the market crash from 2008 to mid-2009, ‘Disciplined to Financial Plan’ advisors were able to capitalize fully on the market rebound as a result of their decision to stay invested compared to ‘Strayed to Cash’ advisors.

A carefully constructed financial plan that is well-understood by clients can steady frayed nerves and act as a reference point to persuade and influence them to stay disciplined to their financial plans in good times and in bad.

Growth of $100 Over Time

% Cash allocation

S&P 500 Total Return Equity Index Barclays Aggregate US Bond Market Index

40%

20%

0%

0

2,000

4,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

$132

$125

'Strayed to cash' Advisors 'Disciplined to Financial Plan' advisors

60

80

100

120

140

Market Value

In Good Times and Bad, Coach Your Clients To Add Value

How Advisor Cash Allocation Varies with Market Movement

Index

valu

es

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for Investment Professional/Financial Institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

An ongoing topic of discussion among investment advisors centers on how they can create value for clients, given the rise of robo-advisors.

Envestats this quarter will explore how successful advisors on Envestnet’s platform add value and attempt to quantify these pillars of advisor created value.

Register on www.envestnetinstitute.com to view published Envestats.

Published Envestats :

© 2015 Envestnet, Inc. All rights reserved.

Volume 3Issue 2

November 10, 2015

This week’s Envestat explores historical cash allocation across some managed account products and reveals that advisor managed accounts not only maintain higher levels of cash but also increase their allocation by a greater degree during periods of market stress compared to UMAs and MF/ETF Wraps.

Between January 2007 and June 2015, advisor managed accounts, on average, held 8% of their assets as cash while MF/ETF wrap accounts had an average cash allocation of 3%. High cash allocations in advisor managed accounts may provide downside protection in bear markets but can drag down performance during market rallies limiting the potential gains. Timing re-entry into the market becomes the key issue.

During the market crash (Oct 2007-Feb 2009), the cash allocation of advisor managed accounts jumped to 11% while the cash allocation of MF/ETF wrap accounts increased marginally to 4%. The over weighted cash allocation in advisor managed accounts returned to pre-crisis levels late 2010 by which time a significant portion of the market rally was over. Increasing or decreasing cash allocations at the right time (market timing) is difficult, if not impossible to achieve.

Professional money managers (e.g., MF/ETF wrap accounts), on the other hand, had a more disciplined cash allocation enabling them to remain invested in the market and enjoy the full benefit of the rally.

2007 2008 2009 2010 2011 2012 2013 2014 2015

0%

5%

10%

15%

20%

25%

30%

% Cash allocation

0

1,000

2,000

3,000

4,000

Index Values

To Cash Or Not To Cash: That Is The Question

Advisor Model Accounts UMA Accounts

Barclays Aggregate US Bond Market Index S&P 500 Total Return Equity Index

MF/ETF Wrap Accounts

Historical Cash Allocation across Product Mix

Advisors who were active both during Jan 2007 and June 2015 have been considered for the analysis.

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for Investment Professional/Financial Institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

An ongoing topic of discussion among investment advisors centers on how they can create value for clients, given the rise of robo-advisors.

Envestats this quarter will explore how successful advisors on Envestnet’s platform add value and attempt to quantify these pillars of advisor created value.

Published Envestats :

Register on www.envestnetinstitute.com to view published Envestats.

Issue No: Date Topic

1 October 27, 2015 In Good Times and Bad, Coach Your Clients to Add ValueAdvisors who persuade their clients to remain invested during periods of market stress outperform advisors who increase their allocation to cash.

© 2015 Envestnet, Inc. All rights reserved.

Volume 3Issue 3

November 24, 2015

Our analytical work through our Capital Sigma research demonstrated that end consumers could benefit by as much as 1% per year from advisor tax management. This week’s Envestat reveals that:

Only a small percentage of advisors on our platform utilize automated tax overlay or tax harvesting capabilities and thus a large percentage of the advisor population is potentially missing an opportunity to deliver scalable tax alpha. Advisors who provide tax management services do so across a handful of clients and accounts relative to their overall book of business, which makes this metric even more relevant.

The vast majority of advisors offering tax management services have historically made use of tax harvesting capabilities, but in 2014 the trend was more towards tax overlay as market conditions warranted.

Advisors prefer SMA’s for tax loss harvesting and UMA’s for tax overlay services. In previous editions of Envestat, we have discussed that top growth advisors tend to have a higher adoption rate of UMA, not only because it provides scalability, but also because of the tax overlay benefits. The second chart shows this benefit plays out as expected given that 83% of the tax overlay accounts on the Envestnet platform are in fact in UMA.

Advisors thus have a tremendous opportunity to add value to client portfolios by providing tax management services.

Tax Alpha: Are Advisors Missing a Value Opportunity?

Advisors who provide either tax harvesting or tax management have been included in the analysis

Accounts With Tax Management Services by Product Type: 2014

Tax Management Services Offered by Advisors

6%2011 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

94%

10% 2012 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

90%

9%2013 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

91%

• • • • • • • • • • •

21% 2014 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 4

79% I

0% 20% 40% 60% 80% 100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Harvest

Overlay

12%20%

83%

66%

17%

2%

SMA UMA MF/ETF Wrap Advisor Model

• 4

Overlay Harvest

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for Investment Professional/Financial Institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

An ongoing topic of discussion among investment advisors centers on how they can create value for clients, given the rise of robo-advisors.

Envestats this quarter will explore how successful advisors on Envestnet’s platform add value and attempt to quantify these pillars of advisor created value.

Published Envestats :

Register on www.envestnetinstitute.com to view published Envestats.

Issue No: Date Topic

1 October 27, 2015 In Good Times and Bad, Coach Your Clients to Add ValueAdvisors who persuade their clients to remain invested during periods of market stress outperform advisors who increase their allocation to cash.

2 November 10, 2015 To Cash Or Not To Cash: That Is The QuestionAdvisor managed accounts not only maintain higher levels of cash but also increase their allocation by a greater degree during periods of market stress compared to UMAs and MF/ETF Wraps.

© 2015 Envestnet, Inc. All rights reserved.

Volume 3 Issue 4

December 08, 2015

Our Capital Sigma research framework identified systematic rebalancing as one of the five pillars of advisor created value. This week’s Envestat looks at rebalancing frequency of accounts across different product types to better understand whether advisors leverage rebalancing as a tool to add value to clients.

In 2014, just 10% of MF/ETF wrap accounts were not rebalanced whereas 68% of Advisor as Portfolio Manager (APM) accounts went without rebalancing. One possible explanation for this may be the natural tendency of advisors to hold onto securities that have yielded high returns as it can be difficult to explain to a client why an advisor would sell a “winner” to reinvest in what can be seen as an underperforming asset class, sector or security.

Of the accounts that were rebalanced, the preferred rebalancing frequency was once a year across product types which is consistent with the optimal rebalancing frequency in our Capital Sigma research. Since return differences among various rebalancing strategies are quite small in the long run, this seems intuitive after accounting for taxes and transaction costs associated with more frequent rebalancing.

Advisors thus have a tremendous opportunity to add value by regularly rebalancing their APM accounts. An additional benefit is that systematic rebalancing also creates the opportunity to do tax-loss harvesting to unlock even more value.

The Curious Case of Rebalancing in Advisor Managed Accounts

Rebalance Frequency by Product Type: 2014

Only APM, MF/ETF Wrap and UMA accounts managed through ENV platform are included in the analysis

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70%% accounts

APM

Never

1x

2x

3x

>4x

MF/ETFWrap

Never

1x

2x

3x

>4x

UMA

Never

1x

2x

3x

>4x

7%

4%

8%

13%

68%

33%

10%

15%

32%

10%

11%

10%

22%

24%

33%

_

_

_

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for Investment Professional/Financial Institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Register on www.envestnetinstitute.com to view published Envestats.

Issue No:

Published Envestats :Published Envestats :

Date Topic

1 October 27, 2015 In Good Times and Bad, Coach Your Clients to Add ValueAdvisors who persuade their clients to remain invested during periods of market stress outperform advisors who increase their allocation to cash.

2 Advisor managed accounts not only maintain higher levels of cash but also increase their allocation by a greater degree during periods of market stress compared to UMAs and MF/ETF Wraps.

3 Only a small percentage of advisors on our platform utilize automated tax overlay or tax harvesting capabilities and thus a large percentage of the advisor population is potentially missing an opportunity to deliver scalable tax alpha.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

An ongoing topic of discussion among investment advisors centers on how they can create value for clients, given the rise of robo-advisors.

Envestats this quarter will explore how successful advisors on Envestnet’s platform add value and attempt to quantify these pillars of advisor created value.

November 24, 2015 Tax Alpha: Are Advisors Missing a Value Opportunity?

November 10, 2015 To Cash Or Not To Cash: That Is The Question

© 2015 Envestnet, Inc. All rights reserved.

Our previous Envestat revealed that 68% of APM accounts were not rebalanced during 2014 compared to 10% of MF/ETF Wrap accounts. This week’s Envestat reveals that irrespective of product, accounts which are rebalanced outperform those that are not by 53 bps annually on a risk adjusted basis.

Growth of $100 Over Time

Rebalancing Really Pays Off

Volume 3

Issue 5 December 22, 2015

2010 2015

Mar

ket V

alue

90

100

110

120

130

140135

139

2011 2012 2013 2014

Accounts Rebalanced Each Year Accounts Not Rebalanced

Accounts which were active during Jan 2010 and June 2015 have been included in the analysis.

Rebalancing magnifies portfolio returns when asset class returns are similar, market volatility is high and correlations among asset classes are low. The impact of rebalancing is more muted during bull markets.

Advisors should view rebalancing not as a tool to enhance returns but to improve returns on a risk adjusted basis. If you think that the current bull market has run its course, this would be the right time to rebalance accounts to derive maximum value for clients.

© 2015 Envestnet, Inc. All rights reserved.

The data provided is derived from Envestnet user data composite. Data has not been independently verified. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this report is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

All content posted to the Envestnet Institute is subject to the Terms and Conditions as outlined. Envestnet is not responsible for third party advisor content posted on this website; however, Envestnet does retain the right to edit or remove such postings. Envestnet Institute is not a regulated entity and is intended for Investment Professional/Financial Institutional use only.

About Envestnet

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully aligned standard of care, and empower advisors to deliver better outcomes.

Envestnet Institute is your portal to timely and thought provoking content in partnership with finance’s top thought leaders. Register to learn more about markets, discover new investment tools and assess new ways to serve your clients' needs. If you are a registered investment professional, you can take courses for continuing education credit as well as read documents and watch videos on the Envestnet Institute platform.

About Envestat

Register on www.envestnetinstitute.com to view published Envestats.

Issue No:

Published Envestats :Published Envestats :

Date Topic

1 October 27, 2015 In Good Times and Bad, Coach Your Clients to Add ValueAdvisors who persuade their clients to remain invested during periods of market stress outperform advisors who increase their allocation to cash.

2 Advisor managed accounts not only maintain higher levels of cash but also increase their allocation by a greater degree during periods of market stress compared to UMAs and MF/ETF Wraps.

3 Only a small percentage of advisors on our platform utilize automated tax overlay or tax harvesting capabilities and thus a large percentage of the advisor population is potentially missing an opportunity to deliver scalable tax alpha.

About Envestat

Envestat, Envestnet’s industry analytics engine, delivers regular digests of business intelligence designed to provide context to the decisions that financial advisors and enterprise business owners face every day.

While the regular digests provide insights that revolve around a quarterly theme, our quarter-end INTERSECTION connects these insights to highlight the significance of the quarterly theme and its impact on advisory practices.

Quarterly Theme

An ongoing topic of discussion among investment advisors centers on how they can create value for clients, given the rise of robo-advisors.

Envestats this quarter will explore how successful advisors on Envestnet’s platform add value and attempt to quantify these pillars of advisor created value.

November 24, 2015 Tax Alpha: Are Advisors Missing a Value Opportunity?

November 10, 2015 To Cash Or Not To Cash: That Is The Question

4 Our Capital Sigma research identified systematic rebalancing as one of the five pillars of advisor created value. Yet, in 2014, 68% of Advisor as Portfolio Manager (APM) accounts went without rebalancing.

December 08, 2015 The Curious Case of Rebalancing in Advisor Managed Accounts