Envestnet Asset Management Inc. has much to gain and little to risk in reviving its PMC brand name.
Envestnet Asset Management Inc. has much to gain and little to risk in reviving its PMC brand name.
In 2001, Envestnet purchased Portfolio Management Consultants Inc. It changed its name to Envestnet Management and Re-search Group in 2004.
Granting the PMC brand a second chance means that Envestnet — a provider of wrap account platforms for independent broker-dealers, banks and insurance companies — may earn fatter profit margins, offer more choices to financial advisers and reduce channel conflict, said Bill Crager, president of the Chicago-based company.
One problem that Envestnet has faced is that it has relied on a single sales force to market both its asset management services and platform technology, according to company officials.
Envestnet, which has $60 billion in assets under administration from 450 companies that use its wrap-account platform, recognized that Denver-based PMC needed its own sales staff.
As a result, it will have a new four-person sales team that won't have to juggle the products of competitors. “They're unencumbered; they're completely biased,” Mr. Crager said.
The time is right because of several product initiatives, he said, adding that the company has built out strategies for advisers from Standard & Poor's of New York, Symmetry Partners LLC of Glastonbury, Conn., and Russell Investments of Tacoma, Wash., as part of a launch of six mutual funds and a series of wrap accounts containing exchange traded funds and unified managed accounts.
But it is premature to say that more offerings from PMC means more choice for advisers. Money managers such as Russell Investments, for instance, that depend on Envestnet technology for their platform may choose to go elsewhere, said Ronald Cordes, Pleasanton, Calif.-based chairman of Genworth Managed Money of Richmond, Va., which oversees $21 billion of turnkey asset management products.
“If you lose [other providers] because you have in-creased competition, then it may not be good” for advisers, he said.
Russell Investments declined to comment.
Envestnet may win points with customers through its new selling structure, Mr. Cordes conceded.
“When you market yourself as a clearinghouse, the story gets muddier with an in-house product, so putting it under a different brand is probably the best position to take,” he said.
Bringing out these strategies under the existing brand had its drawbacks.
“Envestnet was a bit of a mouthful,” Mr. Crager said. “We want to make sure there's the proper spotlight on investment management products as opposed to it all residing on the Envestnet brand.”
The reason the company wants to focus on money management is clear, industry observers say.
Envestnet earns only about 0.02% on the assets on its separate-accounts-platform business, but PMC makes 0.3% to 0.4% on assets it manages by providing its own products, they said.
Mr. Crager agrees that profit margins are an important consideration.
“The most profitable part of our business is asset management,” he said.
And it is growing fast. Envestnet's asset management business, now PMC, grew from $7.5 billion as of last Sept. 30 to about $10 billion as of Sunday, an increase of 35%.
This is a Lazarus-like growth, considering that PMC began its life as an Envestnet division.
When Envestnet acquired PMC in 2001, it had $2.5 billion of assets under management, 40% of which evaporated because of outflows and market depreciation after the Sept. 11 attacks on the World Trade Center and the Pentagon, Mr. Crager said.
Brooke Southall can be reached at bsouthall@crain.com.
