Back when he co-founded Envestnet 25 years ago, Bill Crager didn’t plan on one day taking home the Lifetime Achievement in the Wealth Management Industry statuette at the inaugural InvestmentNews Awards. There were too many other pressing matters at the time before focusing on such fanciful dreams, primarily getting a one-of-a-kind fintech business off the ground.
Maybe he should have, because dreams do come true for those willing to do more than dare.
Crager, who recently transitioned from the company’s CEO to a strategic advisor position, along with the late Jud Bergman started Envestnet with the idea of streamlining independent advisors’ practices by offering a broad range of fee-based products side by side within an easily accessible, open-architecture portal.
Currently celebrating its silver anniversary, Envestnet recently confirmed it has agreed to be acquired for $4.5 billion by Bain Capital in a transaction that includes strategic partners BlackRock, Fidelity Investments, Franklin Templeton, and State Street Global Advisors. The scale of the deal reflects the fact the firm has grown into the leading managed solutions service provider by total platform assets, total accounts, and number of advisors served.
“When Envestnet was founded, the concept of supporting advisors with advanced technology was still just an idea,” said Crager, speaking before the acquisition was announced. “I don’t think anyone can fully grasp the challenges of making an idea something more. Somehow, we navigated the daily challenges and the world around us to build something that today is the largest in the entire industry.”
Prior to launching Envestnet, Crager was serving as a managing director at Nuveen. It was a time in the financial industry when a pair of trends were starting to brew. First, the asset management business was shifting to an index mindset, and second, the internet was emerging as a more capable method of distributed infrastructure.
“We saw that these two trends would intersect in important ways – the advisory value proposition shifting to portfolio versus product performance, with more sophisticated tools needed to deliver this,” Crager said. “Jud Bergman and I saw the opportunity to level the playing field for all financial advisors to deliver more comprehensive advice.”
A quarter century ago, the typical advisor tended to be product and performance oriented, and anyone offering more holistic solutions was doing the work manually, which made scale and delivery incredibly hard to achieve. Early on, Crager and Bergman saw the vision for a more holistic, financial planning-centric offering, which then was considered impossible to deliver.
Meanwhile, internet technology was in its nascent stages. Crager recounted how advisors and clients used “dial up” to access the web.
“There was no Google and no mobile technology. The buzz and promise of this networked future wasn’t reality,” Crager recalled. “We leaned into it to evolve into a powerful enabler for advisors, allowing them to provide comprehensive and personalized advice while maintaining the human connection with their clients.”
And like any startup, Envestnet had more than an untested technology to navigate. The world, and not just the financial world, also weighed in. The company’s founding overlapped with the tragedy of 9/11 in 2001, which came at the same time as the dot-com bust. Only seven years later, the housing crisis struck, nearly obliterating the entire financial world.
Crager calls those environments “incredibly pessimistic” due to the scarcity of capital and jittery markets. In hindsight, however, he sees those periods as formative, and critical to reinforcing his own belief in the importance of financial advice being delivered when it matters the most.
The company also endured its most devastating tragedy when Jud and Mary Bergman were tragically killed in an accident in 2019, a catastrophe Crager still has difficulty grasping.
The Envestnet team, led by Crager, showed their resilience and determination and kept on with the journey.
“As an entrepreneur and founder, you never rest on your laurels,” said Crager. “However, I am very proud of what we’ve achieved serving $6 trillion in assets and supporting more than a third of all US financial advisors. Envestnet is the one of the largest wealth management platforms in the world.”
Moving from a TAMP, or turnkey asset management program, to a unified advice platform was the “Aha!” moment for Crager because it represented a shift in moving up the value chain toward providing comprehensive, personalized advice that connects clients’ financial lives in a deeply meaningful way. This new approach aligned with the industry’s evolution toward holistic, planning-based advice.
“By connecting people’s daily lives with their long-term goals, we evolved away from the TAMP moniker and established a baseline ecosystem of solutions, actionable intelligence, and technologies,” said Crager.
Crager was also early in seeing the opportunities for quantitative portfolios and direct indexing, beating competitors to the personalization punch. First made available in 2013 to provide clients with a passive strategy that combined tax management and customization, today Envestnet’s QRG Capital Management is one of the largest direct-index separately managed account providers, with almost $11 billion in QP assets as of the first quarter of 2024.
Looking ahead, Crager views the power of intelligent technology and data as game changers “just as the internet was 25 years ago.” As a historical reference, that sounds about right since the world wide wenabled advisors to do more for their clients, engage more effectively, access more services, operate more efficiently, grow faster, and become more valuable.
When it comes specifically to AI, Crager sees it is a tool that will do the same things for the wealth management industry, but not as a replacement for financial advisors.
“AI lacks empathy and an understanding of an investor’s individual needs,” said Crager. “While it can analyze vast amounts of data and suggest actions, it cannot do an advisor’s job. AI can help an advisor scale to deliver more and with greater personalization to their clients, but it cannot provide a human touch – which is so essential because money is such a highly emotional tool.”
As to his own future and his new role at the company outside the CEO seat, Crager said he plans to spend his time “aligning people to the mission, listening, and learning.”
“While the new role might involve different responsibilities, the commitment to advancing the industry and supporting advisors will persist, with no intention of taking it easy. The dedication to striving, seeking, and not yielding remains strong,” Crager said.
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