We spent a lot of time talking to industry leaders at Envestnet's Elevate conference last week. Here are a few of the biggest announcements. More to come.
Envestnet, in collaboration with State Street Global Advisors, announced is expanding access to personalized investing with the launch of Direct Indexing portfolios available on the Envestnet Unified Managed Account (UMA) platform. This offering combines the powerful legacy of index investing from one of the world's leading asset managers with Envestnet's sophisticated technology to deliver customized, tax-aware portfolio solutions at scale.
Direct indexing at Envestnet with State Street Global Advisors offers investors the ability to create truly personalized index portfolios, featuring over 100 points of customization and optional tax overlay services—all within a seamless UMA structure. Clients can now benefit from the institutional experience of State Street Global Advisors, creator of the world's first ETFs and the fourth largest asset manager globally with $4.72 trillion in assets under management.
"Together with State Street Global Advisors, we're redefining access to customized, tax-smart portfolios," said Dana D'Auria, Group President, Envestnet Solutions at Envestnet. "Through direct indexing on our UMA platform, advisors can deliver truly bespoke solutions aligned to each client's goals, values, and tax needs—without sacrificing scale or efficiency."
The new offering includes a suite of actively and passively managed direct indexing strategies with $100,000 account minimums:
- SSGA Global Equity Direct Index Portfolio
- SSGA US Large Cap Quality Direct Index Portfolio
"Historically, direct indexing has been costly and cumbersome to implement, limiting most investors' ability to take advantage of its potential benefits. However, the combination of the desire to personalize portfolios at scale and technological innovation has made it possible to bring direct indexing to investors of all sizes," said Allison Bonds Mazza, Senior Managing Director, Head of Intermediary at State Street Global Advisors. "Together with Envestnet, we aim to make it easier for investors to efficiently and cost-effectively personalize their portfolios via direct indexing. We are proud of what our partnership with Envestnet has produced, and we look forward to even more innovative developments going forward."
These strategies are offered in partnership with QRG Capital Management, Envestnet's in-house investment team and a pioneer in implementing direct indexing within the UMA construct.
With direct indexing, investors hold the individual securities that make up an index, rather than pooled vehicles like ETFs or mutual funds. This structure enables enhanced tax management, such as tax-loss harvesting, along with the flexibility to incorporate personal values or investment preferences. Historically reserved for high-net-worth clients due to complexity and cost, direct indexing is now broadly accessible thanks to advancements in automation, fractional share trading, and zero-commission platforms.
"Direct indexing represents the next chapter in personalized portfolio construction," said Aaron Bauer, Strategic Partnership Head for Envestnet. "By bringing together the scale and innovation of State Street Global Advisors with the integrated technology of the Envestnet platform, we're helping advisors unlock the full potential of tailored, tax-efficient investment solutions."
And on the models side, Envestnet has also gone live with BlackRock custom model portfolios for registered investment advisors (RIAs).
The new offering provides RIAs with streamlined access to BlackRock's custom model capabilities, managed within a single account and powered by Envestnet's UMA technology. In addition to traditional public markets ETFs and mutual funds, these portfolios are expected to include Separately Managed Accounts (SMAs), private markets and other alternative exposures in the near future. Combining BlackRock's portfolio design and risk management experience with Envestnet's industry-leading managed account platform will enable RIAs to seamlessly deliver more personalized, tax-efficient investment strategies that can align with clients' specific goals, risk profiles and preferences.
"This year, as we celebrate a decade of partnership with BlackRock at Elevate, we're excited to offer advisors on our platform access to these innovative custom model solutions that reflect our shared commitment to providing scalable solutions that can help drive better client outcomes," said Dana D'Auria, Group President of Envestnet Solutions and Co-Chief Investment Officer at Envestnet. "By offering BlackRock's custom model portfolios on our platform, we're equipping RIAs with the tools they need to deliver high-quality, customized portfolios with greater efficiency and scale – and without added costs."
Delivering Value to Clients and Advisors
This enhanced offering provides advisors and their clients with access to institutional-quality portfolios, enables more strategic and personalized advisor relationships and financial planning. For RIAs in particular, this solution will help them scale their practices more efficiently, reduce operational risk, and spend more time focusing on client relationships. According to Envestnet's 2022 research, firms allocating over 75% of their practice to model portfolios consistently achieve higher valuations.
"Clients are our north star at BlackRock. The expansion of our long-standing collaboration with Envestnet reflects that commitment," said Jaime Magyera, Co-Head of BlackRock's U.S. Wealth Advisory Business. "By combining BlackRock's investment platform and portfolio construction expertise with Envestnet's UMA technology, we are helping advisors meet the unique needs of their clients in a seamless way, while also making it easier for them to scale their businesses."
This custom model offering expands on ongoing collaboration between Envestnet and BlackRock, through which personalized high-net-worth (HNW) solutions are provided at scale to advisors on the Envestnet platform.
BlackRock is a leading provider of model portfolios, with approximately $300 billion in assets globally. The firm expects managed model portfolios to roughly double in assets over the next four years, growing from $5 trillion today into a $10 trillion business.
