Envestnet acquires MoneyGuide for $500 million

Deal will allow Envestnet to deepen integrations between MoneyGuide and its other wealth management solutions

Mar 14, 2019 @ 4:32 pm

By Ryan W. Neal

Envestnet is acquiring PIEtech, the technology company behind the MoneyGuide financial planning software, for a reported $500 million.

The deal consists of $295 million in cash and 3.185 million shares of Envestnet common stock.

Envestnet CEO Jud Bergman called MoneyGuide "the premier goals-based financial planning engine" and said it will play a central role in the company's vision of providing software for both wealth management and financial wellness.

At the T3 conference in February, the two companies announced a partnership to develop and distribute an advanced estate planning technology with Apprise Labs, a new company established by former eMoney executive Edmond Walters.

At the time, the companies denied acquisition rumors. Mr. Bergman said that he's been interested in doing something with MoneyGuide for years, but that PIEtech was not interested in selling.

"Over a period of time recently, MoneyGuide concluded that they may be valuable as part of a platform ecosystem," Mr. Bergman said, adding that PIEtech eventually decided Envestnet would be the best fit for its existing customer base and a good steward for the future of the MoneyGuide suite of products.

MoneyGuide isn't the first financial planning software Envestnet has purchased. In 2015, the company acquired Finance Logix for $30 million.

When asked whether Envestnet had struggled to get traction with the Logix platform, Mr. Bergman said the program is "deeply integrated into our core platform" and many advisers utilize the technology without even being aware of it.

He envisions MoneyGuide serving the needs of certified financial planners, while Logix will continue playing a role for non-planners, such as running cash-flow simulations. At the other end of the spectrum, the partnership with Apprise will focus on the sophisticated planning needs of ultra-high-net-worth customers, such as advanced estate planning.

(More: MoneyGuide launches two new financial planning products)

The acquisition will help Envestnet deepen integrations between MoneyGuide and its other wealth management solutions, such as Tamarac or Envestnet's new Insurance Exchange. Over time, Mr. Bergman believes this will improve adviser productivity as technology shows advisers how products like annuities make sense for an investor's goals.

Joel Bruckenstein, producer of the T3 conference, said Envestnet will give MoneyGuide more meaningful account aggregation, while the data and artificial intelligence capabilities of Envestnet Yodlee can improve automation and take the product to the next level.

Michael Kitces, publisher of adviser fintech blog Nerd's Eye View, said the deal makes "a ton of sense" for Envestnet.

"[MoneyGuidePro] has a massive client base, including huge overlap with Envestnet's own broker-dealer enterprises," Mr. Kitces said on Twitter. "It lets Envestnet expand market share and wallet share where it already is."

According to a statement, "tens of thousands of financial advisors" use MoneyGuide across institutional and independent firms, and more than 2 million financial plans were created by MoneyGuide products over the past 12 months.

However, acquisitions of independent technology companies don't always go over smoothly with advisers using the solutions. Envestnet Tamarac recently made waves by acquiring PortfolioCenter, raising concerns among smaller advisers about changes in service and pricing.

(More: Fintech competitors seek opportunity in Envestnet Tamarac acquisition of Schwab PortfolioCenter)

Mr. Bergman said MoneyGuide users have nothing to fear.

"Current users are going to have a firm that increases the amount of investment into the product or the offering over time," he said. "The current base of MoneyGuide users are going to have more resources around goals-based financial planning."

The deal sets up a battle between Envestnet and Fidelity, Mr. Kitces said. Though Fidelity's eMoney has steadily grown in recent years, especially among large financial institutions, Envestnet could help solve for some of MoneyGuide's weaknesses, such as a full-scale portfolio management tool and client portal.

"With Envestnet's Yodlee, that problem is now eminently solvable," Mr. Kitces said. "Bottom line: The MGP acquisition is a real coup for Envestnet, and when coupled with Yodlee, is a profound shift in Envestnet's focus from its investment/SMA roots into a full-scale adviser tech platform with a financial planning focus."

Envestnet announced its acquisition of PIEtech on March 14, popularly known as Pi Day. A spokesperson for the company said that although this was just a coincidence, pie was served in the offices to celebrate the occasion.

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