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Asset Management Solutions document sample
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Envestnet Asset Management
A Leader in Wealth Management Solutions
Our Mission
To provide financial advisors with the resources required to
build, implement and monitor investment plans that meet
the unique goals and objectives of their clients, and to deliver
these solutions using leading, Web-based technology.
BUILD IMPLEMENT MONITOR
Fiduciary management & True personalized Flexible reporting and
research portfolios monitoring solutions
Envestnet Company Snapshot
E
Leading provider of unified wealth management solutions
Over $35 Billion in Assets under Management and Administration
Over 200,000 Investor Accounts
Core Capabilities
Investment Management
Technology
Operations and Administration
Advisory Services
Broad Range of Investment Solutions
Separate Accounts (Access to over 150 Asset Managers)
Mutual Fund Portfolios
Alternative Investments
ETFs
Outside Strategists
Advisor Managed Portfolios
Envestnet At-A-Glance
A Broad Range of Fee-Based Investment Solutions
Mutual Multi Separately Advisor as
Fund Manager Managed Portfolio
Advisory Account Accounts Manager
(MMA) (SMA)
Accessible via a SINGLE web-based platform that delivers:
Unified Proposal Generation
Portfolio Analytics
Research
ENVESTNET Flexible Performance Reporting
Workflow
Back-Office Administration
Envestnet
Investment Services
BUILD
Fiduciary Management & Research
SIGMA Investment Solutions
Investment Process
Fiduciary Management & Research
A division of Investment Services by Envestnet, the Fiduciary Management and
Research team (FM&R) offers access to some of the world’s premier asset managers,
provides thorough and rigorous research on managers, markets and topical issues and
develops creative portfolio solutions tailored to the unique circumstances of the advisor’s
client.
Discretionary Strategies:
• SIGMA Mutual Fund Solution™
• SIGMA Multi-Manager Account™
• SIGMA Alternative Solutions™
Customized
Investment
Solutions that
Meet Your
Fiduciary Services:
Clients’ Needs
• Access to Non-Discretionary
Strategies
• Portfolio Consulting
• Due Diligence
SIGMA Fiduciary
Discretionary strategies offered through Fiduciary Management & Research
(FM&R) by Envestnet.
SIGMA Mutual Fund Solution™
Actively managed models comprised of carefully
selected mutual funds.
SIGMA Multi-Manager Account ™
Actively managed models that combine two or
more globally prominent asset managers into a
single portfolio that deliver the benefits of a
traditional separately managed account for as
little as $250,000.
SIGMA Alternative Solution ™
A fully-discretionary portfolio of diversified mutual
funds that are designed to perform independently
of stocks and bonds as a separate and distinct
asset class.
A Range of Investment Solutions
Suitable For Any Investor Managed Account Solution
with Alternative Investments
$2MM +
Managed Account Solution
$1MM - $2MM
Managed Account Solution with Mutual Funds
$500K - $1MM
SIGMA Multi-Manager Account™
$250K - $750K
SIGMA Mutual Fund Solution™ / Alternative Solutions™
$50K - $250K
Advisor Managed Portfolios (Rep as Portfolio Manager)
$50K - $1 Million
50K 500K 1MM 10MM
FM&R Investment Process
Enabling Advisors to Deliver the Investment Consulting Process to Clients
Used with Managed Accounts, Mutual Funds, Multi-Manager
STEP STEP
1
Step 1: Identify goals and objectives
2
STEP STEP Online capability to profile investors to best identify the appropriate investment
4 3 solution
STEP Step 2: Determine asset allocation policy
STEP
1 2
Accounts, and Alternative Investments.
STEP STEP
Asset allocation committee establishes strategic allocations. Committee is
4 3 comprised of leadership of investment management team
STEP STEP
1 2
Step 3: Recommend investment managers and implement strategy
STEP Approved investment solutions are recommended incorporating risk profile of
4
STEP
3 client with consideration to the correlations between the managers
STEP STEP Step 4: Continuous portfolio and manager monitoring
1 2
Active rebalancing is one of the featured services for the Mutual Fund Solution.
STEP STEP Advisor directed rebalancing is offered on the Managed Account solution
3
4
FM&R Asset Allocation
Strategies that span the efficient frontier
Identifying the client’s optimal allocation
Example
Expected Return
10.0
US Small Cap Equity
9.5
Expected Return (%) 9.2 US Mid Cap Equity
Model # 4 Portfolio International Equity
8.9
12.0 8.6
Expected Return = 7.70%
Expected Standard Deviation: 9.77%
Russell 2000 TR 8.3 High Yield Bond
US Large Cap Equity
11.5 8.0
Optimized Portfolio
7.7 Expected Return = 7.61%
Current Portfolio
11.0 7.4
Expected Standard Deviation: 9.60%
Expected Return = 8.15%
MSCI EAFE 7.1
Model # 2 Portfolio
Expected Standard Deviation: 12.14%
10.5 6.8 Expected Return = 6.80%
Expected Standard Deviation: 6.42%
6.5
6.2
10.0 Global Core 7 5.9
5.6
9.5 Global Core 6 5.3 Investment Grade Bonds
5.0
Global Core 5 Russell 1000 TR 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.0 18.0 19.0
9.0 Expected Standard Deviation (Risk)
Global Core 4
8.5
Global Core 3
8.0
7.5 Global Core 2
7.0
Global Core 1 Automated
6.5
Online
6.0
LB Gvt/Credit TR Proposal
5.5 Generator to
5.0 help present
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 19.0 overall Asset
Expected Standard Deviation (%) Allocation
strategy to
Conservative
clients
Aggressive
Research Process At-A-Glance
Manager Universe 5,000 portfolios on database; 15,000 mutual funds
Initial quantitative, qualitative assessments; manager contact
1 Identification Qualify manager
Three types of analysis:
2 Analysis 1) Quantitative - Performance, tax-efficiency, risk profile
2) Fundamental - Style adherence, investment process
3) Qualitative - Annual on-site visit, organizational review
On-site visit
Ongoing
3 Monitoring
Comprehensive quarterly review
Intra-quarter conference calls
150+ managers
Platform 250 portfolios
Benefits of FM&R Manager Selection
Identifying, hiring and monitoring premier asset managers who are entirely
focused in specific areas of the market helps advisors offer confident advice and
deliver consistent performance.
Large Cap Large Cap Large Cap
Conservative
Value Core Growth Growth Negotiate
Sophisticated Onsite Reduced
Concentrated Screening Due Minimums
Growth Tools Diligence and
Mid Cap Mid Cap Mid Cap Fees
Value Core Growth Aggressive
Growth
Operational
Tax
Thorough Links For Ongoing
Efficient Execution
Growth Analysis Monitoring
Small Cap Small Cap Small Cap And
Value Core Growth Reporting
GARP
A Well-Rounded Platform
Large Cap Growth
Strivefor diversification within style
Populate platform with managers Conservative Aggressive
having complementary approaches, Mega-
Goldman Sachs Cap
processes Congress
Alger
NewBridge
Rittenhouse
Aletheia
LCV LCC LCG
Transamerica
MCV MCC MCG Large-
Mid Cap
Understand differences between managers
Employ most appropriate manager for
SCV SCC SCG client’s unique situation
Envestnet Investment
IMPLEMENT
Customization
Proposal Generation
Custom Model Creation
9-Step Online Proposal Generator
THE RESULT: A personalized, professional proposal document to share with your
client.
The Investment Proposal
A comprehensive, client-friendly proposal document that includes:
I. Client’s financial summary
- client information
- risk assessment
- amount to be invested
II. Proposed investment strategy
- proposed portfolio
- products and allocation
- assessment of suitability
- hypothetical growth of investment
III. Product Profiles
- description
- performance summary
- composition of the recommended investments
IV. Appendix
- optional documents that describe
various aspects of investment markets, etc.
Envestnet
MONITOR
Online Access
Research
Reporting Capabilities
Envestnet Benefits
Advisor Benefits
Investor Benefits
Contact Info
The Advisor Advantage
Streamline your business with one
single investment platform
Add value and pay closer attention
to important client relationships
Leverage a team of experienced
professionals to guide you through
every stage of the client
relationship
The Investor Advantage
An investment process built
around the investor’s unique
needs
Access to some of the world’s
leading investment managers,
many of whom were once available
exclusively to large institutional
investors
Ongoing portfolio review
Comprehensive portfolio reporting
The Advisory Services Team
WA
MT
ND
Web Site:
MN
WI ME www.envestnet.com
SD VT
OR ID NH
WY MI NY MA
IA CT
NE
IL OH
PA RI Client Services:
NV IN NJ
UT CO
KS MO KY WV
VA
DE
MD
1.888.612.9300
CA
OK TN NC
AZ NM
AR
AK
MS AL
SC Email:
GA
TX
LA Info@envestnet.com
HI
FL
Western Region Northwestern Region Midwest Region Northeast Region
Phil Nicolaou James Lumberg Mark Gerard William “Kip” Weese
VP, Regional Director Co-Founder & National Sales Manager VP, Regional Director VP, Regional Director
Ph: 925.253.1088 Ph: 312-827-2810 Ph: 414.962.1085 Ph: 978.462.6646
phil.nicolaou@envestnet.com james.lumberg@envestnet.com mark.gerard@envestnet.com william.weese@envestnet.com
Bryan Watson Patrick Forde Josh Glazer Courtney Bayha
Regional Consultant Regional Consultant Regional Consultant Regional Consultant
Ph: 303.824.8151 Ph: 303.824.8165 Ph: 312.827.2824 Ph: 212.642.7420
bryan.watson@envestnet.com patrick.forde@envestnet.com josh.glazer@envestnet.com courtney.bayha@envestnet.com
Mid-Atlantic Region Southeast Region South Central Region
Tim Hanson Ron Lively Ty Sanders
VP, Regional Director VP, Regional Director VP, Regional Director
Ph: 212.642.7422 Ph: 813.758.1449 Ph: 512.842.1589
tim.hanson@envestnet.com ron.lively@envestnet.com ty.sanders@envestnet.com
Aaron Bauer Phillip Schoenecke John DeHart
Regional Consultant Regional Consultant Regional Consultant
Ph: 312.827.3961 Ph: 312.827.7036 Ph: 303.824.8215
aaron.bauer@envestnet.com phillip.schoenecke@envestnet.com john.dehart@envestnet.com
The MANAGED ACCOUNT SOLUTION:
A Customized Approach to Investment Planning
Topics for Discussion
I. Overview of the Managed Account Solution
II. The Managed Account Marketplace
III. Is the Managed Account Solution Right for You?
I. Overview of the Managed Account Solution
The Managed Account Solution
Program Highlights
• Professional asset management from more than 100 institutional asset managers
representing over 200 investment disciplines that are typically only available to large
institutions
• Four-step investment process that will help identify your goals and objectives and
apply the most suitable investment strategy to meet them
• Ongoing due diligence of the managers in your portfolio to ensure consistency
• Comprehensive portfolio reporting
• With a fee-based relationship, you and your advisor share a common goal – to grow
the assets in the portfolio (as the assets increase, everybody wins!)
Managed Accounts 101:
Separately Managed Accounts vs. Mutual Funds
Separately Managed Accounts Mutual Funds
• You own shares in individual securities • You own fund shares, not individual securities
• You have no embedded gains • You’re vulnerable to embedded gains
• You can time capital gains or losses • You have no control over capital gains or
• You can avoid or include certain losses
investments • You have no influence over the fund portfolio
• You always know which investments • You learn twice a year what investments the
are in your account fund owns
Understanding
Managed
Accounts
Investor = Advisor = Investment Manager =
Team Owner Coach Player(s)
• Investor accumulates wealth to • Hired to help “owner” identify • Excel at respective positions
“buy the team” goals • Focused style of “play” (manager
• Goals need to be articulated in • Recruits the right “players” (asset skills are unique to discipline)
order to “win” (retirement, allocation & manager selection) • The right combination of “players”
children’s education, etc.) • Ensures that “players” adhere to leads to improved performance
• Has neither time nor expertise to their positions (due diligence (diversification)
be his own “coach” guarantees consistency) • Each “player” contributes to a
• Provides feedback on how particular position (specific style with
“players” are doing (performance no style drift)
monitoring)
• Replaces players if not fulfilling
role (manager termination if necessary)
The Managed Account Investment Process
Designed to meet the highly disciplined approach that institutional money managers have
used to oversee large endowment and pension funds for decades
Beginning with a detailed outline of your current
financial situation, and a thorough understanding of
your goals, we construct a blueprint of the investment
strategy and define an asset allocation plan. We
implement the plan by selecting and orchestrating
portfolio components managed by selected premier
asset managers who specialize in specific asset
classes and styles. The result is an individual portfolio
created to achieve your investment objectives.
STEP 1:
Understanding Your Goals and Objectives
Perform detailed analysis of current portfolio
Ascertain a complete understanding of objectives and investment horizon
Step One
Determine return objectives
Identify Your Needs and
Objectives
Develop understanding of tax status
Analyze investment attitude and aversion to risk
Our in-depth risk tolerance
questionnaire helps assess
your investment
objectives, time horizon,
income needs and
tolerance for risk.
STEP 2:
Determine Asset Allocation Strategy
After identifying your investment objectives and
time horizon, level of return needed to achieve
Step Two your goals and risk tolerance, we will assign your
Determine Asset Allocation
Strategy portfolio to a reference asset allocation. This
reference allocation takes into consideration two asset
classes, equity and fixed income, and appropriates the
level of each in the portfolio.
The Benefits of Asset Allocation
Changing Leadership
No one can accurately and consistently predict when shifts in market leadership will occur or how long they will last. The
chart above tracks the performance of several asset classes over a ten-year period. As you can see, the market leaders
of one year often become the laggards the next. It is important to spread your assets across classes to benefit from
quick upswings and receive protection in downturns.
Courtesy of Nuveen Investments. Sources: Standard and Poors, Bloomberg Financial Markets, Frank Russell Company. Performance of all cited indices is calculated on a total return
basis and includes dividend reinvestment but does not reflect investment advisor or other fees that would reduce performance in an actual client account. Indices are not available for
direct investment. Past performance is not indicative of future results. It is important to remember that there are risks inherent in any investment and there is no assurance that any asset
class or index will provide positive performance over time.
STEP 3:
Recommend Managers and Implement Strategy
Once we target the appropriate reference portfolio, we
Step Three
develop a multi-asset class portfolio using selected
Recommend Managers and
Implement Strategy premier asset managers. Your portfolio is constructed
to optimize the potential for greater returns while
maintaining the level of risk accepted by the two asset
class portfolio.
STEP 4:
Portfolio and Manager Monitoring
Investment plans will shift and move naturally as the
market moves.
Rebalancing to ensure portfolio continues to adhere to asset
Step Four allocation plan and targets your objectives
Continuous
Portfolio and Manager
Monitoring Rigorous analysis of asset managers to ensure consistency
and relevance. Ongoing due diligence of manager provides
consistency and assurance
How Do We Select Asset Managers?
Continuous due diligence process ensures the quality of managers selected for your portfolio
Premier
Institutional money managers Asset
selected for the program Managers
Qualitative
Onsite due diligence meetings are Analysis
conducted On-site due diligence
meetings. Investment
discussion and approval
Performance and risk attribution Fundamental Analysis
analysis narrows the list further A thorough analysis of performance
and risk attribution is performed
Screened Managers
An initial screen is conducted for:
Certain managers make the • Style consistency
cut and others don’t • Rate of return
• Information ratio
• Downside risk
Over 5,000 managers
screened Universe of Asset Managers
Comprehensive Portfolio Reporting
• Quarterly account statements provide you with a detailed snapshot of how your portfolio
is performing and how well you are meeting your investment objectives
Your statement provides both an aggregate
view of the total assets in your account as
well detail on how each asset manager in
your portfolio is performing.
Reviewing quarterly statements with your financial advisor is important to help you evaluate your entire portfolio. Since the
last time your allocations were made, your life may have changed in ways that affect your investment goals, or developments in
the financial markets may have changed your attitude towards risk.
Benefits of the Managed Account Solution
• You own shares in individual securities, allowing for better customization of your
portfolio
• You do not incur unrealized gains as the cost basis of each security is established at
the time of purchase
• You can choose to restrict or include certain investments
• You can better manage for taxes by instructing the manager to take gains or losses as
available
You have access to some of the world’s leading investment managers, many of
whom were once available exclusively to large institutional investors
• You’ll know exactly what you own in your portfolio and how your investments are
performing with our comprehensive portfolio reporting capabilities
II. The Managed Account Marketplace
The Evolution of Managed Accounts
Benefits Have Increased While Price Has Decreased
Acct. min.: $5 million+
Access: Wealthy investors go directly to asset managers Acct. min.: $50,000 - 100,000
Acct Info: Investors receive quarterly statements via mail Access: Through brokers and financial advisors (RIAs)
from manager Acct Info: Ongoing access for investors and advisors
through online platforms
Prior to Early Today
1990 1990’s
Acct. min.: $100,000+
Access: Through brokers (from firms w. established
institutional businesses)
Acct Info: Quarterly statements pass through broker
before being sent to investors
The Demand For Managed Accounts Continues to Grow as
Investors Seek Customized Investment Solutions
Cerulli Managed Account Growth Projections
Separate Account Consultant Programs Rep-as-Portfolio Manager
Mutual Fund Advisory Fee-Based Brokerage
$2,000
$1,852
$1,800
$1,612
$1,600
$1,400 $1,391
$1,190
$ billions
$1,200
$987
$1,000
$794
$055 $742
$800
$612
$600
$405
$400 $299
$200
1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E 2007E
Source: Cerulli Associates, January 2006
III. Is the Managed Account Solution Right for You?
Profile of a Managed Account Client
Managed accounts are ideal for investors seeking a long-term,
customized, goals-driven approach to investment planning
You have $300,000 or more to invest
You feel you’ll benefit from professional investment management
You’ve recently inherited a substantial sum, sold your interest in a business, or
won a financial settlement
You have retirement assets you’re ready to roll over
What is Included in the Fee?
Your annual fee covers:
Consultations with your financial advisor
Access to some of the world’s leading institutional investment managers
A strategic asset allocation model that reflects your goals
Ongoing manager due diligence
Comprehensive quarterly statements
Tax selling at year-end for taxable accounts (as directed by your advisor)
Portfolio management and rebalancing
Custody services
Commission-free transactions (thru investment managers)
Summary of Client Benefits
The Managed Account Solution offers customization, transparency and
tax efficiency
Greater portfolio control
Ability to manage for taxes
Insight into the holdings of the portfolio
Accessibility to money manager
Confidence in investment decisions
Goal alignment
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