Jud Bergman at a previous Envestnet Advisor Summit.
Kicking off the Envestnet Advisor Summit 2018, Envestnet Chairman and CEO Jud Bergman equated the development of the food industry in the United States to how the RIA business is evolving through innovation and creativity into a financial wellness business, in which the role of the advisor will expand.
"What lessons can we can take from the development of food, diet and nutrition?" Bergman asked a packed room in New Orleans. "What does that have to do with what I do? Life-changing improvements. It parallels advisors. With advisors, the push and pull of changes, and regulatory environment … the rapid innovation in food and diet over past 100 years is what is happening in [the advisory business]."
He pointed to five broad trends in changes in food and wealth management:
- Everything is connected. What happens in one part of the industry affects the others, and there is a constant interplay of technology and regulation.
- No brakes exist to slow the development of technology. Once something hits critical mass, it accelerates, which means you need to anticipate changes, not react to them.
- Data transformed into intelligence is a game changer.
- Entrepreneurs and innovators will step up to the plate. Disruptive technology is only the start; it's the entrepreneurs and innovators will make change productive and valuable.
- Peoples' lives get better. When you're talking about something as fundamental as food and money, it ultimately comes down to improving lives.
With these lessons, he went on to discuss the transformation in wealth management.
"The good news is over the next three years, we expect global retail assets to increase by as much as $38 billion, and nearly half of those assets will come from high-net-worth individuals. However, as I mentioned, investors are increasingly in the driver's seat and the shift of power is accelerating based on technological change and putting more power in the hands of the investor," Bergman told the audience of RIAs. "At the same time, clients want advice that's more realistic and helps them achieve their financial wellness. They expect smart tools that guide them, and they expect seamless integration that allows them to view their complete financial picture."
Envestnet also expects industry margins to continue to be squeezed and that, as the industry consolidates, there will fewer firms and advisors handling more assets. But by becoming more efficient, they will be more profitable, Bergman said. The firm also expects rules- and index-based management to accelerate with active management and alternatives delivering the alpha. Investors will continue to want ESG and impact investment solutions as well as strategic beta and will get that in the form of ETFs, Bergman said.
"Firms that thrive in this environment provide advice-centric and data-centric wealth management," he said.
