BlackRock buys a minority stake in Evestnet

BlackRock CEO Larry
Fink.
AP

• BlackRock is trying to get more of its products in
  front of financial advisors through a new deal.
• The asset manager is buying a minority stake in
  financial technology company Envestnet company, which is used
  by more than 90,000 advisors.
• The deal is the latest in BlackRock’s push to buy and
  build advisor-specific tools. 

BlackRock, already the world’s largest asset manager, wants to
distribute its retail products even more broadly. 

To get in front of more financial advisors, the New York-based
firm is buying a 4.9% stake in financial technology firm
Envestnet for $123 million, according to a Tuesday
announcement. 

About 92,000 financial advisers use Envestnet’s wealth management
platforms, which include portfolio management, reporting and
other capabilities. There are about 300,000 financial advisers in
the US.

The deal comes as financial advisors move away from stock and
bond picking, in favor of model portfolios built and managed by
third parties.

“As wealth managers shift to fee-based advisory
relationships, they are asking for new technologies to help them
scale their business and build better portfolios,” said Venu
Krishnamurthy, BlackRock’s global head of digital wealth, in
Tuesday’s statement. 

Read more:
BlackRock is banking on a business that could reach $12 trillion
in the next five years, according to its
CEO

The deal deepens an existing relationship between the firms.
Envestnet already offers BlackRock’s iRetire, a retirement
planning technology. In the future, Envestnet will also include
robo-adviser FutureAdvisor, a platform that BlackRock purchased
in 2015, and BlackRock Advisor Center, a resource platform for
financial advisers. 

Envestnet does not have any similar relationships with other
asset managers, a spokeswoman said. BlackRock, meanwhile, has
worked to both buy and build technology platforms. In 2016, the
firm said it would lead a funding round for iCapital Network,
which offers access to alternative investments to financial
advisors. 

In March, BlackRock combined various internal platforms,
including FutureAdvisor and iRetire, under its Digital Wealth
arm. The firm named Krishnamurthy, formerly the president of Citi
Wealth Management, as global head of the business. 

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