Envestnet, the wealth management software giant used by 6,500 firms and 108,000 financial advisors managing more than $5.5 trillion in assets, announced last week that it acquired the retirement plan marketplace 401kplans.com. The deal, Envestnet said, underscores the company’s commitment to the multitrillion dollar retirement plan industry.
Terms of the deal were not disclosed. Scott Buffington, who founded 401kplans.com in 2016, will join Envestnet and become its head of retirement sales. He will report to Sean Murray, the head of retirement at Envestnet, who joined the company in November 2021.
The marketplace, used by more than 28,000 financial advisors to solicit plan proposals from more than 20 providers, will be a core part of Envestnet's retirement services strategy. The software company says it plans to become a major distribution channel for recordkeepers and investment managers.
“Advisors have been cut out of the retirement opportunity, just because of the way that the business has been run over the last 15 or 20 years, and 401kplans.com really has changed that landscape by creating more of a marketplace for advisors to engage and make it easier for them to help their clients,” Andrew Stavaridis, chief relationship officer at Envestnet said. “Everybody needs a retirement account and there's an underserved market and we're helping with that connection.”
When business owners want to offer retirement plans to their employees, they often seek out a plan advisor; a professional separate from their private wealth manager (although many wealth management firms specialize in both). Using 401kplans.com, any advisor can provide this service to their clients, Murray told RIA Intel.
“It makes it extremely easy for any advisor to — not necessarily become a retirement plan expert — but have the ability to offer the same services as a retirement planning expert would through this portal,” Murray said.
The marketplace has instant pricing from most of the major 401(k) providers, helps advisor evaluate investment options, and enables advisors to compare plans from up to five recordkeepers at a time (it integrates with a total of 36 plan recordkeepers). The platform automatically documents the due diligence process and claims it can save advisors more than 10 hours of work collecting all the information on their own.
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The marketplace “really can help all those advisors democratize the space and help them maintain that business directly within their practice,” Murray said.
Envestnet has not decided what the new service will cost, according to Stavaridis. It currently doesn’t coast advisors anything to use 401kplans.com.
Envestnet currently manages asset data for more than 200,000 retirement plans and will integrate data from 401kplans.com, Murray said.
“With this acquisition, you will have the ability to instantaneously shop those plans with real time information [from Envestnet’s data aggregation],” Murray said. “You're going to know how many participants are in your plan, what the investments are, what the costs are, what the annual contribution rates are, all of that as part of our data aggregation.”
Envestnet is also a 3(38) or 3(21) investment manager to some plans, meaning it acts as a third-party fiduciary to manage the retirement investments on behalf of the provider. All retirement plans in the U.S. are required to have a named investment fiduciary and some wealth management firms require their advisors to outsource that responsibility.
Envestnet hopes to combine their outsourced fiduciary offerings with 401kplans.com’s distribution offerings for both old and new customers, Stavaridis said.
Envestnet has more than 108,000 advisors who use the company’s services and plans to eventual bring 401kplans.com to all of them.
“We want to bring this to everybody, so we're going to talk to all of our enterprises,” Stavaridis said.
Envestnet said on Tuesday that it had reorganized its services into three lines of business: Envestnet Solutions, Envestnet Data and Analytics, and Envestnet WealthTech "to accelerate the growth of the Envestnet financial wellness ecosystem."
Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.