Envestnet announces credit exchange and lenders

On Monday, Envestnet publicly revealed that its lending portal, Envestnet Credit Exchange, was up and running, while simultaneously naming the top four lenders on the platform. It was a quieter launch compared to some of the company’s other deployments, in part because the November ribbon cut for wide market availability was not made public. To manage the portal, Envestnet works with Advisor Credit Exchange (ACE), a company that connects wealth managers and lenders, and the duo provide the solution to advisors interested in offering credit options, or even pre-qualified loans, to their customers.

Although publicly discussed as early as last April, the company officially revealed that the top four secured and unsecured finance lenders are TD Bank, LightStream (a division of SunTrust), Nationwide (in partnership with Supernova Lending LLC) and First Citizens Bank, with Nationwide also has a place on the Investnet Insurance Exchange. Envestnet begins its search for a second round of lenders this quarter. Starting at a minimum of $ 10,000, loans are available up to amounts of $ 25 million and more, according to the announcement.

Envestnet does not release official figures characterizing the volume of loans or the number of advisors who have used or interacted with the feature, but John Yackel, who heads both the Insurance and Credit Exchange as head of strategic initiatives at Envestnet, and Peter Stanton, CEO of ACE, characterized the launch as a career turning point.

“It feels like it’s going to be one of the biggest things in the business,” said Stanton, who has more than 30 years of service in finance, including with Merrill Lynch, UBS and Goldman Sachs. Investnet’s vast understanding of the industry, with more than 100,000 advisors and more than 500 RIAs using the company’s technology and services, according to the company, means the platform’s top four lenders are releasing their products. in front of a large number of advisers. .

Not to mention that loans are generally easier to understand for advisors and end clients than insurance, Stanton said. “I don’t think there is any counselor there …[who] does not recognize that being able to provide a loan, being able to lend, is not a valuable tool, ”he added.

Indeed, the Investnet Advisor Summit has generated a lot of interest in details on the feature, tempered by advisers’ concerns that lenders on the platform may not deliver the perfect formula for advisors and their clients. Envestnet was hypersensitive to these concerns, Yackel said. Feedback even before the portal launched indicated that advisors wanted lenders to be creative, flexible, have a variety of loan choices, and be transparent about the credit they offer.

As a middleman, Envestnet has a fine line to walk: it needs to keep advisers happy, while not over-saturating its platform with a particular type of loan, Yackel added. Meanwhile, the company leverages the data available to it through its relationships with custodians and other financial services companies, accessible with permission from advisers and end clients, to facilitate the prequalification of certain loans. While the technology developed by ACE does part of the analysis, the final decision of who is prequalified or not rests with the lenders, who all have their own standards.

For those who are denied a loan or just have questions, there are loan specialists specially trained to work with counselors, Stanton said. “It’s not just the technology,” he said. “When we think of [technology and human resources] together, this makes the process more efficient and the success rates higher. But there will always be these exceptions on the periphery and we have the resources to deal with them. “

Since its limited launch at the Envestnet Alliance meeting on October 29 – and its general market launch a week later – the “majority” of loans made have been “traditional equity-backed loans,” said Yackel. Unsecured loans, for projects like home improvement, have also proven popular. “Advisors very quickly understood how to use unsecured loans for financial planning,” he said.

Advisors are also using the new feature as a selling point when recruiting new advisors. “We are currently working with key strategic partners who are using this as a recruiting effort in some of the large offices around the corner that they, as a RIA company, have not been able to compete with and get these advisors to move. you, ”Yackel said. Envestnet is also evaluating the business-to-business financing offering, for advisors interested in buying out other advisory practices. On the loan side, there are already companies interested in providing these types of loans, he said.

Yackel led the development of the Investnet Insurance Exchange and Credit Exchange which continued throughout 2019. The insurance side, he said, has “a much larger list of products available” and different requirements. licensing, which requires more support from advisers. In comparison, the credit side has a lower barrier to entry, from an education and licensing perspective, and “significantly faster” speed to market and faster adoption by advisors.

Overall, both solutions intentionally leverage technology, as well as the broad reach of Investnet, to bring new products to advisors. “It’s not something we just dabble in,” Yackel said.

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