Technology

INTERVIEW: Envestnet On Bringing Down The Costs Of Pooled Investments For Family Offices

Harriet Davies, Editor - Family Wealth Report, 26 October 2012

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James Lumberg, co-founder and managing director Envestnet, outlines his firm's plans to grow its partnership accounting business, after having integrated the software in its wealth management platform three years ago.

Envestnet is looking to grow its partnership accounting business, after having integrated the software in its wealth management platform three years ago.

There was a “lightbulb moment” for Envestnet in deciding to do this, said James Lumberg, co-founder and managing director of the firm, when one of its large single family office clients approached it with a particular request.

“We have one large family office in particular that said ‘we’re spending tremendous amounts of money on partnership accounting, can you automate the accounting on your platform?’,” says Lumberg.

This client requested to work with Envestnet, and invest along with the firm, to build the partnership accounting system and run it in parallel with its existing systems to prove over a couple of years that the calculations were accurate. Three years down the line and, as a result of this request, two family office clients and a foundation are now using the integrated partnership accounting system. But Envestnet is looking to widen this use.

“Not yet widely used”

Lumberg says this approach is not yet widely used in the industry, despite the popularity of pooled investments among family offices. For example, according to research from Cerulli Associates, offering pooled investments is one of the ways multi-family offices can create a differentiating factor from most RIA firms. Meanwhile, for single family offices, pooled investments can create operating efficiencies and buying power.

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