However, the firm made a net loss of $0.7 million for the quarter, compared to net income of $2.4 million for the same quarter last year, due to acquisition-related expenses, the firm said.

Cost of revenues increased 24 per cent to $13.5 million in Q2, as additional costs from Tamarac set in and assets under management or advisement were higher overall.

The firm completed its acquisition of Tamarac, a provider of portfolio management technology for RIAs, in May this year, with the aim of combining the firms’ technology, products and back-office. Envestnet also acquired Denver, CO-based Prima Capital this year to boost its research services for advisors. Jud Bergman, chairman and chief executive of Envestnet, said both integrations were “on schedule.”

Compensation and benefits rose sharply, by 36 per cent year-over-year, as higher personnel costs from the acquisitions took effect. General and administration expenses shot up 55 per cent to $8.2 million, mainly due to transaction costs from the acquisitions and ongoing expense from the acquired companies.

Other key performance metrics at the firm included assets under management or administration of $87.3 billion, up 23 per cent from June 30, 2011, as the number of accounts (AuM/A only) rose by 25 per cent to 416,017. Advisors served (AuM/A) stood at 15,045. Gross sales of assets under management/administration were $13.1 billion, resulting in net flows of $8.5 billion.  

“During the second quarter we achieved record levels of gross sales and net flows, and conversion activity continued at a high level, reflecting growing support from fee-based advisors,” said Bergman.