Differentiation and Survival


We’re often called on by our investment advisory clients to help them select the TAMP best suited to improve their operational efficiency and grow their businesses. These search and due diligence exercises invariably included two names, FolioDynamix and Envestnet. For firms primarily focused on model management in an open architecture format, these two have been the dominant players for the last several years and have each grown to offer among the most comprehensive and advisor friendly service packages.

The challenge for the market and for these players was not their adequacy as capable platforms. Each had minor advantages and disadvantages relative to the other, but overall either were adequate in serving the needs of their target markets. Rather, the challenge was their inability to clearly differentiate themselves from each other or to effectively increase their penetration of the other’s core market. While Envestnet had greater scale by some measures, there was no clear leader in technology, service breadth or pricing.

Now the competitive battle is over. Envestnet has purchased FolioDynamix, marking a significant consolidation in the TAMP marketplace. TAMP clients and prospects are not likely to be negatively impacted. FolioDynamix clients will be able to avail themselves of the added services of Envestnet, including potentially easier transition for brokers to fee-based advisors. Envestnet clients should see little change. New TAMP clients will have one higher quality provider rather than two similar ones from which to select. Differentiation is a key to survival. Without a clear and distinctive value proposition, scale will typically win.