Envestnet adds cryptocurrencies to Tamarac

Envestnet brings cryptocurrencies to its registered investment advisor technology.

The asset management and fintech giant has new integrations with Flourish Crypto and Gemini Bitria, two companies focused on giving RIAs access to crypto markets, bringing digital asset data into Envestnet Tamarac.

More than 3,100 RIA firms managing a combined $1.3 trillion in assets use Tamarac for portfolio management, reporting and billing, according to the company’s website. The integrations pull custody data on cryptocurrencies directly into Tamarac so advisors can view the investments, add them to reports and bill them just like any other asset class.

Helping advisors gain access to cryptocurrencies is one of the two pillars of Envestnet’s digital asset strategy, said Dani Fava, Envestnet’s CEO of Production Innovation. While Flourish Crypto focuses on bitcoin and Ethereum, the two largest cryptocurrencies, Gemini Bitria offers a menu of more exotic digital coins.

“We wanted to make sure we created more of a marketplace for access,” Fava said.

Ultimately, it is up to advisors to decide whether they believe crypto is an appropriate investment recommendation, she said. But if clients demand it, advisors should be equipped with the necessary information to serve them.

“In order for us … to have the fullest ecosystem, we need to enable the advisor to have access to what they think is right for the clients,” Fava said. “Advisors want to manage the client as a whole [financial] life. If you look at the adoption we’ve had as a society, [crypto] is an asset class you cannot ignore.”

Therefore, the second pillar of Envestnet’s strategy is around education, she added. To that end, Envestnet is launching a cryptocurrency education platform in partnership with Anthony Pompliano, author of The Pomp Letter, a popular newsletter covering bitcoin.

“Pomp has created a crypo education program that we believe is a good fit for what our advisors are looking for,” Fava said. “Not just a certification on the foundations and fundamentals of cryptocurrency and blockchain, it’s ongoing and dynamic, live content on what’s happening in the crypto space.”

Envestnet’s push into cryptocurrencies comes at a difficult time for the asset class. After months of volatility, retail investors seem to be losing enthusiasm for crypto. Bitcoin and Ethereum have fallen around 70% from their 2021 highs, some high-profile crypto companies have gone bankrupt leaving investors holding the bag, and the Securities and Exchange Commission has begun cracking down on celebrities like Kim Kardashian for listing assets disclosing their compensation.

Fava declined to comment.

While a contingent of advisers have taken the so-called “crypto winter” as validation for their decision to stay away from digital assets, others are using the downturn as an opportunity to learn more about it, said Ben Cruikshank, president of Flourish, which is owned by MassMutual.

“Advisors are still receiving client questions about crypto,” Cruikshank said. “Not as many as 12 months ago then [crypto] was in the Wall Street Journal every day, but they still receive questions.”

Far more clients had invested in digital assets than many advisers realised, and many of them are now looking for help with some of the losses they’ve taken, he added. A quarter of all Americans and 91% of high-net-worth individuals younger than 40 have invested in digital assets, Cruikshank said.

There is also a contingent of advisers who strongly believe the assets will return, and partnerships with companies such as Envestnet are facilitating to take advantage of the next big rally, he added.

“If you think there’s a chance this asset class can come roaring back, then today was a far better time to invest than it was 12 months ago,” Cruikshank said.

A survey of 200 professional investors in seven countries by Nickel Digital Asset Management, a London-based digital asset hedge fund manager, found that two out of three believe the crypto winter is either over or less than six months away. A fifth believe cryptocurrency valuations will begin to rise in the next six months.

Conversations with the financial institutions Envestnet serves reveal that many are also doubling down on investing in the technology aspect of digital assets, such as digitizing investment products with the blockchain to reduce overhead and costs, Fava said.

“I don’t know how institutions look at asset allocation, but I can tell you from a technology perspective that there is a growing interest and a lot of intellectual power in how to leverage [digital assets],” she said.

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