The other day I wrote about hot fintech stocks that you should look into. After writing that post, I came across another fintech stock, one that could be even better than the ones I previously wrote about. The stock is Envestnet and if you never heard of them, sit back and grab a cup of coffee. You are going to be amazed at this stock and its future prospects.
Who is Envestnet?
Envestnet (NYSE: ENV) is a cloud based wealth management software company. In a nutshell, they help financial advisors do their jobs more efficiently. Now, the big players out there, like Morgan Stanley and Edward Jones have their own proprietary wealth management software. But most registered investment advisors don’t.
They need to spend time and money in researching and buying the products they need in order to be successful.
As a result, Envestnet has created a one-stop-shop wealth management software package for registered investment advisors. Their software package includes:
- Financial planning
- Investment research
- Performance reports
- Customer relationship management software (CRM)
By bundling these together, it saves the advisors time and money so they can focus on their clients and growing the business.
As it stands now, Envestnet has over 50,000 advisors using their software and those advisors have over $1.2 trillion assets under management.
Where Envestnet Is Headed
The future is blindingly bright for this company. From their own estimates, Envestnet believes they will reach over 250,000 advisors and have over $12 trillion in assets under management.
The company also expects long term organic revenue growth of 15%. While they don’t place a number on profit margin, investors can expect this number to grow even faster. This is because the cost to add new advisors is minimal so each future dollar the company earns is worth more.
Wall Street analysts also agree on the future of this company. They expect Envestnet to have earnings per share growth of 20% annually for the next 5 years.
Fueling some of this growth in addition to new advisors is Envestnet strategically buying best of breed rivals. Earlier the company bought Yodlee and last month they bought FolioDynamix. By doing this, Envestnet is cementing its place as the company for registered investment advisors.
Is All This Hype Or Is This Stock Real?
After reading nothing but good news and bright future forecasts, it could be easy to think this is all hype. But I believe in Envestnet, mainly because I worked for a registered investment advisor and know how challenging things are.
We were a team of 7 and were constantly held back from helping clients because of our technologies and software. For example, we were using trading software but were manually rebalancing. We wanted to automate this, but many of the solutions out there didn’t integrate with our trading software.
Then, our CRM system was outdated. Again, we researched many options but found the ones we liked did not integrate with our other pieces of software.
It was like we were mice in the spinning wheel, working hard but getting nowhere.
If we would have had the option of Envestnet, we would have jumped on it. Having all of these pieces of software not only talking to and working with each other, but also one point of contact should issues or questions arise is priceless to the registered investment advisor.
Having one seamless system allows for more time building strong relationships with clients and helping them reach their financial goals.
Envestnet is a company who I would consider investing in. They have a great management team and strategy and have such a head start and iron grip on the industry that I can’t see them becoming a laggard.
While the stock price does look pricey, you have to remember the potential future growth of the company, which is why many investors are OK with the stock price where it is today.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.