Originally published by InvestmentNews
Judson Bergman was already an accomplished leader in the asset management industry in 1999 when he first pitched the idea for what would become Envestnet, arguably today’s largest and most successful technology company in the financial advice industry.
As the head of mutual funds at Nuveen Investments, Mr. Bergman realized there was a growing demographic of financial advisers leaving investment banks to launch independent registered investment advisers. These advisers would need a new technology platform that integrated services and capabilities they got previously from a wirehouse.
Nuveen passed on the idea, fearing it would threaten the company’s existing relationship with those wirehouses, but Mr. Bergman recruited a small group of colleagues to build and launch Envestnet as an independent company.
“Twenty years ago, I was there at the good, the bad and the ugly origins, trying to make it work. That was kind of the early sense of ‘this could be interesting,’” Mr. Bergman said in an InvestmentNews video interview weeks before his death.
Mr. Bergman, 62, died Oct. 3, 2019, with his wife, Mary Miller-Bergman, in a car accident in San Francisco. His enormous influence and impact on the industry will never be forgotten.
Transforming an industry
Today, Envestnet is the market leader among turnkey asset management providers with a 38.9% market share, according to Cerulli Associates. Envestnet has 4,700 companies, counts 100,000 financial advisers on its platform and serves more than $3.4 trillion in total platform assets. Beyond the numbers, the Envestnet platform has made it easier for thousands of advisers to launch their own firms, fueling a trend toward independence that has fundamentally transformed the industry.
In 1999, however, the idea of a web-based wealth management platform was still too futuristic for many. Outsourcing was rare among financial advisers, and few would trust technology to handle portfolio construction or rebalancing.
Even early adopters would struggle to understand. When Mr. Bergman was recognized as an InvestmentNews Innovator in 2016, he recalled having to teach companies how online software was hosted and didn’t need to be installed.
Others in the business just couldn’t believe he would leave his successful career in asset management to launch a technology company for advisers.
“I knew Jud when he first started Envestnet in 1999, and I thought he was crazy,” Ron Carson, CEO and founder of the Carson Group, said on Twitter the day after Mr. Bergman’s death. “It turns out he was just a visionary well ahead of his time.”
The Envestnet concept took years to catch on. After launching, the company immediately faced headwinds, starting with the bursting dot-com bubble. Then, just days after Mr. Bergman acquired Portfolio Management Consultants, terrorists attacked New York on Sept. 11, 2001. Later, as the company prepared to go public, the recession hit and delayed the initial public offering until 2010.
“I was meshuggener [crazy],” Mr. Bergman said in 2016. “At some point the business runs you — and not the other way around. You have to have the courage of your convictions.”
A history buff, Mr. Bergman would often tell his staff about Hernán Cortés, the Spanish explorer who burned his fleet after arriving in Vera Cruz, to make the point that there was no turning back.
The years following the global financial crisis turned out to benefit outsourcing providers like Envestnet. The consolidation of wealth managers and their service providers, increasing competition from technology start-ups, attrition in the ranks of financial advisers, recruitment challenges, and significant regulatory changes and costs all helped turn outsourcing into a necessity — and Mr. Bergman had Envestnet positioned to take advantage.
When company executives finally rang the opening bell at the New York Stock Exchange on July 28, 2010, to celebrate Envestnet’s initial public offering, Mr. Bergman beamed; the company was a financial success. Today, Envestnet has a market capitalization of $3.7 billion. It also gave Mr. Bergman the resources needed to complete his vision of a comprehensive wealth management platform.
“He knew we now had the ability to go out and get the rest of it, go invest in the things he saw as the future,” said Bill Crager, Envestnet co-founder and interim chief executive.
Mr. Crager isn’t alone in recognizing Mr. Bergman’s clairvoyant intelligence, warmth and inspirational leadership.
“Having a clear perspective about the future, the courage to confront the adversity that comes with all change, and then successfully navigating the business through that evolution is the difference between being a visionary and a dreamer,” said Joe Duran, founder of United Capital.
In his final video interview with InvestmentNews, Mr. Bergman was excited about where Envestnet was going and recognized that it would endure beyond his leadership.
“Sometimes I take comfort in remembering that Moses saw the promised land, but he didn’t go in. I have nothing but excitement and enthusiasm for the future of wealth management and the future of Envestnet.”
— Ryan W. Neal