Investment Product and Service Launches

Envestnet enhances platform; NFP launches HR+; Betterment introduces Bitcoin/Ethereum portfolio.

Envestnet Enhances Platform

Envestnet Inc., which develops and distributes wealth management technology to financial advisers and institutions, rolled out a series of enhancements to increase adviser efficiency. Some of the key enhancements include:

  • Proposal: Security search enhancements within mutual account creation. Extension of holding-level funding to ensure accurate reflection in the “Current Investments to Retain” and “Current Investments to Liquidate” proposal documents.
  • Trading: Generic orders for fixed-income securities, fulfilled by entering external trade details. Trade simulations to give advisors greater visibility into possible outcomes and enable better trading decisions.
  • Client Portal: Branch-level enablement, with templates configured at the enterprise, firm and branch levels. Better account navigation to strengthen the digital access experience for linked and closed accounts.
  • Insights Engine: The Insights Engine, part of the Envestnet wealth data platform, offers more than 100 different types of data-driven insights for advisers, is curated daily and immediately calls out any significant deviations for advisers.

“Through the continual enhancements to our integrated Envestnet ecosystem, advisers can improve their productivity, unlock new revenue streams, and be able to deliver more personalized investment solutions at scale, all while elevating the client experience for better outcomes,” Tom Sipp, executive vice president of business lines at Envestnet, said in a statement.   

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

NFP Launches HR+   

NFP, the employee benefits aggregator and wealth manager, announced the launch of HR+, a packaged human resources solution. The offering provides HR support, scalable services and flexible contract terms for high-growth companies.

HR+ supports businesses experiencing rapid growth that need access to a wider set of human capital capabilities. The solution also serves growing businesses not large enough to support an internal HR team or rely on employment lawyers to resolve their people issues.

“We have seen a huge increase in demand from businesses frustrated by their current HR solution because of a lack of support when issues arise or being locked into a long-term contract that fails to accommodate needs as the business grows,” Steve Foulger, director of HR services and organizational change at NFP, said in a statement. “We’ve built HR+ to empower organizations to overcome frustrations that stand in the way of their progress.”

In addition, HR+ provides clients with regular HR and employment law updates to support compliance with employment regulations. As an addendum to HR+, employers can access extra legal protection with legal expenses insurance.

Betterment Introduces Bitcoin/Ethereum Portfolio

Betterment, the digital financial advisory operating in digital assets, retirement and cash management, announced the launch of a new Bitcoin/Ethereum portfolio as part of the “Crypto Investing by Betterment” suite.

The new portfolio provides investors direct access to the two largest cryptocurrencies in the market. Betterment, which does have a 401(k) platform, only offers the crypto investing suite to retail customers.

“Crypto remains an important and continuously evolving part of the investment landscape,” Mike Reust, president of Betterment, said in a statement. “Our BTC/ETH Portfolio represents the next step in Betterment’s commitment to providing an automated solution to customers who want diversified exposure to the asset class.”

Lawmakers From Both Parties Call on SEC to Withdraw Swing Pricing Rule

Opponents say the proposed regulation on mutual funds would create a two-tiered system that disadvantages retail and retirement investors.

A total of 38 members of the House of Representatives from both parties used a September 5 open letter to call on the Securities and Exchange Commission to withdraw the agency’s proposal to require mutual funds to implement swing pricing and hold a higher proportion of liquid assets.

The letter was signed by representatives Anne Wagner, R-Missouri, and Brad Sherman, D-California, the chair and ranking member, respectively, of the House Subcommittee on Capital Markets.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

Swing pricing is a mechanism that permits open-end mutual funds to change the price of the fund during the day if outflows are too great and risk diluting the fund. The idea is that by decreasing the price, redeemers of the fund are penalized instead of those holding fund shares, which is intended to limit liquidity stress and the risk of panic selling.

Sherman, and many other Congressional Democrats, have expressed disapproval of the “hard close” element of the rule proposal, which would require a fund to receive an order by 4 p.m. ET to get that day’s price, instead of it merely needing to have been received by an intermediary by 4 p.m. ET.

Opponents of the proposal say this would unfairly discriminate against investors who live in time zones further west who would have to get their orders in earlier during morning hours to get that day’s price rather than the next day’s price. This concern was expressed in the open letter.

Though some of the SEC’s proposals under Gensler’s tenure have received limited opposition from Democrats—such as from those from agricultural districts who are concerned about the SEC’s climate disclosure rule’s impact on farmers—no other proposal has received this level of pushback from members of the Democratic Party.

The authors of the comment letter state that the proposal would create a “two-tiered market that would disadvantage retail and retirement investors.” Since these orders can take longer to process, they are less likely to get the same day’s price than orders from institutional investors.

The “two-tiered” refrain was also used by Senator Tim Scott, R-South Carolina, at a hearing of the Senate Banking, Housing and Urban Affairs Committee on September 12, when Gensler testified. Scott called on Gensler to withdraw the proposal, but the letter itself only is signed by members of the House.

The letter acknowledged that the SEC wants mutual funds to update their liquidity requirements and adopt swing pricing so that they are better prepared for conditions that place high stress on their liquidity, such as those experienced at the beginning of the COVID-19 pandemic in March 2020. Gensler has used this rationale to defend the rule in many instances.

The letter elaborated that despite these conditions, no mutual fund failed to meet its redemption obligations during the pandemic, an observation also made by industry actors.

However, this argument ignores the most common defense of the proposal that Gensler appeals to: that mutual fund managers frantically called representatives of the Federal Reserve asking for liquidity assistance so that they could satisfy redemptions and large net outflows.

Investment industry representatives deny that such calls for liquidity were made. Eric J. Pan, the CEO and president of the Investment Company Institute, said, “We have no knowledge of any such panicked calls having been made in March 2020” in an emailed statement.

When asked for clarification on these alleged calls, a spokesperson for the SEC declined to comment.

Gensler has repeated this defense of the proposal in public more than once, including during his September 12 testimony and most passionately at the ICI annual conference in Washington in May. At that event, he encouraged investors who oppose the proposal “to look in the mirror” when asking why the proposal is necessary.

Indeed, the Federal Reserve created the Money Market Mutual Fund Liquidity Facility to provide secured loans to money market funds during the pandemic so they could meet their obligations.

However, that lending facility was for money market mutual funds, not open-end mutual funds, the type of fund at issue here. Whether or not such panicked late night phone calls ever took place, the relief the mutual fund managers allegedly requested was not, in fact, granted by the Fed.

As for money market funds, the SEC finalized rules reforming their liquidity management in July. Though the initial proposal included swing pricing—as in the pending proposal for open-end funds—the final rule for money market funds did not. Instead, the SEC required money market funds to impose a fee on redeemers if daily net outflows exceed 5% of the fund’s value.

The comment period for the swing pricing proposal for mutual funds closed earlier this year. The SEC has not scheduled a vote on a final rule.

«