Envestnet is an investment management firm founded in 1999 that provides investment management and
investment advisory services through independent investment advisor firms (“Advisors”) for use with
Advisors’ clients (each a “Client”). Envestnet also serves institutional clients such as pension or profit-sharing
plans, trusts, estates, and corporations and provides advisory and research services directly to Advisors. As of
December 31, 2023, Envestnet had $426 billion in assets under management.
Envestnet is a wholly-owned subsidiary of its parent company, Envestnet, Inc. (NYSE: ENV), a publicly held
company.
Envestnet provides Advisors with an extensive range of investment sub-advisory services for use by Advisors
with their Clients through its Private Wealth Management programs, including Separately Managed Accounts
(“SMA”), ActivePassive Portfolios, Unified Managed Account (“UMA”), PMC Multi Manager Account (“PMC
MMA”), and Third-Party Fund Strategists (together, the “Programs” and individually a “Program”). Within
these programs certain investment strategies that are prefaced with “PMC” or “Sigma” designate that the
investment strategy is a proprietary strategy of Envestnet, as opposed to the third-party investment strategies
that we also make available in the SMA, UMA, MMA, and Third-Party Fund Strategists programs. Envestnet also
makes available several services within these programs (defined below), including the PMC Custom Case
Design Service, PMC White Label UMA Service, Strategist UMA, Private Wealth Consulting Service (“PWC”), and
Manager Outsourced Consulting Services (“Manager OC Services”).
In general, Envestnet offers its services to a Client’s independent Advisor as sub-advisory services to be
performed on Client’s account at the direction of Advisor, and in certain limited instances, Envestnet works
directly with the Client. In addition to the Envestnet sub-advisory services offered in the Programs, Envestnet
also offers Advisors many advisory service tools, whereby Envestnet provides only administrative and
technology services and investment research and due diligence. A Client’s Advisor determines which services
and Programs of Envestnet to utilize with its Clients and may utilize the services of other third-party services
providers in conjunction with the Programs; Clients should therefore consult their Advisor’s Form ADV Part 2
for a fuller description of that Advisor’s specific use of Envestnet and the Programs. The selection of services
offered by Envestnet to Advisors include:
• Assessment assistance of the Client’s investment needs and objectives
• Investment policy planning assistance
• Assistance in development of an asset allocation strategy designed to meet the Client’s objectives
• Recommendations on appropriate style allocations
• Identification of appropriate managers and investment vehicles appropriate for the Client’s goals
• Evaluation of asset managers and investment vehicles meeting style and allocation criteria
• Engagement of selected asset managers and investment vehicles on behalf of the Client
• Ongoing monitoring of individual asset manager’s performance and management for “Approved”
investment strategies (see also Item 8 - PMC Research Statuses)
• Automated tools that assist in the review of Client accounts to ensure adherence to policy guidelines
and asset allocation
• Recommendations for account rebalancing, if necessary
• Online reporting of Client account’s performance and progress
• Fully integrated back office support systems to Advisors, including interfacing with Client’s
custodian, trade order placement, and confirmation and statement generation.
• Access to third party platforms and strategies through the Envestnet Platform.
The Programs
For all Programs, Client and Advisor compile pertinent financial and demographic information to develop an
investment program that will meet the Client’s goals and objectives. Utilizing the Envestnet Platform tools,
Advisor will allocate the Client’s assets among the different options in the Program and determine the
appropriateness of the asset allocation and investment options for each Client, based on the Client’s needs and
objectives, investment time horizon, risk tolerance and any other pertinent factors.
Envestnet uses a number of proprietary analytical tools and commercially available optimization software
applications in developing its asset allocation strategies. Among the factors considered in designing these
strategies are historical rates of risk and return for various asset classes, correlation across asset classes and
risk premiums. For all Programs, the Client directly owns the securities (e.g., stocks, bonds, mutual funds or
exchange traded funds (“ETFs”) purchased within each of the Program’s investment strategies. Mutual funds,
ETFs, closed-end funds, unit investment trusts and real estate investment trusts and ETFs are collectively
referred to throughout this document generally as a “Fund” or “Funds."
For Clients participating in the SMA program, the Client’s Advisor is recommending an actively managed or
indexed investment portfolio managed by a roster of independent asset managers (each a “Sub-Manager”) with
a variety of disciplines who have been granted discretion. A separately managed account is a portfolio of
individually owned securities that can be tailored to fit the Client’s investing preferences. Envestnet will assist
Advisor in identifying individual asset managers and investment vehicles that correspond to the proposed asset
classes and styles or Advisor may independently identify asset managers. Envestnet retains the Sub-Managers
for portfolio management services in connection with the SMA program through separate agreements entered
into between Envestnet and the Sub-Manager on terms and conditions that Envestnet deems appropriate. For
many Sub-Managers, Envestnet has entered into a licensing agreement with the Sub-Manager, whereby the
asset manager, acting as a “Model Provider,” constructs an asset allocation and selects the underlying
investments for each portfolio on a non-discretionary basis. Envestnet implements the investment selections,
performs overlay management and trade order placement duties pursuant to the investment directions of the
Model Provider’s investment strategy (each a “Third Party Model”). In implementing the investment selections
of a Model Provider for a Third-Party Model, Envestnet is adhering to the investment strategy selected for Client
as instructed by Advisor and is not independently selecting the underlying investments nor exercising
discretion as a “fiduciary” within the meaning of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”). Clients may also select individual Funds through the SMA program.
Client’s Advisor may also recommend asset allocation strategies of a variety of mutual fund and ETF asset
managers in the Third-Party Fund Strategists program. Each portfolio may consist solely of mutual funds or
ETFs or may combine both types of funds to pursue different investment strategies and asset class exposures.
Pursuant to a licensing agreement entered into with the Model Provider, Envestnet provides overlay
management of the portfolios, and performs administrative and trade order placement duties pursuant to the
direction of the Model Provider.
For Clients participating in the UMA program, the Client’s Advisor is recommending a single portfolio that
accesses multiple asset managers and Funds, representing various asset classes, that is customized by the
Client’s Advisor. Utilizing the Envestnet tools, Advisor customizes the asset allocation models for a particular
Client or selects Envestnet’s proposed asset allocations for types of investors fitting Client’s profile and
investment goals. The Advisor then further customizes the portfolio by selecting the specific, underlying
investment strategies or Funds in the portfolio to meet the Client’s needs. Once the Advisor has established the
content of the portfolio, Envestnet provides overlay management services for UMA accounts and places trade
orders based on the investment strategies contained in the UMA portfolio. Within the UMA program, the
Client’s Advisor may also offer MMA portfolios created and managed by third party asset managers that access
multiple asset managers and Funds representing various asset classes. Within the UMA program, the Client’s
Advisor may also select a UMA portfolio Sub-Manager which customizes and manages the single portfolio by
selecting the specific, underlying investment strategies or Funds in the portfolio (see Strategist UMA below).
Client’s Advisor may also offer a version of the UMA, whereby Advisor does not exercise investment discretion
in the selection of the asset allocation or the specific, underlying investment vehicles and investment strategies
used in each sleeve of the UMA portfolio (“Client-Directed UMA”). In the Client Directed UMA, the Advisor will
provide Client with recommendations regarding the appropriate asset allocation and the underlying
investment vehicles or investment strategies to meet the Client’s objectives, but the Client is directing the
investments and changes made to Client’s UMA portfolio and is ultimately responsible for the selection of the
appropriate asset allocation and the underlying investment vehicles or investment strategies. As described
above, Envestnet provides overlay management services for UMA accounts and places trade orders based on
the directions of the investment strategies contained in the UMA portfolio.
For Clients participating in the PMC Multi Manager Account program (“PMC MMA”), the Client’s Advisor is
recommending Multi-Manager portfolios created and managed by PMC that access multiple asset managers
and Funds representing various asset classes. Envestnet allocates the portfolios across investment asset
classes, with the use of complementary asset managers to create a blend that fits the target investment profile
and risk tolerance. Envestnet includes Funds in PMC MMA to complete the asset class exposure of the asset
managers utilized. Because Envestnet does not have to share management fees with Fund families but does
share management fees with third party Model Providers, Envestnet has an economic incentive to choose
Funds rather than third party Model Providers’ strategies within the PMC MMA.
For Clients participating in the Strategist UMA program (“Strategist UMA”), the Client’s Advisor is
recommending portfolios created and managed by third party investment strategists that access multiple asset
managers and Funds representing various asset classes. The third-party investment strategist allocates the
portfolios across investment asset classes, with the use of complementary asset managers to create a blend
that fits the target investment profile and risk tolerance.
For clients using the Manager Outsourced Consulting Services (“Manager OC Services”) the Client’s Advisor is
recommending custom MMA portfolios created and managed by third party investment strategists that access
multiple asset managers and Funds representing various asset classes. The third-party investment strategists
allocate the portfolios across investment asset classes and complementary asset managers to create a blend
that fits the target investment profile and risk tolerance, while the Advisor has full discretion of investments.
The third-party investment strategists include Funds in the Manager OC Services to complete the asset class
exposure of the asset managers utilized.
Envestnet maintains a policy of strongly encouraging Sub-Managers and Model Providers to keep a minimum
of 2% cash in the portfolios as a buffer to compensate for market fluctuation and supplement proceeds from
Sell orders needed to cover Buy orders. The foregoing also applies to Envestnet’s proprietary strategies as
well.
Customized PMC Services
Envestnet provides Advisors “PMC Custom Case Design Service,” whereby Envestnet assists the Advisor in
creating a custom portfolio designed generally for households with a minimum of $250K of investable assets
where the Advisor has full discretion of investments within a UMA or a series of SMAs. The Advisor utilizes the
PMC Custom Case Design Service to provide Client a customized portfolio design recommendation that
accesses multiple asset managers and funds, representing various asset classes, which fits the Client’s
investment profile and risk tolerance, as determined by Advisor. Envestnet provides overlay management
services for UMA accounts and places trade orders based on the investment strategies contained in the UMA
portfolio.
Envestnet provides Advisors the “PMC White Label UMA Service” whereby PMC assists the Advisor in selecting
from a series of UMA models designed for account size entry points at 250K, 500K and greater than 1M where
the Advisor has full discretion of investments within a UMA. The Client is offered a portfolio design
recommendation that accesses over 7 investment styles, multiple asset managers and funds, representing
various asset classes, which fits the Client’s investment profile and risk tolerance, as determined by the financial
representative. Envestnet provides overlay management services for UMA accounts and places trade orders
based on the investment strategies contained in the UMA portfolio. This service is closed to new investors.
In Envestnet’s Private Wealth Consulting Service (“PWC Service”) the Client’s Advisor is recommending a
custom MMA portfolio created and managed by Envestnet that access multiple asset managers and Funds
representing various asset classes. Envestnet allocates the portfolios across investment asset classes and
complementary asset managers to create a blend that fits the target investment profile and risk tolerance, while
the Advisor maintains full discretion of investments. Envestnet includes Funds in the PWC Service to complete
the asset class exposure of the asset managers utilized. Because Envestnet does not have to share management
fees with Fund families but does share management fees with third party Model Providers, Envestnet has an
economic incentive to choose Funds rather than third party Model Providers’ strategist within the MMA.
For portions of the PMC MMAs, PMC Custom Case Design Service, and some of the PMC MMAs created within
the PWC Service, PMC may also utilize proprietary strategies or a PMC Fund. Because PMC is also managing
the portion of assets utilizing a PMC proprietary strategy, PMC has an economic incentive to recommend its
proprietary strategies. Further a portion of these assets may be invested in the PMC Funds or ActivePassive™
ETFs, where appropriate, in conjunction with using multiple asset managers and other Funds that comprise
these portfolios. Since Envestnet serves as the investment advisor to the PMC Funds and the ActivePassive™
ETFs, and receives fees for the PMC Funds, ActivePassive™ ETFs and fees as the portfolio manager, Envestnet
waives the portfolio management fee that Envestnet normally charges for managing the portfolio on assets
invested in PMC Funds or ActivePassive™ ETFs. Envestnet will still recognize ancillary benefits in investing
assets in PMC Funds or ActivePassive™ ETFs.
ActivePassive Portfolios
In the ActivePassive Portfolios, Envestnet’s affiliate Envestnet Portfolio Solutions, Inc. (“EPS”) acts as a sub-
advisor and provides discretionary investment advisory services under which EPS selects investments for
Clients consisting of a series of third party index mutual funds or ETFs, as well as one or more actively managed
funds from the PMC Fund family or the ActivePassive™ ETFs. EPS periodically monitors Client portfolios and
when deemed appropriate makes changes in both asset allocations as well as specific mutual fund selections.
Neither Envestnet nor EPS acts as a qualified custodian for the Funds or other assets owned by each Client.
The PMC Funds are a proprietary fund family of Envestnet and as the investment advisor to the PMC Funds,
Envestnet receives a management fee based on assets invested in the PMC Funds. If PMC Funds are used within
the portfolios, EPS does not separately charge a fee for its management of assets invested in the PMC Funds
through the ActivePassive Portfolios but may charge a portfolio management fee for assets invested in third-
party Funds. The ActivePassive™ ETFs are a proprietary series of ETFs of Envestnet and as the investment
advisor to the ActivePassive™ ETFs, Envestnet receives a management fee based on assets invested in the
ActivePassive™ ETFs. If ActivePassive™ ETFs are used within the portfolios, EPS does not separately charge a
fee for its management of assets invested in the ActivePassive™ ETFs through the ActivePassive Portfolios but
may charge a portfolio management fee for assets invested in third-party Funds.
PMC Strategies and Portfolios
For Clients selecting a mutual fund or ETF asset allocation strategy, Envestnet manages mutual fund asset
allocations based on Envestnet’s recommended investment strategy (each a “PMC Strategy”). The PMC
Strategies are fully discretionary, mutual fund and/or ETF asset allocation programs offering a series of model
portfolios positioned at various points along the risk/return spectrum that correspond
to the individual Client’s
goals and objectives. Once the Client’s assets are invested, Envestnet may add, remove or replace mutual funds
at its discretion. Certain Advisors may re-brand a PMC Strategy and label the investment strategy according to
that Advisor’s design, as further described in the Advisor’s Form ADV Part 2A.
In the PMC Select Portfolios, Envestnet utilizes its proprietary mutual fund family, the PMC Funds or the
ActivePassiveTM ETFs, for the investments based on the Client’s corresponding investment objectives and risk
profile. Where appropriate, Envestnet may also utilize non-proprietary mutual funds in the PMC Select
Portfolios. Envestnet is responsible for developing, constructing and monitoring the asset allocation and
strategy for each portfolio. Envestnet serves as the investment advisor of both the PMC Funds and the
ActivePassive™ ETFs. Envestnet does not separately charge a fee for its portfolio management of assets
invested in the PMC Funds or the ActivePassive™ ETFs through the PMC Select Portfolios, but may charge a
portfolio management fee for assets invested in a third-party Fund. Envestnet will still recognize ancillary
benefits in investing assets in PMC Funds.
The PMC Select Dynamic Portfolios are centered on the strategic allocations of the PMC Funds or the
ActivePassiveTM ETFs used by the PMC Select Portfolios, as described above, but also allow for underweighting
or overweighting between the PMC Funds or the ActivePassiveTM ETFs for each portfolio.
The PMC Paradigm Portfolios are a series of FSPs that, depending on the assets in the account, may include
mutual funds and ETFs.Envestnet chooses the different asset allocations, investment strategies and Funds for
each of the Paradigm Models. The models managed for the smaller asset accounts may only consist of liquid
alternative mutual funds and ETFs.
Third Party Models and Model Providers
Many of the asset managers in the SMA Program and the Third-Party Fund Strategist Program described above
are accessed through the use of Third Party Models, whereby the asset manager, acting as a Model Provider,
constructs an asset allocation and selects the underlying investments for each portfolio on a non-discretionary
basis. Envestnet performs overlay management of the Third Party Models by placing trade orders, periodically
updating and rebalancing each Third Party Model pursuant to the direction of the Model Provider. Investment
selections are determined by the Model Provider. Envestnet is not exercising discretion as a fiduciary in
implementing the investment selections of third-party Model Providers. In implementing the investment
selections of a Model Provider for a Third-Party Model, Envestnet is adhering to the investment strategy
selected for Client as instructed by Advisor and is not independently selecting the underlying investments nor
exercising discretion as a “fiduciary” within the meaning of ERISA. Envestnet may, from time to time, replace
existing Model Providers or hire others to create Third Party Models and cannot guarantee the continued
availability of Third Party Models created by particular Model Providers.
In managing the Third Party Models, certain Model Providers may pursue an investment strategy that utilizes
underlying mutual funds or exchange traded funds advised by the Model Provider or its affiliate(s)
(“Proprietary Funds”). In such situations, the Model Provider or its affiliate(s) may receive fees from the
Proprietary Funds for serving as investment advisor or other service provider to the Proprietary Fund (as
detailed in the Proprietary Fund’s prospectus). Please refer to each Model Providers Form ADV for information
regarding this conflict. These fees will be in addition to the management fees that a Model Provider receives
for its ongoing management of the Third Party Models and creates a financial incentive for the Model Provider
to utilize Proprietary Funds. In selecting a Third Party Model containing Proprietary Funds for a Client, an
Advisor must independently determine that the use of the Proprietary Funds in the Third Party Model is in the
best interest of the Client. Clients should discuss any questions with or request further information from their
Advisor concerning the use of Proprietary Funds in Third Party Models or the conflict of interest this creates.
Tax and Values Overlay Services
Envestnet also provides Tax and Values Overlay Services. Tax Overlay Services seeks to consider tax
implications that may detract from the Client’s after-tax returns. Values Overlay Services seek to reflect a
Client’s own personal values by excluding investments linked to companies that derive revenues from specific
business areas or companies that are involved in controversial business activities (e.g., negative environmental
impacts, human rights violations, corruption). If selected by the Client, Envestnet will provide Tax Overlay
Services, Values Overlay Services, or both, to an account or sleeve.
The end goal of Tax Overlay Services is to improve the after-tax return for the Client while staying as consistent
as possible with the risk/return characteristics provided by the model portfolios. Tax Overlay Services are
available only to U.S. clients, though Envestnet may provide similar services for non-U.S. clients upon
agreement with a program’s sponsor. Envestnet does not provide tax planning advice or services. Clients
should discuss any questions with or request further information from their Advisor or tax consultant in using
the Tax Overlay Services.
The end goal of Values Overlay Services is to align a portfolio with the personal values of the Client, while
staying as consistent as possible with the risk/return characteristics provided by the Third Party Models.
The Advisor establishes account fees for the programs offered to Clients and in some cases may negotiate these
fees with certain of Advisor’s Clients. Envestnet Tax and Values Overlay Services may be available at a lower
overall cost in some of Advisor’s programs as compared to its other programs. In addition, lower fees for
comparable services may be available from other sources.
In providing Values Overlay Services, Envestnet is dependent upon information provided by third-party data
providers. Envestnet does not independently verify or guarantee the accuracy, timeliness, or
comprehensiveness of such information. The assessments and screens made by third parties are based on data
that relates to a company’s involvement in a particular product or ESG-related topic, and such data may not
cover all of a company’s services and practices. The overlay restrictions will only be applied in cases where the
information is available, which is limited to a specific universe of securities covered by the third-party data
research providers.
Client may impose additional reasonable restrictions on the management of Client’s accounts, including the
ability to restrict accounts from purchasing or holding certain securities that client believes are not aligned
with client’s selected impact category restrictions, or securities that were not considered and screened out
through the data provider overlay process that were not considered in the data provider screening process. In
the event Client identifies additional securities in a portfolio that Client desires to be screened but were not
identified by the third-party data research providers, Client’s remedy shall be limited to adding such securities
to Client’s investment restrictions on a go-forward basis, and an instruction to Client’s Advisor to sell or
otherwise dispose of such securities. Reasonable restrictions on the management of an account include, but
shall not be limited to, the designation of particular securities that should not be purchased for the account, or
that should be sold if held in the account.
At the discretion of Envestnet, Values Overlay category criteria may change. Envestnet will periodically review
the criteria and consider whether or not revisions may be appropriate. Envestnet is not affiliated with third-
party data providers.
In providing Values Overlay services, Envestnet will allow client’s account to deviate from client’s selected
investment strategy, based on the additional reasonable restriction instructions provided by the Client. With
the Values Overlay Services, Client’s account(s) may not own all holdings that are part of their selected
investment model, and as a consequence, Client’s account may experience significant performance differences
from the selected investment strategy. If Client chooses an overlay, Envestnet makes no guarantee that the
account’s performance will be within any range of the selected investment strategy or the strategy’s
benchmark.
Envestnet may manage Client’s account using tools and processes which may result in Client’s trades being
executed at a different time or in a different manner than other Envestnet trades, including the potential to not
participate in Envestnet’s standard trade rotation processes (if such trades would have been otherwise eligible
to participate).
Model Trading - Overlay Services
When a Client utilizes a Third Party Model within a UMA portfolio or utilizes a Tax and Values Overlay Services
(such as tax-management or socially responsible investing) on the Third Party Model, trading within such Third
Party Model may differ from Models that are not within a UMA and do not include the screen.
Block orders for tax-managed accounts are processed separately from non-tax managed accounts. Therefore,
tax-managed accounts utilizing a Third Party Model will effect securities transactions required to conform to a
Model update as soon as practicable after receipt of the update instruction; in accordance with any Client-
specific mandates such as tax overlay screens. Same-day or multi-day trade timing differences can occur
between the submission of the Third Party Model update and the execution of securities transactions for tax-
managed accounts resulting in execution price differences from non-tax managed accounts.
Same-day trade timing differences are due to trade evaluation and order processing timing differences (i.e.,
dependent on timing of Third Party Model update submissions and tax overlay trade engine analysis
completion). Multi-day trade timing differences are due to the evaluation and recommendation of the tax
overlay trade engine to align with Client’s specific tax goals (i.e., whether to execute the trade the day of the
model update vs. waiting until a future date based on Clients’ stated tax goals). Due to the referenced trade
timing differences, a Client may receive different prices than other Client’s in the same model. Given that each
Clients’ tax situation can vary from one person to another, Client should discuss any questions with or request
further information from their Advisor or tax consultant in using the Tax Overlay Services. Refer to Item 8 (Tax-
Managed Investing Risks) for additional information regarding the risks associated with tax-managed accounts.
PMC Strategies Availability on Non-Affiliated Platforms
Certain PMC strategies may be offered through non-affiliated institutional platforms. In doing so, Envestnet
contracts with the non-affiliated firm as a portfolio manager. For such portfolio management services, PMC
obtains a manager fee, which is negotiated separately with each respective firm.
Mutual Funds
Envestnet also serves as the investment adviser to a mutual fund family: The PMC Funds, consisting of the PMC
Core Fixed Income Fund and the PMC Diversified Equity Fund. Additional information available at
www.investpmc.com/solutions/portfolios.
ETFs
Envestnet also serves as the investment adviser to the following proprietary ETFs: ActivePassive™ Core Bond
ETF, ActivePassive™ Intermediate Municipal Bond ETF, ActivePassive™ International Equity ETF, and
ActivePassive™ U.S. Equity ETF (collectively, the “ActivePassive™ ETFs”). Additional information available at
www.activepassive.com.
Account Customization and Investment Restrictions
The discretionary Programs identified above are intended to comply with Rule 3a-4 under the Investment
Company Act of 1940. Advisors instruct Envestnet on the management of each account based on the Client’s
financial situation and stated investment objectives, in accordance with the Client’s reasonable investment
restrictions imposed by Client on the management of the assets in the account. In addition, Clients will be
contacted at least annually by their Advisor, and notified quarterly to contact Advisor, in order to confirm
whether there have been any changes to the Client’s financial situation, investment objectives or if Client would
like to impose or modify investment restrictions on the account.
Customized Strategies and Direct Indexing Portfolios
Certain Sub-Managers offer highly customized strategies and direct indexing portfolios. The customized
strategies typically require additional input from the Adviser or Client. This input may include account level
security or sector-based restrictions or tilts, or customizations based on a client’s specific tax, ESG or
sustainable preferences. It may also include modifications to asset allocations in a multi-asset solution or
include tilts away from or toward certain investment styles as part of the client account construction. While
these portfolios are available within the SMA Program, Clients and Advisors should review and monitor these
custom portfolios to ensure they are consistent with Client’s risk profile and investment objectives, as Sub-
Managers build and trade these customized client models away from the Envestnet Platform and Envestnet
does not have visibility into the holdings and performance of custom portfolios. Envestnet may perform
periodic due diligence reviews of certain Sub-Managers who maintain custom portfolios; however, use of such
portfolios are at the recommendation of Client’s Advisor and Envestnet does not undertake supervisory
responsibility for the custom portfolios or Sub-Manager’s compliance practices.
Customized Asset Allocation Program
Firms may engage with Envestnet to create a customized asset allocation program (“Enterprise Program”) that
is available to only their advisor representatives. Envestnet will manage asset allocations based on the firm’s
direction for investment strategy and available investment universe. The Enterprise Programs are fully
discretionary asset allocation programs that access multiple third party Model Providers, mutual funds and/or
ETFs offering a series of model portfolios positioned at various points along the risk/return spectrum. Once
the Client’s assets are invested, Envestnet may add, remove or replace third party Model Providers, mutual
funds and/or ETF at its discretion. Because Envestnet does not have to share management fees with Fund
families but does share management fees with third party Model Providers, Envestnet has an economic
incentive to choose Funds rather than third party Model Providers’ strategist within the Enterprise programs
utilizing the Multi Manager Account (MMA) framework.
Wrap Fee Programs
Advisors may offer the Programs as “ fee programs” to Clients as described in Advisor’s Appendix 1 of its Form
ADV Part 2A. Envestnet also offers the Programs as “wrap fee programs” and provides portfolio management
services. Envestnet manages the wrap fee programs in the same manner as described in this document and
receives fees for its portfolio management services as described in Appendix 1 of its Form ADV Part 2A.
Envestnet may provide asset management services as a non-discretionary sub-adviser for unaffiliated RIA
program sponsors. Under these arrangements, Envestnet provides model portfolio recommendations to third
party platforms. Ultimately, the discretionary responsibility for the asset allocation and securities selection
remains with the unaffiliated RIA program sponsors. The unaffiliated RIA program sponsors maintain
responsibility for executing all security transactions in connection with such determinations, which means the
portfolios may materially diverge from the model portfolio communicated by Envestnet. Envestnet receives a
fee from the RIA sponsors for the services provided in these programs.
Institutional Clients
Envestnet also provides customized services to certain institutional clients, such as banks,
charities/foundations organized under Section 501(c)(3) of the US Internal Revenue Code and employment
retirement plans. These services generally consist of investment policy statement development and
documentation, investment due diligence, and plan advice and management services under ERISA.
As also described below, Envestnet may make its technology platform available to Advisors, banks, or trusts
for them to manage their own advisory services for Clients. In such cases, Envestnet may be providing account
billing, reconciliation and reporting and other administrative and technology services, but is not acting in an
advisory role to any Client.