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BI, and Insights AI, an enhancement to its existing Insights Engine. Both are designed to streamline the way advisors access and use data, so advisors can make better, faster de- cisions, says Jeremi Karnell, head of data solutions. Todd shares the widespread belief that one of the advi- sory industry's biggest threats is the talent shortage. ere are simply too few advisors given the number of Ameri- cans seeking financial advice. AI, in the view of many, is an obvious instrument to empower existing advisors to service more clients. But adoption of AI by financial advisors, or other businesses, isn't yet turning into a stampede. One mar- ket strategist, David Kostin at Goldman Sachs, recently said at Goldman's RIA Professional Investor Forum that he was "underwhelmed" by the adoption rates when he spoke with CEOs and CFOs across American industry. "Only about 6% say they use AI, and that figure is expect- ed to go to 10%," Kostin told advisors at the forum, held in New York in May. Todd believes that advisors who embrace AI inevita- bly will develop a competitive advantage. "We're infusing AI into our business to allow advisors to be more efficient and serve more clients," he says, adding that the technol- ogy can also address productivity slack. Other fintech executives are even more blunt. "It's not the industry pushing change, it's the clients," says Bill Capuzzi, the CEO of Apex Fintech Solutions. "Transpar- ency, speed, seamless tech—these aren't [just] nice-to- haves anymore. Advisors who adjust will win. ose who don't? ey'll get le behind. Simple as that." Todd thinks AI will help Envestnet bring new programs and services to market faster while empowering advisors to engage in more meaningful conversations with clients. In particular, he expects to see "tremendous growth in tax overlay products." is reflects a desire "to meet clients where they are." Todd realizes that there has been huge growth in the high-net-worth market as many clients have enjoyed seri- ous increases in wealth over the last decade. At the same time, technology has helped advisors deliver direct index- ing and tax overlay, so that something once available only to those investors with eight-figure portfolios is now ac- cessible to the mass affluent. Like many at Envestnet, Todd also says he is "extremely proud of our UMH [unified managed household] chas- sis," the master account that combines multiple accounts. Indeed, Envestnet's managed account supermarket is be- lieved to be a major profit center. Ultimately, success in AI hinges on possessing a wealth of data, and Envestnet is well-positioned in that arena, according to industry consultant Joel Bruckenstein, pro- ducer of T3, a leading advisor fintech conference. e company is making "a push to be a data warehouse and they have some cool stuff," he says. If Envestnet enjoys a wide swath of opportunities, it also faces a sea of competition, or "co-opetition," as Todd refers to it, since some fintech companies competing with En- vestnet on one product might partner with it on another. Upstarts like Altruist, as well as long-established fintech companies like SEI, are offering both custody and port- folio management solutions. Other companies—such as Goldman Sachs, Axos Advisor Services and Trade PMR (now part of Robinhood with 25 million accounts)—are also expanding into many sectors of the business. Gold- man executives said at the company's May RIA event that their long-term goal is to be as important to advisors as Schwab. It was a bold statement. Former Envestnet CEO Bill Crager announced several years ago that the portfolio soware company planned to enter the custody business, though that plan has yet to ma- terialize. And the company's private equity backers might have no appetite to enter a notoriously low-margin busi- ness like custody for advisors (the margin is widely con- sidered to be about 0.1%). When asked about it, Todd says the current plans are "somewhere between not a priority and no," though he adds "priorities can change." When asked if Envestnet's existing businesses boast better profit margins than cus- tody, he responds mischievously, "A smidge." Also consider that one of the company's investors, Fi- delity, is already a leading player in custody and might feel territorial about its turf. en again, Fidelity, Schwab and BNY Mellon/Pershing already face dozens of small- er custodian competitors, so another one probably won't faze them. Some advisors believe new emerging custodians with powerful technologies will shake up the advisor fintech ecosystem, nonetheless. One of those advisors is Ron Bul- lis, CEO of Lifeworks, a Milwaukee-based RIA with $800 million in client assets. He sees these upstarts offering services like tax-loss harvesting, direct indexing and au- tomated portfolio rebalancing for little or zero cost, which means the leading players will be forced to respond. Schwab and Fidelity are likely to remain entrenched as custodians to the big RIAs, many of which have relied on these companies' referral networks to source new cli- ents and are now locked in. "Cash is king, and Schwab Todd believes that advisors who embrace AI inevitably will develop a competitive advantage. "We're infusing AI into our business to allow advisors to be more efficient and serve more clients," he says, adding that the technology can also address productivity slack.

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