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COVID-19: Client Update

May 20, 2020

This week began on a positive note with news about the promising results of Moderna’s experimental COVID-19 vaccine trial. As I have previously written in these update letters, we must never lose hope that this pandemic will eventually be quelled.

We are working hard to ensure you are positioned to optimize the wealth management experience, and improve outcomes, for your clients in the post-COVID-19 world. To learn more about how our present reality will shape the future of financial advice, you can view our webcast about the core implications of the pandemic on our industry.

Our Operations and Service teams continue to work from home to fully support our customers, and volumes are mostly returning to normal levels. Even our Manager Services team (the last group in our organization to experience an uptick in volume), which supports managers as they provide model data to the Envestnet platform, is beginning to see moderated workloads.

In addition, as part of our ongoing effort to regularly enhance our solutions for advisors, we put our second technology release of this year into production on the evening of Friday, May 15, with the roll-out beginning yesterday. We will continue to update you on our latest enhancements as they go live.

Envestnet | Yodlee COVID-19 Income and Spending Trends

The latest data from Yodlee tracking income, spending, and saving trends among Americans at this time indicates:

  • Spending patterns are shifting, with discretionary spending having declined by 7% year-over-year during the week ending May 12.
  • In general, consumers are spending less and saving more—giving advisors the opportunity to engage with clients on directing funds into investments or toward paying down debt.
  • We are in what some are referring to as a “Stay At Home Economy,” which creates advisor/client discussions on investment considerations that are well-positioned to drive growth in the current environment.

Market Pulse

Our in-house professionals continue to deliver actionable insights to help advisors and their clients strategically navigate this period of uncertainty and volatility.

  • Markets Start Strong After Falling Last Week: On Monday, stocks bounced back on positive news about a potential coronavirus vaccine after suffering its worst weekly performance in nearly two months. Downbeat comments last week from Boeing CEO David Calhoun predicting that a major airline will collapse and Federal Reserve Chairman Jerome Powell stating that the economic outlook is highly uncertain were replaced with optimism Monday as economies begin to emerge from lockdown and promising news about a vaccine for coronavirus made headlines.
  • Fed Begins Buying Corporate Bond ETFs: The Federal Reserve started its unprecedented purchases of corporate bond exchange-traded funds (ETFs) last week. The Fed will first buy investment-grade corporate bond ETFs, followed by their high-yield counterparts. After that, the central bank plans to purchase individual corporate bonds directly if necessary.
  • New Stimulus Bill: Congressional Democrats proposed a new $3 trillion stimulus package last week, mostly involving direct payments to households and $1 trillion to state and municipal governments. While the previous stimulus package was passed swiftly with little objection, the new bill has already met significant resistance, and is likely to be modified before passage.
  • April Retail Sales: Retail sales for April fell 16.4% from March levels, the worst sales growth on record since 1992. This data demonstrates the severe impact of the lockdown economy. It will be interesting to see how economic data improves as the economy begins to reopen in the coming months.

Advisor Pulse

Last week closely resembled the previous week for the advisors in our financial wellness network:

  • Trading activity and changes to client goals from May 11-15 remained consistent relative to the previous week, though transaction volumes are still roughly 35% higher than the average in 2019.
  • Cash in advised portfolios rose slightly to 6.1% from 6.0%.
  • Client contributions are trending slightly lower than normal, while withdrawals remain flat, suggesting clients have slowed their investing activities. This could also be attributed to the passing of bonus season, where seasonal contributions are to be expected.
  • Last week saw a slight increase in client defections from their advisor compared to the average in 2019, which is consistent with the past four weeks.

To view a more detailed Advisor Pulse report, click here.

We’re Here for You

We continue to work diligently to help you meet the needs of your clients and practices during this challenging time. Although we regret not being able to spend time with all of you at this year’s Envestnet Advisor Summit, we plan to share our industry observations and intelligence in an on-demand format. Sign up here to be notified when the Summit On-Demand content is live.

We are grateful to you for placing your trust in us. Please don’t hesitate to reach out with questions or concerns. We hope your families and communities stay safe and healthy.

Enjoy the Memorial Day weekend.

Bill Crager
Chief Executive Officer

Click to View Envestnet's Coronavirus (COVID-19) Planning Update