How today’s financial advisors can add value

As an advisor today, you are navigating an environment shaped by geopolitical uncertainty, persistent inflation concerns, and potential for higher interest rates. You are helping your clients wrap their brains around new developments, such as AI market concentration and expanding access to private markets through alternatives.

And I’m sure you know, as all advisors do, that you cannot control market outcomes. What you can control, and what is increasingly more valuable to clients, are the decisions, strategies, and behaviors that can improve client outcomes.

Where, in years past, the role of many financial advisors might have been defined first by security selection, asset allocation, and market insights, today’s technology makes a broader concierge set of services a bigger part of the value chain for many advisory practices. Markets have become increasingly efficient, information is widely available, and sophisticated investment tools are more accessible than ever. The future of advice is less about predicting markets and more about helping clients keep more of what they earn, stay disciplined, and access opportunities thoughtfully.

The question is no longer, "Can I outperform the market?"

The more important question is, "How can I improve the client's overall outcome?"

Let’s take a deeper dive into what that looks like today, particularly in light of recent industry advancements.

Advancements shaping the industry

AI is changing investment management, not replacing advisors

Much of the conversation around artificial intelligence has focused on productivity gains, client communications, and operational efficiency. But some of the most significant developments are taking place inside investment management itself.

Researchers, asset managers, and quantitative investment teams are actively exploring how AI can enhance the way investment decisions are made. Rather than replacing traditional investment approaches, AI is increasingly being used to refine and extend them.

AI in investment management can:

• Enhance factor analysis and security selection

• Identify nonlinear relationships within markets

• Analyze news flow and earnings communications at scale

• Improve portfolio construction and risk management

• Discover new sources of signal in increasingly complex datasets

An interesting development is AI's ability to process information in ways that were previously difficult or impossible using traditional analytical techniques. Researchers are finding that machine learning can help uncover relationships that may be missed by more conventional models, while also improving the ability to evaluate large volumes of structured and unstructured data.¹

At the same time, it's important to maintain perspective. Markets remain extraordinarily complex, and AI is not a crystal ball. The goal is not perfect prediction. The goal is better information, better research, and better decision-making.

Many asset managers are already incorporating these capabilities into their investment processes, and that trend is likely to continue. As AI tools evolve, they may increasingly influence how managers evaluate opportunities, manage risk, and construct portfolios.

Just as artificial intelligence is expanding what's possible in public markets, innovation is also reshaping how investors access private markets.

Private markets are becoming part of the modern portfolio

Private markets have become an increasingly important part of the investable landscape. More innovation, more growth, and more value creation are occurring before companies ever reach the public markets. As a result, advisors are being asked to evaluate whether—and how—exposure to alternative investments should play a role in client portfolios. That can create both opportunity and complexity. Questions around liquidity, access, suitability, and portfolio construction require careful consideration. Not every client is an appropriate candidate, and private market allocations must be evaluated within the context of a client's broader financial goals and risk tolerance.

Advisors are exploring ways to provide clients with access to a broader opportunity set while maintaining a disciplined portfolio framework. Envestnet's vision is centered on making private markets part of the portfolio construction process rather than treating alternatives as standalone products. This means helping advisors integrate public and private investments within a unified managed account framework, offering a more complete view of the client's overall portfolio.

Today, advisors can incorporate interval funds into UMA models through Envestnet's platform. The roadmap will continue to expand with support for additional structures, including tender offer funds, private REITs, and private BDCs. Along the way, Envestnet is building technology designed to simplify administration, trading, rebalancing, and portfolio oversight. Our goal is not simply to provide access. Our goal is to reduce friction and create a more seamless experience for advisors and clients alike.

Ultimately, the conversation is no longer about public versus private markets. A more important question is how advisors thoughtfully combine both within a client's overall investment strategy. As private markets continue to evolve, advisors will continue to need tools that help them evaluate opportunities in the context of the entire portfolio—not as isolated investment decisions.

How today’s financial advisor can add value

Today, advisors can create value in three areas that are difficult for clients to replicate on their own: tax efficiency, personalization, and behavioral coaching.

Tax efficiency

One of the most powerful levers advisors can control is tax management. Market returns are beyond our control, but advisors can control how efficiently a portfolio is managed on behalf of the client. That's why tax efficiency has become an increasingly important source of advisor value. Tax-loss harvesting, tax-aware rebalancing, asset location, and other tax-management strategies can meaningfully improve after-tax outcomes over time.

Recent Envestnet analysis of accounts utilizing Fund Strategist Tax Management throughout the full 2025 tax year found that participating accounts generated an average after-tax benefit of +4.74%, reinforcing how intentional tax management can drive measurable results. Clients don’t spend pre-tax returns. They spend after-tax wealth. In many cases, improving after-tax results can potentially  offer more value than pursuing incremental alpha.²

Envestnet continues to invest heavily in tax-aware portfolio management capabilities, including tax overlay solutions designed to help advisors systematically manage tax consequences across client portfolios. These tools help advisors focus on an area where they can have a direct and measurable impact on client outcomes.

As markets become more complex, helping clients keep more of what they earn may be one of the most valuable services an advisor can provide.

Personalization

Personalization is no longer a luxury feature. It is rapidly becoming a core component of the advisory experience.

Today's clients increasingly expect portfolios that reflect their individual goals, preferences, and values. Whether that means implementing direct indexing, incorporating portfolio restrictions, or building around a specific purpose or mission, personalization can allow advisors to create portfolios that are uniquely aligned with each client.

The potential value goes beyond customization itself. Personalized portfolios often lead to stronger client engagement and deeper commitment to the investment plan. That matters because staying invested through periods of uncertainty remains one of the biggest determinants of long-term success. When clients feel a stronger connection to their portfolios, they are often more willing to remain disciplined during market volatility.

Envestnet has made significant investments in this area through its direct indexing ecosystem, custom portfolio capabilities, and purpose-driven investing solutions. These tools can help advisors move beyond one-size-fits-all portfolios and deliver experiences tailored to the goals of each client.

In an increasingly competitive marketplace, personalization helps strengthen relationships and reinforces the advisor's role as a trusted partner.

Behavioral Coaching

Markets have historically provided reasons for investors to abandon long-term plans.

There will always be uncertainty. There will always be headlines. There will always be periods when fear, excitement, or short-term noise tempt clients to make decisions that may not serve their long-term goals.

This is where advisors can offer some of their most important value. Behavioral coaching helps clients stay disciplined, distinguish signal from noise, and maintain perspective during periods of market volatility. While technology continues to automate many aspects of investing, the ability to guide clients through uncertainty remains difficult to replicate.

Investment strategies will evolve. Markets will change. New technologies will emerge. But the need for trusted guidance is unlikely to disappear.

In many ways, behavioral coaching remains one of the most valuable and enduring aspects of financial advice. Helping clients stay committed to a well-constructed plan may ultimately matter more than any individual investment decision along the way.

Advisor value remains deeply human

The challenges facing advisors today are not getting simpler. Markets are increasingly complex. Technology is advancing at an extraordinary pace. Clients have access to more information, more investment options, and more opinions than ever before.

At the same time, the tools available to advisors have never been more powerful. Artificial intelligence is changing investment management. Direct indexing is expanding personalization. Tax-management technology is helping to improve after-tax outcomes. Private market solutions are broadening the investable universe.

These innovations do not diminish the advisor's role. They reinforce it. The firms best positioned for the future will likely be those that combine sophisticated technology with deeply human advice focused on client outcomes, not just market predictions. In the end, some of the greatest sources of advisor value come from helping clients focus on what they can control.

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As client expectations for wealth management become more personalized, we can help you deliver where it matters most.

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