Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to Investment Advisors. Our open-architecture Platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective, and fully-aligned standard of care, and empower Advisors to deliver better outcomes through the following product and services suites:
- Envestnet | Advisor Suite™ empowers advisors to better manage client outcomes and strengthen their practice. The software unifies the applications and services advisors use to manage their practice and advise their clients, including data aggregation; financial planning; capital markets assumptions; asset allocation guidance; research and due diligence on investment managers and funds; portfolio management, trading and rebalancing; multi custodial, aggregated performance reporting; and billing calculation and administration.
- Envestnet | PMC®, Portfolio Management Consultants group, primarily engages in consulting services aimed at providing financial advisors with additional support in addressing their clients’ needs, as well as the creation of investment solutions and products. Envestnet | PMC’s investment solutions and products include managed account and multi manager portfolios, mutual fund portfolios and Exchange Traded Funds (“ETF”) portfolios. Envestnet | PMC offers Prima Premium Research, comprising institutional quality research and due diligence on investment managers, mutual funds, ETFs and liquid alternatives funds. Envestnet | PMC also offers Placemark Overlay Services which includes patented portfolio overlay and tax optimization services.
- Envestnet | Vantage™ software aggregates and manages investment data, provides performance reporting and benchmarking, giving advisors an in depth view of clients’ various investments, empowering advisors to give holistic, personalized advice and consulting.
- Envestnet | Advisor Now™ offers a private-labeled investor engagement technology enabling advisors to deliver a compelling digital wealth management experience to their clients.
- Envestnet | Finance Logix™ provides financial planning and wealth management software solutions to banks, broker-dealers and RIAs.
- Envestnet | Tamarac™ provides leading portfolio accounting, rebalancing, trading, performance reporting and client relationship management (“CRM”) software, principally to high end RIAs.
- Envestnet | Retirement Solutions (“ERS”) offers a comprehensive suite of services designed specifically for retirement plan professionals. With our integrated technology, ERS addresses the regulatory, data, and investment needs of retirement plans and delivers the information holistically.
- Envestnet | Yodlee™ is a leading data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services.
- Envestnet Analytics provides powerful data analytics to the wealth management industry, with solutions tailored to meet the specific needs of wealth advisory firms and their advisors. Leveraging Envestnet’s comprehensive data aggregation capabilities, coupled with the ability to utilize custom data, Envestnet Analytics delivers packaged and custom analytics that help drive profitable growth.
- Envestnet | FolioDynamix is a leading provider of wealth management technology in the industry.
Founded in 1999, we now have nearly $1,294 billion in assets under management or administration or under licensing agreements, servicing more than 6.7 million investor accounts (as of 09/30/2017).
We do not hold customer funds or securities. Transactions are sent to our customers’ Clearing Firms for execution, clearing and settlement of orders, with a minor amount of trades clearing through our self- clearing broker/dealer, Portfolio Brokerage Services, Inc. Our firm services retail and institutional customers and we do not engage in any private placements.
Our firm’s policy is to respond to a Significant Business Disruption (SBD) by safeguarding employees’ health, safety, and firm property; making a financial and operational assessment; quickly recovering and resuming operations; protecting all of the firm’s books and records; and allowing our customers to transact business.
Our strategy is to manage an approved corporate-wide Business Continuity Program (BCP) to maintain the policy and standards while providing a comprehensive education and implementation process. The objective is to create, document, test, and maintain departmental business resumption plans in order to recover critical systems and functions. At least annually, Operations departments with critical business processes and Technology departments test their plans to ensure that they are workable, in compliance, and that staff are aware of their roles in a business interruption. A corporate communication and management process exists to ensure critical business processes resume quickly, thereby reducing financial risk.
Annually we provide a Summary BCP Disclosure statement via our corporate website or an updated hard-copy version to customers upon request. Our firm creates and documents BCP plans based on the potential risks of disruption to our employees, workspace, and/or technology in each of our critical locations. Our firm provides this through resumption plans at the department, location, and enterprise-levels.
Significant Business Disruptions
Our plan anticipates two kinds of SBDs, internal and external. Internal SBDs affect only our firm’s ability to communicate and do business, such as a fire in our building. External SBDs disrupt the operations of the securities markets for a number of firms, such as a natural disasters; acts of terrorism; cyber-attacks; equipment of system failures; unexpected loss of a critical service provider / facilities / key personnel; or a wide-scale, regional disruption. Our response to an external SBD relies more heavily on other organizations and systems, especially on the capabilities of Clearing Firms for trade execution for many of our clients.
As cybersecurity incidents have the potential to contribute to a SBD, Envestnet’s Business Continuity and Disaster Recovery planning controls complement the firm’s Information Security practices which have been standardized using the ISO/IEC 27001, under the direction of the firm’s Information Security Officer.
Plan Location and Access
Our firm will maintain copies of its BCP plan(s), including the annual reviews and approvals in accordance with our Records Management policy, along with any changes that have been made to it for inspection. An electronic copy of our plan is located on the Fusion Risk Management Platform with historical copies maintained on the Envestnet network shared drive within the Business Continuity directory. Additionally, hard copies are kept in each location and safely at BCP leaders’ homes.
Our firm headquarters is located in Chicago, IL and has US offices in Boston, MA;; Dallas, TX; Dallas (Plano), TX; Denver, CO; Evansville, IN; Gig Harbor, WA; New York, NY; Philadelphia (Berwyn), PA; Raleigh, NC; Redwood City, CA; Sacramento, CA; San Jose, CA; Seattle, WA; Secaucus, NJ; Tucson, AZ; and Worthington, OH. In addition international locations exist in Bangalore, India; Brisbane, Australia; London, United Kingdom; and Trivandrum, India. Some of the above referenced locations are dedicated to specific service offerings provided by other Envestnet entities and thus have separate Business Continuity Summaries to cover individual operations.
We engage in order taking and entry in Boston, MA; Chicago, IL; Dallas, TX; Dallas (Plano), TX; Denver, CO; Evansville, IN; Gig Harbor, WA; Philadelphia (Berwyn), PA; and Sacramento, CA.
Alternative Physical Location(s) of Employees
In the event of an SBD, Envestnet will move our staff from affected locations to the relevant predetermined workspace failover site assigned to each employee record within their Department Resumption Plan and maintained in our Business Continuity Planning system.
Envestnet’s overall Business Continuity and Disaster Recovery strategies have been designed to complement each other and address not only worst case scenario in the event of a Significant Business Disruption (SBD), but also disruptions of a lesser magnitude. Envestnet maintains stop-gap measures for business continuity, some of which are outlined below:
- To address loss of Platform technology, Envestnet has an established presence in geographically disperse primary and disaster recovery data center facilities, resulting in the ability to support business out of either facility, should one of these locations by compromised by a natural disaster. Both data centers are hardened with redundant HVAC systems, electrical systems with battery backup and diesel generators, and temperature and environmental monitors. Access to the data centers is secured by cameras and card key access with biometric scanners. Both data centers are staffed 24x7x365;
- To address contingency arrangements for loss of key personnel due to a pandemic or other limited event, Envestnet maintains an Employee Unavailability Plan as a supplemental document to the Firm’s Enterprise, Location-Specific and Departmental Business Resumption Plans. Long-term or permanent arrangements would be made in conjunction with Human Resources Succession Plans.
- To reduce key man risk, most critical operations departments work in a distributed fashion, meaning that they have multiple locations that perform the same production work. In instances of weather issues or regional disasters, these distributed locations can continue processing, and unaffected Envestnet locations can serve as a relocation point for critical employees should the SBD timeframe be extended;
- All employees are assigned a workplace strategy to be employed in the event of a significant business disruption – work from home; relocate to an alternate Envestnet Facility; on hold; etc. In order to support these strategies:
- Most US-based employees have been issued Envestnet laptops to support work in a remote fashion utilizing a secure VPN capabilities and our web-enabled systems to access our custom Platforms to support critical business processes in a remote fashion;
- India-based employees have pre-designated individuals that would relocate to an alternate Envestnet facility and utilize either Disaster Recovery Laptops that are distributed at the time of disaster or VDI interfaces to support work utilizing a secure connection and our web-enabled systems to access our custom Platforms to support critical business processes; and
- Periodic testing of these strategies is required for critical Operations departments.
Customers’ Access to Funds and Securities
Envestnet does not maintain custody of customers’ funds or securities; custody is maintained at third-party Custodians designated by our clients. In the event of an internal or external SBD, if telephone, email, or fax service is available, our registered persons will take customer orders or instructions and contact our Clearing Firms on their behalf; and if our Web access is available, customers may access their funds and securities by contacting their Custodian directly. Envestnet will provide alternative phone numbers and will make the Custodian contact information available to customers as required.
For our self-clearing broker/dealer, Portfolio Brokerage Services, Inc., SIPC could determine that we are unable to meet our obligations to our customers, or if our liabilities exceed our assets in violation of Securities Exchange Act Rule 15c3-1, SIPC may seek to appoint a trustee to disburse our assets to customers. We will assist SIPC and the trustee by providing our books and records identifying customer accounts subject to SIPC regulation and oversight.
Data Backup and Recovery (Hard Copy and Electronic)
Our firm maintains its primary copy of books and records at its Boston, MA; Chicago, IL; Dallas (Plano), TX; Denver, CO; New York, NY; Philadelphia (Berwyn), PA; Redwood City; and Sacramento, CA offices. Our firm maintains the documents required by Rule 204-2, SEC Rule 17a-3 and SEC Rule 17a-4.
Our firm maintains its backup hard copy books and records through various third-party storage vendors. Hard copy records are sent to offsite storage semi-annually or more frequently if needed.
Our firm maintains its backup electronic books and records through strategic partnerships with various parties for our Platform technology and backup vendors. The data vaulting / managed backup service and data center providers, which house our primary / production and secondary / disaster recovery sites, are hosted in the United States and do not have direct access to Envestnet data or client PII. Data center providers only provide physical space, security and environmental controls; Envestnet owns and manages the equipment within our secured cage. Backup vendors only store data on behalf of Envestnet; Envestnet encrypts data before transmission, vendors do not have access to encryption keys. We have a defined data protection strategy to cyclically back up our electronic records to meet the recovery time objectives of our various mission critical systems.
In the event of an internal or external SBD that causes the loss of our paper records, we will access electronic versions of these records in our various systems and Platforms. If our primary site is inoperable, we will continue operations from our backup site or an alternate location. For the loss of electronic records, we will recover the electronic data from our backup records stored in the disaster recovery site, or, if our primary site is inoperable, continue operations from our backup site.
Financial and Operational Assessments
Envestnet’s Risk Management Program is managed within its corporate risk assessment tool, with oversight provided by a cross-functional Risk Management Committee (RMC).
The RMC meets formally no fewer than two times a year to review, assess and discuss any significant risks or exposure and steps taken to minimize identified risks or exposures. The results of the Risk Assessments are confidential and cannot be shared with parties external to Envestnet; however, Envestnet can attest the assessments are performed using best practice standards.
Our firm recognizes that operational risk includes the firm’s ability to maintain communications with customers and to retrieve key activity records through its mission critical systems. In the event of an SBD, we will immediately identify what means will permit us to communicate with our customers, employees, critical business constituents, critical banks, critical counter-parties, and regulators. Although the effects of an SBD will determine the means of alternative communication, the communications options we will employ will include our web site, telephone, voicemail, and secure email. In addition, we will retrieve our key activity records as described in the section above, Data Backup and Recovery (Hard Copy and Electronic).
Financial and Credit Risk
In the event of an SBD, we will determine the value and liquidity of our investments and other assets to evaluate our ability to continue to fund our operations and remain in capital compliance. To the extent that we have financing requirements at the time of an SBD above and beyond considerations that are already contemplated through insurance coverage, we will request additional financing from our bank or other credit sources in order to remain in compliance with any applicable capital requirements. If we cannot remedy a capital deficiency, we will file appropriate notices with our regulators and immediately take the appropriate steps.
Mission Critical Systems
Our firm’s mission critical systems are those that ensure prompt and accurate reporting of securities holdings and the processing of securities transactions, including order implementation, reconciliation, comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts and the delivery of funds and securities. More specifically, these systems include the custom Platforms that support our core business offerings. In addition our mission critical systems include any corporate applications that support our communication needs surrounding internet, phone, and email.
We have primary responsibility for establishing and maintaining our business relationships with our customers and have sole responsibility for our mission critical functions of order implementation, reporting, billing, reconciliation, comparison and allocation. In addition we provide execution, clearance and settlement of securities transactions. Our Custodians provide through contract execution, clearance, settlement of securities transactions and the delivery of funds and securities.
Clearing Firms utilized by our client maintain a business continuity plan and the capacity to execute that plan. The Clearing Firms represent that they will advise us of any material changes to plans that might affect our ability to maintain our business and they have presented us with an executive summary of their plans. In the event any of the Clearing Firms execute their plan, the firms represent that they will notify us of such execution and provide equal access to services as its other customers. If we reasonably determine that the Clearing Firm has not or cannot put its plan in place quickly enough to meet our needs, or is otherwise unable to provide access to such services, the Clearing Firm represents that it will assist us in seeking services from an alternative source.
The Clearing Firms represent that backup of our records are taken at a remote site. Each Clearing Firm represents that it operates a backup operating facility in a geographically separate area with the capability to conduct the same volume of business as its primary site. Each Clearing Firm has also confirmed the effectiveness of its back-up arrangements to recover from a wide scale disruption by testing.
Recovery time objectives provide concrete goals to plan for and test against. They are not, however, hard and fast deadlines that must be met in every emergency situation, and various external factors surrounding a disruption, such as time of day, scope of disruption, and status of critical infrastructure— particularly telecommunications—can affect actual recovery times. Recovery refers to the restoration of clearing and settlement activities after a wide-scale disruption; resumption refers to the capacity to accept and process new transactions and payments after a wide scale disruption.
As a part of Envestnet’s annual review and update of our the BCP Program and Plans, Envestnet performs a Business Impact Analysis (BIA) to account for any changes in our operations, structure, business, or locations. The BIA process is supported through our Business Continuity Management Tool, Fusion Risk Management and assists the firm in analyzing the following criteria for each critical business process performed:
- Building a criticality profile, outlining personnel resource requirements and mitigation strategies;
- Assessing financial, operational, legal/compliance, reputation, market share, and strategic impacts over several points in time of a SBD;
- Identifying and prioritizing critical business processes and associated Recovery Time Objectives (RTOs);
- Providing visibility for upstream and downstream dependencies between critical business processes across the firm;
- Providing visibility for system and technology resources for both internal systems and external service providers;
- Identifying key personnel that support processes in either a primary or secondary role;
- Naming alternate processing facilities where work is processed in a distributed fashion;
- Outlining dependencies on key documents and vital records; and
- Identifying critical strategic partners / third-party vendors required to support our business.
Our Firm’s Mission Critical Systems
Currently, our firm receives orders from customers via the Envestnet Trading Platform, email, phone and fax. During either an internal or external SBD we will continue to take orders through any of these methods that are available and reliable, and in addition, as communications permit, we will inform our customers when communications become available to tell them what alternatives they have to send their orders to us.
Customers will be informed of alternatives by email, Envestnet website and/or telephone. If necessary, we will advise our customers to place orders directly with their Clearing Firm or an alternative.
We currently implement orders by sending them to our self-clearing broker/dealer or by sending them to the customers’ Clearing Firm. In the event of an internal or external SBD, we would use our failover sites, our self-clearing broker/dealer or the customers’ Clearing Firms in order to execute orders.
Other Services Currently Provided to Customers
In addition to those services listed above in this section we also provide our customers with rebalancing, reconciliation, portfolio management, reporting, overall account information and the ability to withdraw or deposit funds into their accounts. In the event of an internal or external SBD, we would continue to provide these services through unaffected locations or through our Clearing Firms.
Mission Critical Systems Provided by Our Clearing Firm
Our firm relies, by contract, on our Clearing Firms to provide order execution, order comparison, order allocation, and the maintenance of customer accounts and the delivery of funds and securities.
Alternate Communications between the Firm and Customers, Employees, and Regulators
We communicate with our customers using our Platform technology, telephone, email, our web site, fax, U.S. mail, and in person visits at our firm or at the other locations. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party. For example, if we have communicated with a party by email, but the Internet is unavailable, we will call them on the telephone and follow up where a record is needed with paper copy in the U.S. mail. In addition, we may also utilize our automated notification system, EverBridge, as a means to reaching select contacts at our client home office locations quickly during an SBD to provide disruption notification, procedures, and contingency arrangements.
We communicate with our employees using the telephone, email, and in person. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party. We will also employ a call tree and/or our automated notification system, EverBridge, so that senior management can reach all employees quickly during an SBD to provide disruption notification, procedures, and contingency arrangements.
Key Service Providers / Strategic Partners
We communicate with our key service providers / strategic partners using the telephone, email, fax, U.S. mail. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party.
We communicate with our regulators using the telephone, email, fax, and U.S. mail. In the event of an SBD, we will assess which means of communication are still available to us, and use the communication closest to those we have used before the disruption.
Critical Business Constituents and Counter-Parties
Envestnet follows a formalized a risk-based strategy for performing vendor due diligence and oversight. Envestnet works with the business to identify vendors that support their critical business processes. Envestnet performs due diligence on the vendor and their service offerings at the onset of the relationship. The due diligence review is tailored to the specific service provided by the vendor, and typically includes: information and physical security, regulatory compliance, business continuity, and enterprise risk management.
For vendor onboarding, the Envestnet Legal department, along with Envestnet’s Information Security Officer, requires that all vendors are subject to strict confidentiality, non-use and non-disclosure restrictions, and that all contracts contain appropriate language to specifically address issues related to Information Security, Data Security, Confidentiality, and Service Level Agreements (as applicable to the specific vendor engagement).
Envestnet defines outsourced/subcontracted work as leveraging a third-party vendor for operational support. Envestnet does not use outsourced operational support for any of its core functionalities (i.e. software development, technology support, reconciliation activities, client support, etc.). However, engages in strategic partnerships with several third party vendors to leverage certain capabilities. These strategic partners do not have access to Envestnet’s data or client PII, with the exception of a Custodian, Clearing Firm, and Statement Providers that are used at the direction of our clients. The following are examples of our strategic partners; a comprehensive list can be made available upon request:
- Data center providers only provide physical space, security and environmental controls; Envestnet owns and manages the equipment within our secured cage;
- Electronic vaulting / backup vendors only store data on behalf of Envestnet; Envestnet encrypts data before transmission, vendors do not have access to encryption keys;
- Shredding vendors are supervised onsite and throughout the shredding process;
- Data feeds are one-way to Envestnet; and
- Custodians, Clearing Firms, and Statement Providers are known directly to our Advisor Clients, and RIAs enter into a tri-party agreement, thus the RIA has the ability to conduct direct reviews and ability to approve the relationship. Additionally, Custodians and Clearing Firms are regulated and bound to laws and rules related to data security.
We have contacted our critical business constituents defined as those businesses with which we have an ongoing commercial relationship in support of our operating activities, such as vendors providing us critical services and have determined the extent to which we can continue our business relationship with them in light of the internal or external SBD. We will quickly establish alternate arrangements if a business constituent can no longer provide the needed goods or services when we need them because of an SBD to them or our firm.
We have contacted our critical counterparties, such as our disaster recovery providers, Clearing Firms, and Custodians to determine if we will be able to carry out our transactions with them in light of the internal or external SBD. Where the transactions cannot be completed, we will work with our Clearing Firm or contact those counter-parties directly to make alternative arrangements to complete those transactions as soon as possible.
Our firm is subject to regulation by: SEC, FINRA, MSRB and the particular states in which we are registered. We file reports with our regulators using paper copies through the U.S. mail and electronically using fax, email, and the Internet. In the event of an SBD, we will check with the SEC, FINRA and other regulators to determine which means of filing are still available to us and will use the means closest in speed and form (written or oral) to our previous filing method. In the event that we cannot contact our regulators, we will continue to file required reports using the communication means available to us.
Communications with Law Enforcement / FBI
In the event of a security-related incident which requires assistance from external agencies, Envestnet will communicate with local FBI authorities regarding the nature and extent of the incident.
Below is our contact information for the FBI Chicago Field Office. The Envestnet Information Security Department will coordinate all communications.
Business Continuity tests are completed with critical business resources and BCP Teams at least annually to provide Envestnet Management and our stakeholders with the assurance that the business will successfully recover following a business disruption. Below is an overview of Envestnet BCP Testing:
- Testing is a major component of the Envestnet Business Continuity Program, tests ensure that plans are repeatable, consistent and that staff are able to fulfill roles and responsibilities;
- The test schedule is created annually in Q4 by BCP Teams. Considerations are made for employee participation and preparedness levels along with the current risks and impacts to the business;
- Success is measured ultimately by achievement of testing objectives;
- As needed, Business Continuity Plans are updated to account for findings and/or feedback received from test participants; and
- Quarterly BCP Reports are provided to management for review and action, as well as, to clients if requested.
Updates and Annual Review
Our firm will update this plan whenever we have a material change to our operations, structure, business or location or to those of our Clearing Firms.
Senior Manager Approval
I have approved this Summary BCP Disclosure as reasonably designed to enable our firm to meet its obligations to customers in the event of a significant business disruption.
By: Pete D’Arrigo
Title: Chief Financial Officer
*original signature on file in main office