Significant layoffs are coming to advisory technology behemoth Envestnet, the company has confirmed.
WealthManagement.com received the text of a leaked internal memo from Envestnet CEO Bill Crager; sources say it was distributed early Thursday morning, giving staff warning about what is coming.
"We have made some very difficult decisions," the memo reads. "These decisions are not taken lightly, and I acknowledge the personal impact they have. These decisions are necessary to sustain the amazing work we do, and the value we deliver for our stakeholders."
"As an ongoing part of this process, we are eliminating certain positions across the company," the memo continues. "We are providing support during this transitional period to impacted employees,"
Eric Jones, head of corporate communications for Envestnet, issued the following statement confirming the layoffs:
“As we noted during our last earnings call, we signaled the conclusion of our investment cycle, and we are transitioning to a normalized expense and operational environment in order to meet our goals for margin expansion and cash flow. In this market environment with macroeconomic headwinds, this requires maintaining a disciplined approach to managing our expenses and optimizing operational efficiency company-wide. With this in mind, we made the difficult decision to eliminate certain positions across the company. These are deliberate steps to continue to deliver value to shareholders and customers given the current market conditions and our significant goals for the future.”
The news comes just as Envestnet competitor Orion Advisor Solutions also is planning job cuts of its own.
“Orion has acquired seven companies over recent years and this is the final action of the team synergies of bringing these businesses together," Orion spokeswoman Kendra Galante said in a statement. "A number of roles were eliminated—the majority of which were duplicative and non-client-facing."
The news of Orion's layoffs was first reported by Citywire RIA.
According to sources, there had been discussion at Envestnet between senior management indicating some units had been asked to put together lists of staff that could be laid off, while others had no such mandate.
Mark Ovaska, who worked at Envestnet for a year after his firm Advisor Innovation Labs was acquired in early 2020, heard about the layoffs and was not surprised at news.
"I think it is a long time coming [the layoffs] but the ability for [Bill] Crager to make what is undoubtedly a tough decision shows that he is displaying strong leadership," said Ovaska, who left Envestnet in March 2021
This week, Envestnet announced that former iShares Managing Director Josh Warren will replace long-tenured Pete D’Arrigo as the company's chief financial officer. Warren will officially step into the role on Nov. 15, a move that signals “Envestnet is not proactively making moves to sell the company,” according to Devin Ryan, an equity analyst with JMP Securities.
Rumors that Envestnet was an acquisition target have circulated frequently in the media, particularly in early 2020 and early 2022, Ryan points out. One publication last year cited offers on the table in the range of $90 to $100 a share. In both time periods, no deal was announced.
Envestnet currently trades around $46 a share.
Under Crager's leadership, Envestnet has experienced a series of challenges in recent years, from co-founder and CEO Jud Bergman's untimely death in 2019, to disputes with activist shareholder Impactive Capital, which acquired a 7.5% stake in the company and two board seats in 2022.
"Seeing colleagues leave our organization is not easy, and I understand that today is a challenging day," Crager's memo ends. "I want to express my sincere gratitude to each and every one of you for your unwavering commitment and continued hard work, your dedication to our clients, and your focus on our shared future."
This is a breaking story and will be added to as more information is available.
