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How fast have Charles Schwab, Envestnet, Financial Engines, and BlackRock grown, relative to their respective peer groups? I'd like to show how these company's growth in a positive light!
Hello! It is my pleasure to respond to your query in providing you with a competitive analysis of several financial firms’ growth rates.
FINDINGS
To compare the growth rates of these companies to the industry for assets under management/administration, we must first look at the industry itself. Across the industry, according to Cerulli data (and the Envestnet website), “the managed account market will climb to $6.7 trillion in assets under management by 2017, [showing] an 18 percent compound annual growth rate between 2013 and 2017”.
The details of my findings on each of the companies can be located on this spreadsheet, and are outlined briefly below.
• CHARLES SCHWAB: According to Trefis, Charles Schwab’s “interest earning assets have been growing significantly in the last few years, reaching over $191 billion in 2016, having almost doubled since 2012”. Forbes notes that, at year-end 2014, they had nearly $2.5 trillion in client assets under management. For revenue growth, MarketWatch notes that, in sales/revenue over the last five years, Schwab has seen growth from 2012’s figures of $5.08 billion to 2016’s figures of $7.63 billion. Additionally, Trefis reports that the asset and investment management portion of their business is becoming ever-more important to the firm, although competition due to low-cost ETFs is fierce. The firm manages nearly $1.23 trillion in proprietary and mutual fund assets, though the fees earned on these accounts is lower than those traditionally earned on client assets. Although most of their financials have been increasing/improving over the last half-decade, their revenue-per-trade has declined over the last few years due to stiff market competition.
Schwab’s competitors include Ameritrade and Fidelity Investments. MarketWatch notes that Ameritrade’s sales/revenue increased from $2.65 billion in 2012 to $3.33 billion in 2016. Ameritrade’s website notes that they currently hold $882 billion in total client assets under management, and that they gained $267 billion in new client assets under management over the last five years. Fidelity Investments currently has just over $6.2 billion total customer assets, which is up from $4.9 billion they showed in 2014, according to their website. Forbes notes that, at fiscal year-end 2016, they had made $15.9 billion in sales revenue. MarketWatch notes that their sales/revenue increased from $7.16 billion in 2012 to $9.57 billion in 2016 (showing a slight dip between 2013 and 2014).
• ENVESTNET: According to the 2015 and 2017 TAMPS reports, Envestnet has grown their total assets from $72 billion in assets under management and $174 billion in assets under administration at the end of 2014, to $73 billion in assets under management and $177 billion in assets under administration as of 9/30/2015. This shows growth in less than one year from $246 billion to $250 billion. According to their investor presentation, the company’s AUM/AUA grew from $38 billion in 2009 to $64 billion in 2010 to $70 billion in 2011, and hit $93 billion by 9/30/2012. Other figures in the report note that they experienced a 31% increase in asset CAGR from 2005 to 2011 and a 39% increase in account CAGR over the same period.
Envestnet’s competitors include SEI and LPL Financial. According to the TAMPS reports, in 2015, SEI has $47 billion total assets under management, and in 2017, had $55.6 billion assets under management. MarketWatch notes that SEI’s sales/revenue increased from $1.01 billion in 2012 to $1.4 billion in 2016. As for LPL Investments, their website notes that, as of 12/31/2016, they had $509 billion in total advisory and brokerage assets. MarketWatch notes that their sales/revenue ebbed-and-flowed over the last five-year period – with the following figures: 2012 = $3.66 billion; 2013 = $4.13 billion; 2014 = $4.37 billion; 2015 = $4.28 billion; 2016 = $4.05 billion.
• FINANCIAL ENGINES: According to InvestmentNews, Financial Engines currently have $138 billion in assets under management. In reviewing their annual reports from 2008 through 2016, we note that the company’s total revenue increased from nearly $390,000 to nearly $1.5 million in 2012. The reports also show that, in 2012, they had $64 billion in assets under management (a 35% increase from 2011), and that, as of the end of 2016, the company had $138 billion in assets under management. This shows tremendous growth over time. MarketWatch notes that the company has seen tremendous five-year growth, going from $185.82 million in 2012 to $423.94 million in 2016.
Financial Engines’ competitors include FutureAdvisor and Betterment. Owler reports that FutureAdvisor’s current revenue is $6 million. It is important to note that BlackRock acquired FutureAdvisor in 2015. At the time, they had $600 million in assets under management and approximately $3 million in annual revenue. Owler notes that Betterment’s estimated revenue is $12 million. According to Forbes, since they launched in May 2010, their “assets under management have grown to $8.5 billion at a 300% rate”.
• BLACKROCK: According to WSJ, in 2015, BlackRock’s assets under management equaled $5.12 trillion, which was a 14% increase from the previous year. Their corporate overview demonstrates significant growth from 2011, where they had $3.5 trillion in AUM, to 2016, with $5.12 trillion in AUM. Barron’s notes that in Q3 2016, the AUM growth surpassed that of 12 competitors’ firms, increasing by 4.6% during Q3 alone. MarketWatch notes that BlackRock’s revenue showed minor growth from $9.46 billion in 2012 to $11.21 billion in 2016.
BlackRock’s competitors are Goldman Sachs and Franklin Templeton Investments. Pionline notes that, at the end of Q1 in 2014, Goldman Sachs reported $956 billion in AUM, up 11% from the previous year. Their total assets under supervision equaled $1.083 trillion at the end of Q1 2014, which was up 12% from the previous year. MarketWatch notes that Goldman Sachs’ revenue decreased between 2012 ($10.41 billion) and 2015 ($7.73 billion), then rebounded in 2016 with $9.03 billion. According to their investor notes, Franklin Templeton had $763.9 billion AUM at year-end 2015, and $720 billion AUM at year-end 2016. GlobeNewsWire reports that the company’s AUM as of 6/30/2017 were $742.9 billion, which showed an increase from $732.1 billion as of 6/30/2016. So, this company has seen a decrease in their AUM over the last three years.
ANALYSIS
• CHARLES SCHWAB: Charles Schwab’s AUM nearly doubled between 2012 and 2016, and they’ve seen significant growth in revenue, as well. Schwab’s competitors Ameritrade and Fidelity Investments also saw significant growth in AUM and revenue, though not as strong of growth as Schwab.
• ENVESTNET: Envestnet has seen only slight growth in AUM between 2015 and 2017, however previous to that, from 2009 to 2012, the company saw significant growth in AUM. Envestment’s competitors SEI and LPL Financial have also seen limited growth in AUM. SEI also saw slight growth in revenue, while LPL’s revenue fluctuated.
• FINANCIAL ENGINES: Financial Engines has experienced significant AUM and revenue growth since 2008. The company’s major competitors, FutureAdvisor and Betterment, have also seen tremendous growth over the last half-decade or more.
• BLACKROCK: BlackRock saw significant growth in AUM between 2011 and 2016, as well as strong revenue growth from 2012 to 2016. BlackRock’s competitor Goldman Sachs also showed strong increases in AUM, however they experienced a decrease in overall revenue year-over-year, with a slight rebound in 2016. BlackRock’s competitor Franklin Templeton’s AUM decreased between 2014 and 2016.
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Thank you again for your question, and I hope this information gives you what you need. Please contact Wonder again for any other questions you may have!