The new portfolio adds to a range of solutions that the firm, which provides much of the digital infrastructure used by wealth managers, has unveiled in recent months.

Envestnet, the US tech platform and tech group that was bought by Bain Capital in 2024, has launched what is called an Options Strategy Quantitative Portfolio. It addresses market volatility, tax risk, and liquidity risk associated with concentrated stock positions, and helps advisors and their clients unwind these positions.

The offering comes at a time when there is a need for many HNW and other investors to diversify and reduce concentration risks. 

"This new Options QP strategy, which will allow advisors to build better portfolios around low-cost basis shares and other investment needs, is a great addition to our suite of personalized solutions,” Dana D'Auria, co-chief investment officer and group president of Envestnet Solutions, said. 

The firm explained that concentrated stock positions can arise for reasons such as an inheritance, a large stock position granted by a company, shares from a business sale, or simply loyalty to a long-term holding. 

“For investors holding a concentrated position in less liquid or closely held stocks, sometimes selling the position without moving the market or finding buyers can be difficult when trying to exit the position,” Envestnet said. “Furthermore, selling a concentrated position in a stock that has seen strong appreciation may trigger significant taxes. Consequently, many investors will delay or avoid selling to defer taxes leading to a prolonged concentrated position, further exacerbating the risk.”

The new strategy offers investors three options-based hedging solutions that can help generate income from and/or mitigate the risk of a concentrated position while spreading out taxable gains over a multi-year time span. 

In September, Envestnet showcased new and existing RIA offerings at the Future Proof wealth management festival in California. The business also unveiled research showing that 30 per cent of advisors say they cannot spend enough time with clients. 

Businesses such as Envestnet provide much of the digital infrastructure used by RIAs and other wealth management businesses today. The marketplace for such services is competitive, and Envestnet, no longer a listed company, has been through difficulties, as explained by FWR’s US correspondent, Charles Paikert, here.