Products October 24, 2022

Envestnet Data & Analytics Plans to Enhance Access to Financial Data, Improve Financial Wellness

Envestnet seeks to make it easier for customers to connect, grow, protect and manage the financial wellness of their business all in one place.

Reported by



Envestnet Data & Analytics has announced new platforms, innovations and partnerships at Money 20/20 USA, taking place this week in Las Vegas. By bringing together capabilities from throughout its business, Envestnet Data & Analytics seek to apply the use of data, intelligence, and technology to support the decisions people make about money and their financial future.

Envestnet offers data, digital solutions and differentiated experiences delivered and embedded through APIs and standalone portals with the goal of empowering customers to intelligently connect, grow, protect, and manage the financial wellness of their business all in one place.

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The platforms seek to enable actionable intelligence and next best actions for Envestnet clients –driving measurable results to deliver the intelligent financial life for consumers, small and medium size businesses, advisers, and investors.

The new announcement include:

Platforms

  • Wealth data platform: a cloud-based data intelligence solution for wealth advisory firms that allows home offices and financial advisers to connect and enrich all the data sources across their practice and provide clients with actionable insights at scale on one holistic platform.
  • Banking data platform: available for banks and financial institutions of all sizes, including those who support small to medium-sized businesses. This platform provides an option to better support and guide customers on their financial journey along with their need to obtain high-level, holistic views of their retail banking and business’ finances.
  • Technology data platform: fintech, personal financial management and small business lenders can obtain high-level, holistic views of their business’ finances through innovations within Envestnet’s TDP—including the option to better support and guide customers on their financial journey through the use of finance apps and payments.

Solutions

  • Envestnet Insights Engine for banking and technology is a machine-learning based tool that supports the growth of client activities across the Envestnet ecosystem. As of the second quarter, Insights Engine had generated more than 17 million insights a day across 12 categories—compared with 11 million at year end 2021. Among clients who adopted them, there has been a 70% increase in usage of those insights.
  • The SMB Portal within the banking and technology data platforms provides customers with access to their data in one place, allows them to make important business decisions more easily, and take actions based on that data. The integrated portal includes the apps that most SMBs use to run their businesses and provides greater opportunity for growth and partnership between SMBs and banks.

Partnerships

  • To increase operational scale and business agility, Envestnet Data & Analytics has announced a partnership with TCS earlier this month. The partnership seeks to accelerate Envestnet’s response to growth opportunities in the market and be more dynamic in meeting clients’ expectations.
  • A digital financial wellness company, BrightUp has implemented Envestnet’s FastLink 4 to provide users with a better account linking experience. Through the integration, insights are now enabled to help users with debt consolidation, reduction, and emergency loans.
  • Fintech-as-a-service platform allows any company to embed financial services and payment capabilities into their existing applications, products or services through a single and scalable API. The partnership with VoPay provides Canadian enterprises access to multichannel payment rails and open banking capabilities enabling product managers and developers to build cutting-edge financial products.
  • A privacy-compliant identity network reviews more than 1.5 billion daily interactions generated by more than 550 million U.S. digital identity profiles (many U.S. residents have more than one email address) captured from a growing coalition of more than 150,000 websites and apps to provide real-time identity intelligence at scale. Deduce seeks to add a layer of fraud detection and prevention within payments solutions to help financial institutions ensure that the user verifying the account is who they claim to be before performing subsequent (and potentially costly) transactions.
  • FinGoal is an insights platform that sits atop of personal finance data and enables companies to benefit from their comprehensive data aggregation network. Leveraging the Aggregator Switch Kit powered by the FinGoal, developers can switch to Envestnet | Yodlee data aggregation in minutes with no disruption to current users, saving time and reducing friction.
Compliance October 24, 2022

Outdated Mortality Table ERISA Suit Filed in Arizona

The lawsuit alleges that Pinnacle West, an electric utility, used outdated mortality tables, causing it to underestimate the present value of employee pensions.

Reported by


Former employees of Pinnacle West, an electric utility company in Arizona, allege that the company used outdated and unreasonable actuarial tables to undervalue their defined benefit pension benefits by underestimating the participants’ life expectancy.

The Employee Retirement Income Security Act suit was filed in the Federal District Court of Arizona.

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The beneficiaries of Pinnacle’s retirement plan earned benefits in the form of a single life annuity, or SLA. The SLA then makes monthly payments to the beneficiary upon retirement. The plan also offered a joint survivor annuity, or JSA, which makes payments to a surviving beneficiary, typically a spouse, after the death of the participant. The JSA must be actuarially equivalent to an SLA, discounted for the possibility that the spouse will outlive the participant up to a statutory maximum.

In calculating the present value of either annuity, the plan must account for future interest rates and the life expectancy of the participant using a reasonable mortality table. Underestimating the life expectancy of a participant by using an outdated mortality table, would likely result in the pension’s value being underestimated.

The suit alleges that Pinnacle used an actuarial table published in 1971 for calculating the JSA, which drew on life expectancy data from the 1960s, to estimate the life expectancy of plan participants. According to the suit, a 65 -year-old man on the 1971 table is estimated to live another 15.2 years, but a more updated table, published in 2014, says the same man should expect to live another 21.6 years. Plaintiffs Joseph Peck and Jerome Skrtich retired from Pinnacle in 2018 and 2021, respectively, and were enrolled in a JSA plan.

This would have the effect of reducing the “present value” of the JSA since it is projected into the future for fewer years and therefore also reduces the monthly payments paid out to the plaintiffs all else being equal. Peck’s pension was undervalued by $47,000, according to the suit, which translated to a reduction of $191.39 per month. Skrtich’s pension was undervalued by $17,000, which resulted in a monthly reduction of $62.91. The suit seeks class action status to include all beneficiaries affected.

 “By failing to pay JSA benefits in amounts that are actuarially equivalent to the single life annuities offered to participants under the plan, defendants cause retirees to lose part of their vested retirement benefits in violation of ERISA,” the plaintiffs argue.

When asked for comment, a representative of Pinnacle said, “we have received and are currently reviewing the complaint,” and declined to comment further.

The suit also alleges that Pinnacle used modern actuarial mortality tables in estimating their plan’s liabilities for the purpose of setting utility prices. Pinnacle passed these hypothetical pension costs onto their customers by requesting an increase in utility prices from the Arizona Corporation Commission, which was approved. Utility costs increased in Arizona by a combined $165.9 million to cover increased pension costs, but Pinnacle only applied the modern tables to calculating pension cost for the purpose of setting utility prices, and not for the pension pay-outs themselves, and therefore did not actually increase the pension pay-outs, which was ostensibly the justification for the cost increase in the first place.

Additionally, the plaintiffs allege that Pinnacle assumed a 4.3% female workforce when calculating the present value of a beneficiary’s pension, when the female workforce of Pinnacle is actually 25%. Since women tend to live longer than men, undercounting them in this calculation results in the present value being underestimated. Also, though men have made greater life expectancy gains than women since 1971 (closing, but not ending the gender gap) these gains have not been included in the calculation, since the mortality tables used by Pinnacle have not been updated.

The plaintiffs asked the court for compensatory damages and an injunction against future infractions.

The full complaint is available here.

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