Journal of Financial Planning: February 2021
WHO: Dani Fava
WHAT: Head of strategic development,
WHAT'S ON HER MIND: “We’ve done everything online and what has happened is that clients and advisers have an increased level of trust in online experiences.”
Tell our readers a little bit about your new role at Envestnet.
I am the head of strategic development at Envestnet, which is part of a new strategy office that Envestnet has built over the past year. My goal as the head of strategic development is to look ahead to the future and see where the industry is going, where our clients are going and where they really need to be going, and making sure that the company’s road map aligns with where everything is headed.
Our group creates a strategic roadmap that pulls together initiatives from the entire firm. With all the information that comes into our group, we simplify it and help communicate it and make sure everybody’s tracking to the right goals. It really has added a level of transparency into the core of Envestnet that I don’t think was there before. We’re unique in that we have an ecosystem of capabilities and each one derives value from the others. One example is Yodlee for data aggregation. We have this whole wealth of data and we have customers who use that data, but we also have brands inside of Envestnet that derive value from that data. We have the Tamarac and MoneyGuide brands, and it’s this ecosystem of brands all drawing value from each other. So our awesome strategy team is looking at how those brands play together and how we want them all to move forward together into the future.
In a recent interview, you coined the term ‘involuntary technology revolution.’ Tell us what that means and how the COVID-19 pandemic has exacerbated that.
A constant theme throughout all the discussions we’ve had in the past is how do we get more people—advisers as well as clients—to adopt more technology? I think before the pandemic something like 30 percent of advisers were using video conferencing. The involuntary tech revolution during the pandemic has pushed both advisers and their clients to really adopt technology and do everything online.
One of my favorite quotes is, ‘Once the mind expands, it can never go back.’ We’ve been forced to adopt technology—whether it be in the form of video conferences or online banking or online grocery shopping. We’ve done everything online and what has happened is that clients and advisers have an increased level of trust in online experiences. What this does moving forward is make clients more ready to adopt more solutions from different or disruptive entities. Take insurance, for example; you wouldn’t think five years ago that so many people would be buying insurance online. Then you see a company like Lemonade kill it at the online insurance game.
Now, clients are not only willing and able to, but their expectation is that [business] should be able to be done online. These changing expectations and increased levels of trust have advisers looking at their practices in a different way. For someone like me who’s been tech-forward for most of my career, it’s the silver lining.
What are some fintech trends you foresee coming out of the pandemic?
You’re using one right now that I think is going to become really popular: voice transcription and having all of our meetings online. I see that growing. That’s probably a small one.
We’re actually coming out with a mega trends deck, which is a way for us to communicate some of the most impactful trends that we’re seeing in the fintech space to Envestnet clients and prospects. It’s called Social Megatrends. We examined what social behaviors and trends we see showing up in fintech and report on four of them.
The involuntary tech revolution is one that we’ve already hit on.
Then there’s something I call the age of the creator, which is why Etsy is trading at all-time highs, because we really crave and value creations of our peers. Also, all of us now want to create—we want to create content—and that’s showing up in a really interesting way. I’ll give one example of that in eToro, the trading platform that allows you to copy trades from somebody that you follow. It’s like doing a duet on TikTok but it’s trading, so you can really follow someone whose trades you like. I think solutions like that are going to become more popular because people want to follow their peers.
Another one is something called decentralization. Cryptocurrency is probably the biggest example of decentralization, which is moving away from the middle, moving away from the established organization and into a more independent situation where you can engage with a piece of something rather than engaging with the entirety of something.
We’re going to see a really competitive space for advisers because what decentralization means for them is that they’ll be able to sell more products. They’ll be able to go wider and not deeper. They’re going to be able to offer more things like insurance and banking services because of decentralization.
The last, and probably most important one, is wellness. Everyone wants to measure their wellness. People are wearing a Fitbit or an Apple Watch, which are tracking your steps and sleep and nutrition. Everyone wants to measure. There are apps coming out that are enabling you to measure your performance.
Measuring your wellness is really important in fintech because now we’re going to start to see a natural push toward impact investing and understanding the wellness of [your portfolio] and the impact that your portfolio is having on you and on the world. That’s a really big one that I’m excited about. And, Envestnet’s mission is financial wellness. It’s the purpose that drives us. We’re ahead of this trend and feel really good about where the industry is headed.
Let’s talk AI for a minute. How has AI impacted the financial planning profession and how will it continue to impact the profession in a post-COVID-19 era?
Artificial intelligence. One of my favorite areas, of course. We’ve seen AI pop up in a lot of places. Many of them have been back-office facing in order to do things like predict or isolate fraud just by looking at behavior—identifying something that is different and detecting abnormal behavior.
But we’ve also seen AI coming in on creating investments—making investment decisions using artificial intelligence—whether that is from a quantitative perspective using the fundamentals and seeing what might work in the future or looking at what has worked in the past.
AI also plays a role in natural language understanding. AI can go out there and read the sentiment of every article that was written today or every article that was written about a company and distill that into an insight.
It’s moving now from artificial intelligence in the back office into investments and I think it’s going to continue to move to a more client-facing role now that more people understand it and there’s more talent that can work with it. So how do we—an adviser or a firm—create more personalized content for a client consumption, based on what clients have done or read in the past or based on what clients like that person are doing?
You often talk about the importance of connecting and asking questions. How has that helped you in your career?
What has helped me in my career is leaning into things that I don’t understand and the way to lean into things that you don’t understand is to just ask questions.
One of those areas is cryptocurrency. I have become very well-versed in that arena lately and the reason why is because I’m just naturally curious. I don’t like that there are things out there that I don’t understand, and I want to understand them and be able to participate and be a leader. My natural curiosity pairs with my being fearless to fail. I’m not afraid to look bad or do something wrong—I’m just not afraid of that. I think a lot of people shy away from unfamiliar things because of the fear of failure. I decided long ago in my career that failure is good and to learn from it. You should fail fast and often; that’s how you progress.
In terms of fintech, what are some ways advisers can be more innovative?
Curiosity begets innovation. I think advisers should lean into that curiosity and learn as much as they can about things they’re uncomfortable with. They can also find ideas and innovation in the most unlikely places. If you spend your time around the same people with the same hobbies and the same lifestyle all the time, you’re probably not going to get a lot of great ideas for innovation from external sources. If you start to reach into places where you don’t normally wander—like pro bono financial planning, for example—and spend some time around different types of participants with different types of needs, that actually creates ideas, and that diversity also begets innovation.
I would say an adviser who really wants to be more innovative should lean into things they don’t know anything about—cryptocurrency is a great example—and spend time around different types of people and clients.
What’s the best piece of advice you’ve ever received?
The best piece of advice I would say is if you’re the smartest person in the room, find a new room.
That was my quote for the [InvestmentNews] Women to Watch Award and I take that seriously because I really do feel like you can learn something from virtually everyone you meet.
I think when you’re spending your time around people and you feel like you’re the smartest person in the room, you’re not learning. I’m not saying it’s a problem with the people in the room—it could also be about yourself. If you feel like the smartest person in the room, look for a change because you’re not listening anymore and they’re not learning anymore. And that is really powerful.
What technology tools became most important to planners during the pandemic?
Financial planning tools. Financial planning tools are the way to engage a client through financial planning. This pandemic has been all about engaging your clients and starting conversations more than ever because we can’t see each other in person, can’t go out to dinner, and you have to figure out a way to engage your client in conversations. I think financial planning tools have been one of the best ways to do that because now you can engage and say, ‘Hey, remember that goal you had? Let’s talk about how you are doing these changes.’
For advisers, I would definitely say that’s the one thing that became most important.