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Envestnet executive Dani Fava on stage at the firm's May 12, 2022 conference in Charlotte, N.C.

Technology > Investment Platforms

Dani Fava's Quest to Bring Financial Advice to the $500 Investor

By John Manganaro

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The work of technologists has long been integral to the development of the modern financial advisor industry, but current trends in the marketplace are putting a major premium on the skills of technology professionals.

There is a particular need for innovators who can bring together massive and dispersed data sets and use them to automatically generate timely, actionable insights that allow advisors to better serve clients. Industry executives see such back-end solutions as foundational to the future growth and profitability of their firms.

In fact, according to Envestnet’s Dani Fava, there has simply never been a better time for advisor industry innovators. The opportunities they have to elevate the profession and the outcomes of clients are “nothing short of astounding.”

Fava, the product innovation group president at Envestnet, outlined her views on the state of the advice business at the firm’s 2023 Elevate Conference, which has brought several thousand of the firm’s advisor clients and provider partners to Denver this week.

According to Fava, the many technologies and business solutions being produced by Envestnet are helping to revolutionize the way advisors serve their clients, allowing them to expand their businesses while also bringing their valuable services downmarket to people of more modest means — investors with as little as $500, for example.

One of the ways the firm is pursuing this goal is through its forthcoming embedded finance capabilities. Through embedding, she explained, useful financial services can be offered through the consumer apps and websites of nonfinancial firms, such as Apple.

As recounted in an interview with ThinkAdvisor, Fava feels the advisor industry is at an inflection point — one that will see advisors further embrace technology in their business processes or fall behind their tech-enabled peers.

THINKADVISOR: Can we start by speaking about your transition from TD Ameritrade Institutional to Envestnet, which happened about three years ago? How has your experience been so far working with the Envestnet leadership team under CEO Bill Crager? You must be busy?

DANI FAVA: It’s been wonderful, and yes, very busy. When I pause and take a moment to look back over the list of solution enhancements and feature integrations that have taken place in that time, it’s pretty amazing.

It’s just a wonderful time to be an advisor industry innovator, as you know. This industry is growing and changing so rapidly, and so it has been an extremely fun dynamic, working on this team. There’s just a lot of energy and interest in what we are doing, as you can see from this conference.

While the work is challenging, Bill has such a strong vision about where we need to go and what we need to accomplish, and that gives us a lot of confidence in the goals we are pursuing.

Can you tell us more about the work of the product innovation group that you oversee? 

The first thing I will tell you is that my team specializes in a really unique form of market validation, and that’s what we are working really hard on right now with the embedded finance capabilities.

An integral part of our innovation process is to go out and do really strong qualitative market validation research. It’s all about a central question: Are we identifying and solving a true problem that advisors are facing, one that needs to be solved to allow them to do business more efficiently and effectively?

It’s interesting work because there is a tendency in the financial services space in general to have a lot of assumptions about how the industry works and what clients’ needs are. But when you do this kind of validation work, you often find that you had a lot of things right, but you didn’t understand everything.

One of the most valuable testing tools we have is doing anonymous survey research, because another thing that many firms get wrong is to ask their current clients about the usefulness of their services or technology. You often do not get a truly honest response.

We recently had a situation in which we were testing out a new integration with a big-name firm from outside of financial services, and, internally, we just thought this was the coolest idea and that advisors were going to love our idea.

Well, we went out and tested it, and we discovered that there were just some reasons why an advisor would not engage with such a solution.

It may be disappointing when that kind of thing happens, but it is by doing this validation work first that we are able to save time and resources overall for the company.

As you’re leading the product innovation group and trying to keep everybody moving together across different complex projects, how do you keep it all straight?

It’s the overall vision that you have to get right. The most important thing is that you have a vision of the ecosystem you want to create.

Yes, there may be a lot going on, but it’s all in search of a clearly defined end goal.

I can distill it down to one example for you. Within the embedded finance solution, one of our motivating goals is to be able to bring really valuable professionally managed account services to clients with as little as $500. It’s really about democratizing access to advisory services.

That is a lofty goal and really provides us with a sense of personal purpose and motivation.

When Envestnet was founded, I believe their separately managed account minimum was like $800,000. To be working on a solution to bring that same level of intellectual capability all the way down to somebody who has just $500 to invest — that’s honestly a source of personal fulfillment.

Can you tell our readers about the subject of your keynote presentation here at the conference? It’s about TiKTok trends and financial advice? 

Yes, it’s a light and fun presentation, but I think it has an important message with respect to consumer behavior.

The basic approach is that I’ll be playing four different TikTok videos to display key trends on the platform, and I’ll be likening these trends back to key facts about consumer behavior and how this impacts financial services delivery, especially with respect to next-generation clients.

Stepping back, something I would say to your readers is that they cannot underestimate the impact of what I will call “finfluencers.” People in Gen Z, in particular, obtain so much of their information from social media, and that includes information about investing and finance.

I think it’s a real risk for firms to just completely ignore this fact and assume they don’t have any need to be exploring platforms like TikTok or other forms of social media.

With respect to your own career development, do you have any tips or suggestions for young people in the industry who want to work for the likes of an Envestnet at a senior level? What are some things you’ve learned about how to be successful in such a dynamic and demanding environment?

That’s a great question. First of all — and it’s not really surprising — I would emphasize that this is a relationship business, even if you are working on the technology side. Success comes from building strong relationships with your firm leaders and cultivating an ability to communicate effectively.

Frankly, you also have to work to be amicable. You want to try to be somebody that other people actually want to be around and work with. It is demanding and stressful, and you need to have those close relationships to be successful.

This is just my perspective, of course. I think other people can and do find success in different ways. But at the end of the day, my advice would be to focus on both the technical skills and also the soft skills of emotional intelligence.

The great leaders I have worked for know that the technical stuff can be taught. What can’t be taught is attitude — the eagerness and energy to get the job done.

I think that’s a pretty big misconception about our industry, actually. A lot of young people think that financial services is all just about the intellectual stuff, the math and the certification letters you have after your name. Sure, those things matter, but there is just so much more to it.

What are your big goals for the remainder of 2023 and beyond?

My team and I are very focused on bringing the embedded finance solution to market and iterating it to a point where it is profitable and scalable.

Like I said before, we’re in the product market fit phase, which is a really important time in the product development lifecycle. It means you have identified a market that you feel is right for a solution, and you’ve had some demonstrated success, but now you are really going in and you are asking the tough questions about scalability.

This is a very exciting part of the process, but I would also say it is the most delicate. You really have to turn the dials on cost, pricing and positioning and get them just right. We now have real customers in front of us, and we need to get this right.

(Pictured: Dani Fava of Envestnet) 

John Manganaro

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