Hi guys, welcome to the Fintech Coffee Break. I’m your host, Isabelle Castro. This week I joined Dani Fava Group President of Product Innovation at Envestnet for my coffee break to talk about the promise of generative AI for the financial advisory.

With AI being one of the topics of the year for finance, I wanted to ask her how she sees the technology impacting financial advisors and the customers they serve. Particularly, I wanted to get her thoughts on the mistakes and hallucinations Gen AI users come up against, and how the space will develop while facing potential regulatory shifts.

Isabelle Castro 0:39

Hey, Dani, how are you today?

Dani Fava 0:42
I’m very good as well. Nice to see you.

Isabelle Castro 0:44
Nice to see you. Nice to meet you. I’m looking forward to this conversation. So to begin with, what gets you up in the morning?

Dani Fava 0:53
Yeah, so I mean, practically speaking, my dogs get me up in the morning. But I think you you’d like a real kind of inspirational answer. And I thought a little bit about that. And what gets me up in the morning is that I, I assume a lot of responsibility for people who look like me. And what I mean by that is, you know, it’s kind of rare being an openly gay Hispanic woman in the financial services space in the fintech sector. And I kind of view myself as being the North Star. So I want people who look like me to see me out here, succeeding, speaking about my work, and I want them to follow into my footsteps kind of feeling comfortable in a space that wasn’t necessarily built by people who look like us.

Isabelle Castro 1:41
That is very inspirational. You did a good job with that one. And yeah, I’m inspired by your story. How about you tell the listeners, how you came to Envestnet and your career journey up until that point?

Dani Fava 1:56
Yeah, so I’ve got really interesting beginning to my fintech career. And it all started when I graduated college and got my first job on Wall Street. And at the time, I had a toddler. So I started my job on Wall Street with this, you know, toddler that I brought to daycare every day and my job on on Wall Street on this trade desk was to print out and deliver reports to the traders before the market opened, so to commute to Manhattan to you know, run into the office and print out these reports, it started to become, you know, a little bit too much to handle. And I was I was late a lot of the time and I had to figure out a way to make this work. And I couldn’t make my daughter’s daycare open up any earlier. So what I did was effectively kind of hacked into the software so that I could automate my job. And I figured out how to code self taught. And I figured out how to run automated reports and schedule them to run at a specific time based on specific triggers and send them to the printer so that when I arrived in the morning, my job was half done, and I could just deliver them to the traders desks. One day, I got a phone call from the software company that I was using. And I thought immediately Oh, no, I’m in trouble. I’m like, this is probably not not a good thing. But what they said to me was, it’s kind of rare for someone to figure out how to do this, how to automate these reports. It’s kind of a feature that we don’t tell people about, and you figured out how to backdoor it and get it done. Are you interested in the job? So that kind of started my career and fintech Of course, I took that job, either out of desire or out of fear. But it worked out well. And I’ve been automating and creating productivity tools in the financial services space ever since.

Isabelle Castro 3:59
Okay, nice. And yeah, that brought you to Envestnet which is all about that right?

Dani Fava 4:04
Now all about that. As a matter of fact, I am the group head of product innovation at Envestnet. Prior to being here. I was at TD Ameritrade for about a decade where I was the Director of Innovation there as well. So I’ve kind of fallen into more of the financial advisory fintech space, where for a lot of years now I’ve been creating software for financial advisors so they can better serve their clients so they can be the hero to their customers. And I’ve really quite enjoyed this industry and what I’ve been doing so far.

Isabelle Castro 4:40
Okay, great. I’m really glad you mentioned financial advisory because this is what I want to talk to you about. But first of all, I want to kind of get your focus and get your ideas on generative AI, which we’ve heard about a lot this year, and how it’s going to create a huge impact and all the sectors of the finance well in all sectors in general, where would you say we are right now with it? And where do you see it going?

Dani Fava 5:08
So this is a big question. And I’m going to, I don’t think I’m going to surprise you by saying I’ve been innovating for about 15 years in the financial advisory space. I have experienced, you know, machine learning voice technology, cryptocurrency robotic process automation, and the applicability of all of those things across the financial advisory space. And I have never been as excited and as confident that a technology is going to make a significant change as I am about generative AI. So that doesn’t answer your question. Where are we at the moment with generative AI? And I would say we’re at a discovery moment. And the way that I think about it is you ever you ever watch a baby realise that they could use their hands, right? And it’s like, it’s this fascinating moment where they’re, they’re looking at their hands, and they’re like, Wow, I can control things with my hands, what a world of possibilities, this opens up. And you can like see the ah, on their face, that it’s this really fun thing to watch. And I kind of feel like that’s where we are in the fintech space with generative AI, we’ve had this awakening, and we’re in this discovery moment, and we’re looking across all of the things that we do, and saying, Wow, generative AI can have an impact in all of these places. Where do we go first? I mean, the possibilities are endless. So that’s where we are right now. And it’s kind of you know, being an innovator is probably we you know, this is these are the moments that we live for.

Isabelle Castro 6:44
Hmm, yeah, no, definitely, I think this year has been all about opening new stories around the possibilities of generative AI, among other things. Where do you see it having the most impact?

Dani Fava 7:01
Yeah, so I, I’m wondering whether you want me to answer this question as far as in the world or in the financial advisory space? Both?

Isabelle Castro 7:10
Well, let’s go financial sector, and then I will focus you in on to the financial advisory application. Yeah.

Dani Fava 7:18
Yeah. So I think in the financial sector, like the biggest impact is going to be the ability to scale right. So I think generative AI is going to add the so much productivity, I predict a 30% increase in productivity across the board in the financial services space over the next five years. I mean, everything from, you know, the the reports that everybody was running, reviewing information, research analysts, customer support, understanding products, comparing products, like this is all going to be automated and conversational, and at your fingertips and accessible to everyone, which creates an immense amount of scale. So I think overall scale and accessibility is going to be the thing that changes the most.

Isabelle Castro 8:08
Okay, okay, that’s really, really exciting. Now, I’m going to focus in on the financial advisory application. So I’ve talked to a few people over the course of this year, who thinks it could make a great impact. But then others are saying that we’re a long way from using it as like an A financial advisor due to the fact that Jen, I still makes mistakes and hallucinations. What’s your take?

Dani Fava 8:33
Yeah, well, they first take. So two people, right, we still make mistakes. But I understand the thought, because the mistakes that can be made can be made at a greater scale to my earlier point, right. So it does leave kind of cause for concern. And it’s not just the mistakes that it makes, I think we’ll also see some regulatory challenges with generative AI, specifically, governing bodies, like the SEC really want to see how you arrived at the best answer. And they want you to show your work. And using generative AI is very difficult to do that. For the sheer fact that it’s just using so much data and turning through it so quickly, it is very hard to nail down the exact path that it took to make a decision and all of the data that it used as as an input. And so I do think there’s not only concerned about potential errors, but also we’re facing kind of a regulatory issue. However, that does not mean that is not applicable in the financial advisory space right now. I think over the course of the next couple of years, what we’re going to see are generative AI products that give a human being an answer that they can review. Whether that means you know creating content, creating presentations, creating research material We’ll even Investment Recommendations allocation recommendations answers on what if what will happen? You know, if the conflict in the Middle East grows and in, you know, into into something that sort of spins out of control, how’s my portfolio going to be affected? These answers can be given to a fiduciary, right? We don’t have to consider the degenerative AI answer to be the ultimate answer, what we can do is put it in the hands of a trusted financial advisor, so that they can review it. And then if they decide it is accurate, and acceptable and aligns with their philosophy, then they can hand it over to their customer. And we can see that type of product playing out in a lot of areas, including customer service, you know, I can, I can call up for an answer. And the person on the other end of the phone may be using generative AI to get an answer quickly. But they’re going to review that answer before it’s given to me, I can do that out of social media posts on a blog on a presentation all of these areas, I think we’re going to see Gen AI being used in the financial advisory space with human intervention with human delivery, and that it’s going to be that way. And I think it’s actually going to be really effectively used in that way for the near term.

Isabelle Castro 11:24
Okay, so even I understand this kind of coordination between the human and the Gennai. But even if it’s making mistakes, do, is it still an effective tool?

Dani Fava 11:36
I think so. I mean, and I think about it, in terms of being human like, let’s consider GenAI. And in turn, so, so it’s, it’s helping you and it’s giving you answers, very quickly and to the best of its ability, and it’s still learning, right? So if you’ve got a person who’s filling that role, would you consider that person to be, you know, not helpful if the person is wrong? Some of the time? No, what you would say is, let me help you learn why this is wrong. And let me you know, I’m going to continue to teach you. And that’s exactly the way that I look at GenAI is that yes, it may be wrong, it may give you incorrect information, you should always check it and you should not use it as gospel. But you know, there, there is still a lot of value. And the beauty of Gen AI and machine learning overall is that it can be taught, and it can be taught specific to your specialty. So I really do think even though it makes mistakes, it is going to be very useful in terms of increasing productivity.

Isabelle Castro 12:46
Okay, nice. So, if it is successful, if it does get implemented successfully, and we get through all these regulatory things, what do you see being the impact on customers and consumers and people who want to have this financial advice?

Dani Fava 13:07
Yeah, so there’s the two biggest things I see are scale, which, which I, you know, I’ve already said that, but what really what does that mean, and in a practical sense, so for as long as I’ve been working in the financial advisory space advisors have wondered how can I scale so that I can take on more clients and potentially even smaller clients, right, so what we see a lot in the industry are that kind of the number says one financial adviser can effectively manage about 100 households. And then there’s some degradation in service if they go beyond that. And therefore, they try to make sure that those 100 households are each individually over a certain threshold of wealth, that makes the financial advisor profitable. It’s completely understandable. From a business perspective. What generative AI is going to do is allow an advisor to scale way beyond that, right? So they won’t have to do as much meeting preparation for that individual client meeting, they can be chatting with Gen AI, about that client specific situation on the fly, they can create content faster. So here we have a financial advisor being able to go down market, what does that mean? In terms of consumers, it means more accessibility. And that’s really what I’m the most excited about is more people will have more democratised access to financial advice to financial products to good financial decisions to education. Our industry has for far too long been gate kept you know either purposefully or or just because of the complexity of the of the industry. It has been gate kept from a lot of people right they can’t get access As to the right information to the right financial tools to the right investments, that’s about to change. And I think that’s going to have a really an amazing, profound impact on on the lives of of Americans and on the lives of retirees, for example.

Isabelle Castro 15:17
Okay, okay. Nice. So scale is the main thing.

Dani Fava 15:22
Yeah.

Isabelle Castro 15:24
I think, did you say two things? Do you say two things that

Dani Fava 15:29
scale and accessibility? That’s right. Yeah. The second one being accessibility.

Isabelle Castro 15:33
Okay. Nice. Okay. I like I like that answer. So, I mean, this technology is obviously only become available recently. But do you think it holds particular importance right now, as opposed to, like, you know, within all the economic conditions, and all of that, is there? Is it particularly important now than it could be in a different moment?

Dani Fava 16:00
I think, I think no matter when Gen AI, hit its tipping point, which I believe it hit its tipping point, when ChatGPT became available publicly. That was a real tipping point, in kind of kicked off this discovery phase. But I think any at any point in time, when when Gen AI was, you know, hit that point, it would have been amazingly impactful. The thing that’s interesting about this point in time is that I think we focus, we’re starting to understand that money is really tied to our emotions. So we’ve always known some of this, right? So we’ve always known that, you know, finance, or is the highest reason for a divorce or problems in a relationship or should stress. And we’ve always kind of known that statistically. But I think now it’s become an industry, behavioural finance has become an industry, connecting money to happiness, health to wealth, is a really, you know, a fledgling industry. And so what’s really interesting here is that I think a lot of the things we’ve been focused on in the past as far as allocation, investment returns, risk profiling, that is going to become so incredibly automated, that it’s going to free up more time and resources to focus on behavioural finance. What is it about money that affects your emotion, your mood, your happiness index, we’re going to try to measure that to fix it to alter it and pointed in the right direction. That’s a whole industry that has gone I think we’re gonna see a lot more movement in now that we can increase productivity and automate so many of those other things.

Isabelle Castro 17:52
That’s super interesting. I’m really looking forward to seeing how kind of fintechs come up with things to do that I can’t even imagine it. So it’ll be interesting to see how it pans out. I’m really curious, actually, obviously, the Biden’s executive order with AI was passed recently. How do you see that kind of feeding into? I know, it’s all a bit up in the air? But do you how do you see it fitting in? driving growth?

Dani Fava 18:22
Yeah. So I think I think it’s, there’s a lot of companies that are going to be at this kind of wait and see moment, right? I think and that’s by design, a lot of financial services companies are really conservative for good reason. And we’d like to see how this new tech plays out for other people before we dive in and make investments and start using it. And I think that the more clarity we get from regulators, the better off we’ll be. And I think that is true for any industry, it’s been true for crypto, you know, once the US government starts really regulating crypto or allowing certain products X sets to be publicly available. That’s when that’s when people really start feeling more comfortable that, okay, the US government, the regulating bodies are really looking at this and are passing some laws, it actually gives an increased sense of security. So no matter what the you know, as long as it’s not a complete across the board ban, I think no matter what, the regulating bodies, you know, set forth for GenAI it ultimately ends up being a good thing for adoption across the financial services sector.

Isabelle Castro 19:36
Okay, cool. Very, very interesting. Thank you for all your thoughts on that. I’m gonna go to the closing questions. So what’s a piece of advice that you’ve been given that you would give to others? This can this can be personal professional.

Dani Fava 19:51
Yeah, I thought I thought about making this one. Be a little bit inspirational too, but I’m actually going to go with a pretty pragmatic answer. So the advice that I’ve been given that I, that I would give to others that I because I think it really made a big impact on me and my both personal and professional life is to outsource as much as you can. So as you continue to grow in this, you know, in this life, there are things that you’re just accustomed to doing, which you can now outsource. I recall having this conversation with one of one of my favourite bosses, and I just said, you know, at this moment, in my in time, I’m just feeling really stressed because I have so much to do, and I get home and, you know, I’ve got laundry and cooking and you know, I’m, I’m a single mom, and it’s, I’m struggling, and he said to me, you know, you make enough money now to outsource all of that, you know that right? And it took somebody telling me that to say, Huh, that’s okay, isn’t it, I can outsource those things. And I think as, especially as women, we put so much on our own shoulders that we need to shoulder the responsibility of so many things that sometimes we don’t stop to think like, hey, I can outsource this. So that that made my life so much easier, and allowed me to focus on the things I’m really passionate about. And the things I really love gives me a lot more free time to do the work that I want to do that I find so meaningful. By by you know, just outsourcing more. whether those be personal tasks or professional tasks, you really just got to get good at delegating and knowing what to focus on and where your time is best spent.

Isabelle Castro 21:35
That’s a great piece of advice. I get what you mean like it almost takes either someone or yourself just to look in the mirror and give yourself permission to do that. Because otherwise you’re just going to spread yourself too thin. I find that to thank you for that. I like that your curveball question. If he could turn into another person for the day, who would you choose to be and why? I’m sorry. It’s quite

Dani Fava 22:01
Oh no. So I’ve had no preparations because questionnaire at all. So you’re gonna get my most honest answer. I would I would actually be The Marshall Mathers for a day. Here’s why. So that’s Eminem, for those of you who don’t know. So I think there are so few people in the world who are the absolute uncontested best at what they do. There’s so few people there’s maybe, you know, Michael Jordan, and there’s maybe you know, a few others who are the absolute best top of the game at what they do. And they do it so well that you’re almost you’re almost, you know, afraid to challenge them. And I want to know what it feels like to be at the the absolute best. So in my mind, Eminem is the uncontested best lyricist there ever was heavy use of of words. And lyric is just, you know, it’s it’s fascinating. And I would love to know what it feels like to just be able to, to live in those shoes for a moment, you know, and maybe like not have impostor syndrome and just know that I’m the best at what I do when I step on stage and that would be I think that would be a great feeling for me that I could that I could go back into my into myself and carry that competence with me.

Isabelle Castro 23:22
Okay, that’s a really nice answer. I do wonder whether he does get impostor syndrome Well, yeah gets imposed and does feel that about himself it’d be really interested to find out and also I’m very impressed by your like that was completely like curved for and you just came up with something just like that. So I’m very impressed. Well done. That was a really good answer. So how can people get a hold of you follow you get in contact?

Dani Fava 23:51
I’m on X formerly known as Twitter as EMVDani that’s investments publicly traded stock symbol EMV, Dani’s my first name so @EMVDani, I’m you know, lurking around on Twitter watching what people are saying sometimes giving some input so you can reach me there.

Isabelle Castro 24:10
Okay. Nice. Thank you so much for your time. I’ve really enjoyed having you on the show. You’ve been a great guest, so have a good rest of your day.

Dani Fava 24:17
Thanks for having me Isabelle.

Isabelle Castro 24:20
As always, you can reach out and chat with me or my personal LinkedIn or Twitter IZYcastrowrites. But for access to great daily content, check out Fintech Nexus on LinkedIn, Twitter, Facebook or Instagram. You can also sign up for our daily newsletter brand new structure inbox. For more fintech podcast fun, check out the website, where you can find more fascinating conversations posted by Peter Renton. That’s it from me. Until next time, enjoy your downtime.

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